While we are prognosticating neither the collapse of DPRK nor the unification of the Korean peninsula, we thought it would be prudent to take a look at such a scenario. We have found the following research papers on the issue thus far:
MacArthur Foundation: The Economic Impacts of a North Korean Collapse
The economic impacts of a North Korean collapse may change depending on a number of variables. Examples include whether the North and South pursue integration after the collapse, the timing of such integration, and the environment and methods of integration. Integration will determine the economic impacts felt by neighboring countries and the international community. If integration becomes more or less an established fact, then South Korea will be the primary agents who are to incur any expenses North Korea may present. The timing and method of integration, along with the environment will determine the magnitude of the impact resulting from a North-South economic integration. This in turn determines the scale of financial burdens which will be felt primarily by South Korea, and secondarily by neighboring countries.
This paper uses Generational Accounting to assess the fiscal impacts of Korean reunification. Our findings suggest that early reunification will result in a large increase in the fiscal burden for most current and future generations of South Koreans. The Korean reunification’s fiscal impact appears much larger than that of German reunification, due to a wider gap in productivity between the two Koreas and North Korea’s much larger share of the unified country’s population. The projected large-scale fiscal burden on South Korea is attributable primarily to the rapid increase in social welfare expenditure for North Korean residents, rather than to the direct reconstruction cost of the North Korean economic system after the disintegration of its old economic regime.
Strategic Studies Institute: Prospects from Korean Reunification
Throughout the 1990s, predictions of Korean reunification were rife. Since then, enthusiasm for such predictions have faded, and although the underlying assumption of reunification remains, forecasts of when and how this will occur have been more subdued. Reunification poses two distinct yet interdependent conundrums: reunification itself, which is the immediate challenge; and the strategic landscape that emerges from reunification, which has the potential to fundamentally transform strategic relationships in Northeast Asia. Within this context, this paper examines the prospects from Korean reunification. Initially, it will establish the framework from which such prospects will emerge: the nature of the North Korean regime, the cost of reunification, and likely reunification scenarios. From this framework, a raft of challenges and opportunities present themselves to the stakeholders in the region; and South Korea, China, the United States and, to a lesser extent, Japan and Russia will be examined to determine prospects from Korean reunification. The paper will suggest that China, at the expense of the United States, has positioned itself to profoundly influence the nature of reunification, the “tilt” of a unified Korea, and with it, the future Northeast Asian strategic environment.