United Korea economy may surpass Japan's

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(China Daily)
Updated: 2009-09-22 10:34

SEOUL: A united Korea - combining Asia's fourth biggest economy with one of its poorest - could surpass that of Germany or Japan in economic might in the next 30-40 years, US investment bank Goldman Sachs said Tuesday.

Though outisde analysts say the Democratic People's Republic of Korea's (DPRK) planned economy system looks to be weak, it offers a large and cheap workforce, a wealth of minerals that the resource-poor Republic of Korea (ROK) currently has to import to feed its industry and the likelihood of gains in productivity and its currency once economic reforms take hold.

"We project that a united Korea could overtake France, Germany and possibly Japan in 30-40 years in terms of GDP in US dollar terms," it said in a report.

The two Koreas have been separated for more than half a century and have yet to sign a peace treaty to formally end the 1950-53 Korean War.

The cost of reunification has long been seen as one of the biggest risks facing ROK's economy.

Many analysts warn the South's rise to an economic powerhouse in the region could be undone by the burden of absorbing its neighbor, whose per capita income is about 5 percent the size.

But Goldman Sachs said it could be affordable by having the appropriate policies and by following the China/Hong Kong reunification model which allows two political and economic systems to co-exist, with limited inter-Korean migration.

The report was written by the bank's ROK economist, Goohoon Kwon, and included input from one of the economists who co-authored the bank's influential prediction earlier this decade that the economies of Brazil, Russia, India and China - the so-called BRICs - would turn dominant by the mid-century.

DPRK's strengths include its relatively young population, well-educated labor force, rich mineral resources, potential investment from ROK and the possibility of big productivity and currency appreciation gains that commonly occur in "transition economies," Kwon wrote.

Biggest market shutdown

The Democratic People's Republic of Korea (DPRK) has shut down its largest wholesale market because of its apparent concern that big markets spread capitalist influence, a Republic of Korea (ROK) monitoring group said yesterday.

Authorities closed the Pyongsong market on the outskirts of the capital of Pyongyang in mid-June and set up two smaller markets in nearby districts, the Seoul-based Network for North Korean Democracy and Human Rights said in a newsletter provided yesterday.

The move is believed to be an attempt by the rulers to "control an excessive spread of markets" while still allowing people to seek food on their own at small markets, said Kim Yoon-tae, secretary-general of the group.

Kim said Pyongsong was DPRK's biggest wholesale market with some 30,000-40,000 stalls.

Pyongyang has grown wary of capitalist influence resulting from the spread of markets where imported goods, including DVDs of ROK films and television soap operas, are sold, according to analysts, defectors and news reports.

Reuters - AP