This study seeks to examine the issues of core policy tasks addressing the sudden reunification of Korea in order to draw out policy directions, thereby contributing to devising a detailed countermeasure addressing Korea’s reunification.
Economic policy tasks for the reunification of the Korean peninsula can be approached from two perspectives–the transition of the North Korean socialist economy to a market economy or the economic integration of the two areas with wide income level and productivity gaps. Should reunification take place with North Korea maintaining a centrally-planned economy just like Germany’s case, North Korea’s economic system should be shifted to a market economy as a first priority. As shown by the case of Eastern Europe, system transition is indeed a difficult task to achieve. Moreover, with big differences in productivity and income level, the shock following economic integration is bound to be severe even between two market economics with the same basic structure. With South Korea and North Korea not only holding different economic systems, but also showing a wide gap in income levels, the shock from economic integration is bound to be even more intense.
The method of system transition and its economic outcome are often decided by the initial conditions of economic integration. North Korea’s economic structure and condition is in between the initial stages of a system transition that took place in China and Eastern Europe, but is closer to the Eastern Europe experience. Core tasks regarding system transition include price and trade liberalization, agricultural reform, privatization of national companies, macroeconomic stabilization, and financial reform. Considering the economic structure of North Korea, these tasks should be carried out in a full-scale and speedy way.
Even if North Korea does make a shift to a market economy, economic integration is still a very difficult task to complete with the deepening gap in income levels between the two Koreas. In addition, major tasks regarding economic integration are controlling a large-scale population movement and rebuilding the North Korean economy. In relation to Germany’s past experiences, attracting investment in the North and accelerating economic development there seems to be the most effective population-movement control policy and relief plan of income gaps.
For North Korea to achieve economic development, an active wage policy should be carried out for the North’s wage level to increase within the range of productivity improvement. In addition, the government must carry out a leading role in resolving economic problems overall in order to minimize economic confusion and establish basic order in the market. Government must see to it that it does not make excessive interventions in the economy, but its active leading role in rebuilding the North Korean economy is still indispensable.
북한의 체제전환과 남북한 경제통합의 주요 과제(Study of the system transition of North Korea and major tasks for inter-Korean economic integration)
|Series Title; No||정책포럼 / 제108호(9611)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Economic Administration|
|Holding||KDI; KDI School|