North Korean Paradoxes

North Korean Paradoxes: Circumstances, Costs, and Consequences of Korean Unification

Charles Wolf
Kamil Akramov
Copyright Date: 2005
Edition: 1
Published by: RAND Corporation
Pages: 94
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  • Book Info
    North Korean Paradoxes
    Book Description:

    Analyzes economic, political, and security issues associated with Korean unification. Considers how the North Korean system might unravel, leading to possible unification, and what the capital costs of unification would be under differing circumstances and assumptions. Compares points of relevance and nonrelevance between the German experience with unification in the 1990s and what might occur in Korea.

    eISBN: 978-0-8330-4078-7
    Subjects: History, Political Science

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. Figures
    (pp. vii-viii)
  5. Tables
    (pp. ix-x)
  6. Summary
    (pp. xi-xviii)
  7. Acknowledgments
    (pp. xix-xx)
  8. Acronyms
    (pp. xxi-xxii)
  9. CHAPTER ONE Preamble: Purpose and Roadmap
    (pp. 1-2)

    The principal aim of this research is to analyze some of the central issues associated with Korean reunification—and especially its attendant costs. As essential background for the analysis, we begin in Chapters Two and Three with a brief examination of the structure and functioning of the North Korean system—what is known and not known about its various dimensions and particularly about its economy.

    Chapter Four briefly summarizes how the system might unravel.

    Chapter Five describes the simulations we have done to estimate the capital costs of reunification. The costs of reunification as estimated in this analysis are narrowly...

  10. CHAPTER TWO North Korea: Obscurities and Paradoxes
    (pp. 3-8)

    North Korea is conspicuous if not unique among the 190 other members of the United Nations in the paucity of reliable information about it. The North Korean government has never published a statistical yearbook, and it essentially ceased publishing even fragmentary economic statistics in the early 1960s. Limited information and data and the unreliability of what is available result in obscurity and conjecture rather than knowledge about the political, economic, and military circumstances actually prevailing in North Korea.

    Itspolitical obscuritiesare pervasive. They include the bizarre, volatile, and perhaps calculating character and behavior of its leadership; the content and...

  11. CHAPTER THREE Size, Growth, and Structure of the North Korean Economy
    (pp. 9-20)

    Estimates of North Korea’s Gross Domestic Product or Gross National Income¹ vary widely for many reasons. They include the absence of reliable data for many components of the national accounts,² secrecy surrounding data that may be available internally but are not available externally, and a possible temptation by some analysts to invent data in the process of trying to make the best of the bad data that are available.³

    Another problem associated with North Korean data stems from the legacy of Soviet accounting practices, which excluded “intermediate services” (for example, transportation, housing, health care, and education), from national accounts data....

  12. CHAPTER FOUR How the System Might Unravel: Scenarios for Reunification
    (pp. 21-26)

    The political prospects for Korean reunification and for the unraveling of the North Korean system have fluctuated intermittently over the past dozen years. Following the demise of Kim Il Sung in 1994, foreign observers periodically conjectured that the regime’s survival might be imperiled. Circumstances contributing to these conjectures have included the apparently serious deterioration in the North Korean economy, as well as the gradual, uncertain, and usually obscure process by which Kim Jong Il has acquired most of the power possessed by his father.

    In recent years, these conjectures have receded for two reasons:

    The North Korean regime’s demonstration of...

  13. CHAPTER FIVE The Capital Costs of Korean Reunification: Estimation and Management
    (pp. 27-44)

    As previously noted, the political prospect of Korean unification has frequently surfaced over the past two decades, preceding the demise of Kim Il Sung in 1994 and especially in the decade since then. For decisionmakers in Seoul and Western policymakers, that prospect has frequently been sidelined by external events that have diverted attention away from Korean reunification. These distractions have included—besides those mentioned earlier—the protracted and costly process of German reunification since 1991, the financial crisis in Korea and Southeast Asia in 1997 and 1998, and North Korea’s brandishing of nuclear weapons or periodic claims to have programs...

  14. CHAPTER SIX Other Estimates of Reunification Costs
    (pp. 45-50)

    The previous chapter described the wide range of estimates we have made using a simple estimating model and employing a limited number of parameters that reflect various assumptions and interactions relating to the reunification process. As noted above, these assumptions and parameters included the economic growth target stipulated for reunification, capital input requirements to reach the target, the accompanying pace and scale of military integration and downsizing, the scale of and constraints on population mobility, the pace of institutional reform, and opportunities for sharing the burden of reunification costs between public financing and commercially motivated private financing. As previously noted,...

  15. CHAPTER SEVEN Is Germany’s Reunification Experience Relevant?
    (pp. 51-58)

    The apparent similarities between the reunification of West Germany (the Federal Republic of Germany, FRG) and East Germany and the possible reunification of South and North Korea are sufficient to warrant a brief review and recapitulation of the German experience to see what lessons might be extracted that would be relevant to the Korean case. However, the dissimilarities between the two cases are so prominent as to limit the relevance of the German reunification experience for possible future reunification in Korea.

    The similarities include a common culture and language shared by the two Koreas and the two Germanys, the protracted...

  16. CHAPTER EIGHT Conclusions: Effects on Korean Security Policies and Programs
    (pp. 59-62)

    The capital costs of Korean reunification will be large and burdensome, although they will probably be considerably lower and more manageable than many previous estimates have indicated. The difference between the low estimate ($50 billion) and the high estimate ($667 billion) in our simulations—a factor of 13—suggests the enormous uncertainties that would accompany reunification and its associated costs.

    Managing reunification so as to constrain its associated costs requires a multifaceted strategy whose principal components include the following:

    Establishing as the key economic target of reunification a rapid rate of increase in per capita income in the North, rather...

  17. APPENDIX A Simple Simulation Model for Sizing Korean Reunification Costs
    (pp. 63-64)
  18. Bibliography
    (pp. 65-71)