September 21, 2009

A new paper by economist Goohoo Kwon at Goldman Sachs argues that the economy of a reunified Korea could be larger than France and Germany and possibly Japan by the middle of this century. According to the Wall Street Journal, Kwon says “the risks of unification need to be reevaluated, particularly after the rapid development of countries such as Vietnam and Mongolia that had state-run economies like North Korea’s.”

The Journal adds, “Mr. Kwon’s study [suggests] that the North’s huge growth potential could help offset the slowing growth of South Korea, burdened by limited natural resources and a fast-aging population. North Korea has huge mineral deposits and a population that is younger and growing twice as quickly. Using long-term forecasts Goldman Sachs has previously published for industrialized countries, Mr. Kwon concluded that the gross domestic product of a united Korea would be the world’s eighth-largest in 2050 at $6 trillion, surpassing France around 2040 and Germany and Japan later that decade.” The Journal observed,”Nearly all previous economic reports on Korean unification focused on the costs that South Koreans will face, and ignore or play down investment and business opportunities that may arise.”

Read the full Goldman Sachs report here.