In his Independence Day speech delivered on Sunday, President Lee Myung-bak said, “Unification will certainly come one day and I believe it’s time for measures to prepare for that time, such as a ‘unification tax.’”
Civic calls for such a tax have been made in the past but it’s the first time for the president to make the remark.
Civic calls for such a tax have been made in the past but it’s the first time for the president to make the remark.
The Cost of Unification
Typically, the cost of unification refers to the expenses incurred while overcoming the chaos of the unification process (food, medical support, etc.) and the overall post-unification expenditures needed to consolidate the two sides’ political, defense, economic, social and cultural systems. It also includes investment to raise the gross domestic product of the poorer side (North Korea in this case) to a sufficient degree in order to ease the income discrepancy. These three components comprise the theoretical cost of unification, but the actual calculation is very complex and controversial. When to consider the cost is debated (e.g. until the moment of unification or until the united nation fully recovers from the aftermath). The actual cost will also vary depending on whether the North collapses abruptly or if it gradually narrows the wide economic gap with the South.
Typically, the cost of unification refers to the expenses incurred while overcoming the chaos of the unification process (food, medical support, etc.) and the overall post-unification expenditures needed to consolidate the two sides’ political, defense, economic, social and cultural systems. It also includes investment to raise the gross domestic product of the poorer side (North Korea in this case) to a sufficient degree in order to ease the income discrepancy. These three components comprise the theoretical cost of unification, but the actual calculation is very complex and controversial. When to consider the cost is debated (e.g. until the moment of unification or until the united nation fully recovers from the aftermath). The actual cost will also vary depending on whether the North collapses abruptly or if it gradually narrows the wide economic gap with the South.
[ Estimated Cost ]
| Charles Wolf (Rand Corp.) | $1.7 trillion | Per capita GDP of South and North Korea is $20,000 and $700, respectively, while the populations are 48 million and 24 million. On this assumption, this is what will cost to raise the North’s level to the South’s. |
| Peter Beck (Stanford Univ.) | $2.0~5.0 trillion | The cost necessary for 30 years to raise the average N. Korean person’s income to 80% of the S. Korean level. |
| Samsung Economic Research Institute | $460 billion (KRW 545.8 trillion) | 2005 estimate |
| Korea Institute of Public Finance | 7~12% of GDP | Cost for 20 years after unification |
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