Stephen Haggard's Research Featured in The Economist
Parallel economies: What the North and South Koreans can learn from the reunification of Germany
12/29/2010
The Economist
South Koreans dread the prospect of renewed fighting across the “38th parallel” that divides their country from the communist North. But not all of them savour the alternative ending for their cold war: rapprochement and reunification.
North Korea’s indigence is almost as scary as its belligerence. The collapse of its rogue dictatorship—improbable but not unthinkable—would replace a military threat with a variety of economic perils, including a possible flood of cheap migrant labour and costly obligations to support the North’s people and infrastructure. Germany’s example is hardly reassuring. Two decades after reunification, the East still subtracts heavily from Germany’s budget and adds greatly to its unemployment figures.
Before the last Korean war in 1950, the North was home to most of the country’s heavy industry. As late as 1975, its income per head still exceeded the South’s, according to Eui-Gak Hwang of Korea University in Seoul. “Obviously, sooner or later the country must be reunited,” wrote Joan Robinson, a Cambridge economist, in 1977, “by absorbing the South into socialism.”
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Stephan Haggard can provide commentary on current developments in the Asia-Pacific, including particularly Korea, and on the politics of economic reform and globalization.
