Korean Economic Integration: Prospects and Pitfalls

Abstract

Using a growth model of productivity catch-up estimated from the 1990 German reunification, we study the economic impacts of a hypothetical economic integration between South Korea and North Korea on macro aggregates. By considering a range of scenarios, we analyze the impacts of labor migration and capital transfer policies.

Keywords:

• Korea
• Germany
• economic integration
• reunification

JEL Classifications:

• N15
• N45
• O53

Acknowledgements

We thank Gérard Roland for valuable inputs. Hyung Seok Kim acknowledges financial support from the Sogang University Research Grant of 2009 (200910038.01).