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The economics of korean unification

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  • Marcus Noland
  • Sherman Robinson
  • Ligang Liu

Abstract

We simulate the impact of a customs union and an exchange rate unification of North and South Korea. Factor mobility and technological change are of critical importance. If factor markets do not integrate, the macroeconomic impact on South Korea of economic integration is relatively small, while the effects on North Korea are large. With factor market integration, there is a significant impact on the South Korean income and wealth distribution. If integration is accompanied by external capital inflows, there is a significnt appreciation of the real exchange rate with deleterious implications for the South Korean traded-goods sector.

Suggested Citation

  • Marcus Noland & Sherman Robinson & Ligang Liu, 1999. "The economics of korean unification," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 3(3), pages 255-299.
    • Handle: RePEc:taf:jpolrf:v:3:y:1999:i:3:p:255-299
    DOI: 10.1080/13841289908523406
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    1. Noland, Marcus & Robinson, Sherman & Wang, Tao, 2000. "Modeling Korean Unification," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 400-421, June.
    2. Ruiz Estrada, Mario Arturo & Park, Donghyun, 2008. "Korean unification: How painful and how costly," Journal of Policy Modeling, Elsevier, vol. 30(1), pages 87-100.
    3. Moonsung Kang & Soonchan Park, 2018. "Institutional Economic Integration between South and North Korea and the Economic Impacts of Integration," Asian Economic Journal, East Asian Economic Association, vol. 32(3), pages 257-276, September.
    4. Paul Hare, 2012. "North Korea: Building the Institutions to Raise Living Standards," International Economic Journal, Taylor & Francis Journals, vol. 26(3), pages 487-509, September.
    5. Bradford, Scott C. & Phillips, Kerk L., 2008. "The Economic Reunification of Korea: A Dynamic General Equilibrium Model," MPRA Paper 23550, University Library of Munich, Germany.
    6. Bernhard Heitger, 2001. "Minimum Wages And Employment: The Case Of German Unification," International Economic Journal, Taylor & Francis Journals, vol. 17(1), pages 1-15.
    7. Noland, Marcus & Robinson, Sherman & Wang, Tao, 2000. "Rigorous Speculation: The Collapse and Revival of the North Korean Economy," World Development, Elsevier, vol. 28(10), pages 1767-1787, October.
    8. Noland, Marcus & Robinson, Sherman & Wang, Tao, 2001. "Famine in North Korea: Causes and Cures," Economic Development and Cultural Change, University of Chicago Press, vol. 49(4), pages 741-767, July.

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