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Unified Korea on verge of economic greatness, observes Hyun Jin Moon

North and South Korea on Verge of Economic Greatness,
          Observes Hyun Jin Moon

by Jacquie Bigford

“Discussions around the unification of North and South Korea have intensified over the last month,” said Hyun Jin Moon.

Moon is a social entrepreneur respected for his moral and innovative leadership, his spiritual leadership and his philosophy of one family under God. Hyun Jin Moon’s vision is for global peace and in 2009 he founded the Global Peace Foundation.

South Korean President Park Geun-hye, included remarks in her New Year press conference, not only about her desire for a reunification, but also the anticipated benefits that it would offer.

Korea was divided at the end of World War II in 1948 at the 38th Parallel with the two nations having utterly opposed political, economic, and social systems. North Korea was established as a communist state and South Korea a democratic state.

The Korean War began with North Korea launching a surprise invasion of South Korea in 1950. This effectively ended hopes of a peaceful reunification of the two nations. There was no real resolution to the dispute, and it effectively ended with a stalemate when North Korea was pushed back to the 38th Parallel. No peace treaty was ever signed. Subsequent relations between the two nations have been historically tense.

With two diametrically different systems, it may be hard to envision a path to reunification. The reunification of East and West Germany in 1990, after 28 years of separation, was primarily instigated by East German citizens who felt drastic change was needed.

Historically, the reunification of East and West Germany has been the example cited for why reunification of North and South Korea would not be beneficial. Following the unification, German central bank set the exchange rate at 1:1 which created havoc when East German workers migrated to West Germany with hopes of finding work offering higher wages.

The 1:1 exchange rate caused hesitation on the part of West German firms to invest in East Germany. Overall, the reunification costs proved to be considerable and the effects are still felt today.

“Pundits and economists alike have tended to focus on negative economic arguments, seeing unification as a burden. But there are significant economic benefits that unification would bring and these need more attention,” said Hyun Jin Moon.

A 2009 study by Goldman Sachs questions pessimistic economic arguments against Korean unification. The study suggests that using Germany as a benchmark for reunification, may be presenting an inaccurate picture of the potential for successful Korean unification.

Looking to Eastern Europe, Mongolia and Vietnam demonstrate that there are better ways to make the reunification process a success.

The unification of member states into the European Union created a unique political and economic community throughout Europe. The Treaty of Maastricht outlined goals to unify Europe beyond economics. The major goals were efficiency improvements, strengthening of democratic governance, and the establishment of a security policy.

The creation of a single European currency, the Euro, helped to establish fiscal unification and economic stability. The European Union allows participating countries to enjoy easier trade, greater citizen interaction on a variety of issues including the environment, and security and vastly simplified travel throughout the 28 member countries.

Based on the success of other nations following reunification, the Goldman Sachs study now indicates that a re-evaluation of the potential benefits of a Korean Reunification is warranted.

Previous studies uncovered a lack of interest in unification, this new study provides reason for optimism. “Previous belief that a Korean Reunification would be too costly has been replaced with a greater understanding of the potential benefits to both nations,” said Hyun Jin Moon.

North Korea possesses vast mineral deposits and a population both younger and growing twice as fast as South Korea. North Korean exports shipped to China included $291.1 million of iron ore and $1.37 billion worth of anthracite. Trade volume between North Korea and its major trading partner China reached a record US$6.45 billion in 2013, up 10.4 percent from a year earlier. The potential for growth in North Korea is huge which could help offset the costs involved with reunification.

South Korea brings to the table an impressive technology and economic portfolio. This includes Samsung Electronics, which is exporting increasingly high-quality products. Smartphone penetration in South Korea boasts a 97.7% level among 18 to 24 year olds, with many South Koreans using their smartphones to pay for products at stores, watch mainstream TV shows (not just YouTube) and scan QR codes at South Korea’s world’s first virtual store. Thanks to this strong focus on technology successes, South Korea is more resilient than ever in coping with currency swings, aiding in the stability of the economy.

Following a decade of concerted efforts by South Korea to improve economic links with North Korea, the South has become North Korea’s largest export market. North Korea has also implemented a number of conciliatory measures to improve relations with their neighbor to the south, though the signals sent from Pyongyang are often contradictory. As South and North Korea continue to edge forward with inter-Korean economic cooperation, the possibility of a politically, economically, and socially successful reunification increases.

The Goldman Sachs study conducted in 2009 predicts that a unified Korea by 2050 would boast the 8th highest GDP in the world.

“This is a dramatic statistic that shows Korea has the potential to become a significant presence on the world stage. The scope of economic opportunity is vast. This is why GPF is promoting a mindset change, toward unification and work to engage ordinary Korean citizens, in the process. Unification would open up trade between nations, tap the labor pool and mineral resources of the North, and remove a major barrier to travel, and development in East Asia,” Hyun Jin Moon said.