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South Korean spending power 32.8 times that of the North

SPECIAL TO WORLD TRIBUNE.COM
Thursday, December 22, 2005

The income gap between South and North Korea widened to the highest level ever in 2004.

According to the National Statistical Office (NSO), South Korea's gross national income (GNI), the nation's real purchasing power, was 32.8 times larger than that of its communist neighbor last year. North Korea's GNI stood at $20.8 billion last year, compared to $681 billion of the South.

Per capita gross national income in the South reached $14,162, nearly 1,450 percent more than the North's $914.

The statistics fueled concerns among South Korean taxpayers over unification costs with warnings by international rating agencies that these costs would be a major constraint on South Korea's sovereign rating.

South Korean economists estimate the cost for unifying the two countries would be somewhere between $250 billion and $3.5 trillion. Goldman Sachs estimated Korean unification costs to reach from $770 million to $3.5 trillion for the next 10 years after the peninsula was unified.

The RAND Corp says the unification of the Korean peninsula by absorption of a collapsed North Korea would cost South Korea up to $670 billion.

"The total cost of reunification would be dependent on how unification would occur, including for example, the costs of meeting humanitarian demands, stabilization requirements, the needs of human capital reeducation, training and replacement and the demands of social integration," a South Korean government official said.

Analysts agree that Korean unification costs would be much greater than those of Germany because of the primitive economic conditions in the North.

Ahead of unification, East Germany's per capita GDP was 25 to 33 percent of West Germany's in 1990. East Germany's population was just a quarter of the West's, while North Korea's population is half of the South's.

East Germany's GDP was on average 30 to 40 percent that of the West, but North Korea's has been just 10 percent of the South's according to Seoul's government data.

The gap in per-person national income widened from $5,005 in 1990 to $10,398 in 1995 $10,084 in 2000, and $11,902 in 2003. The widening gap is attributed to a recent surge in the South's per capita national income, which jumped to $12,720 in 2003 from $11,499 in 2002, and the dwindling income of the North.

The North's per capita national income shrank to $757 in 2000 from $1,142 in 1990, but recovered slightly to $818 in 2003.

Exports and imports in the South totaled $478.31 billion in 2004, about 167 times greater than $2.86 billion of the North. The gap in trade between the South and the North peaked in 1999 when the South's trade was 178 times greater than the North's. The North managed to narrow the gap down to 139.2 times in 2002 but it again widened to 155.9 times in 2003.

The South imported a total of 825.79 million barrels of crude oil in 2004, 211.7 times as much as the 3.9 million barrels purchased by the North, according to the NSO report. The South had 60 times as many automobiles with a total of 14.93 million cars compared to 249,000 cars in the North.

The South's population totaled 48.08 million, more than twice the North's 22.71 million. South Korea ranks 25th in the world by population and North Korea 47th. When combined, the Korean peninsula has the 18th-largest population in the world.


Copyright © 2005 East West Services, Inc.

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