A New Approach to the Economic Integration between South and North Korea: A Comparative Study with the Transition Economies in Eastern Europe

Myoung Chul Cho and Jeong-Chul Han
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Myoung Chul Cho: Korea Institute for International Economic Policy
Jeong-Chul Han: Korea Institute for International Economic Policy

East Asian Economic Review, 1999, vol. 3, issue 2, 133-171

Abstract: The purpose of this thesis is to find the enlightenment that the experience of state system transition in Eastern Europe offers to the economic integration of Korea and DPRK if leave DPRK as an independent economic area to seek its economic transition in a certain period, when the political structure breaks down. The transition policies of economic system of Eastern Europe states could be roughly divided into four types, the policies of liberalization, the policies of stabilization of the macro economy, the policies of privatization and financial reform. This thesis is trying to analyze how to use these types of polices in DPRK. According to the situation in Eastern Europe, compared to the fact that whether the speed of the transition of economic system is radical or gradual, the result of the transition of economic system depends on the condition of the preliminary stage of the transition of economic system and how consistently and ardently the states which plan to change their system promote all kinds of reform policy. The way to minimize the side-effect which the Eastern Europe suffered after the transition is to minimize the cost of the unity of Korea as much as possible. Therefore, the following policies coordination must be carried out. First, do not launch the stabilization policy mainly by restraining the aggregate demand as the Eastern Europe states. Appropriate policy adjustment should follow that. Second, the fruit of the economic reform should be distributed to the class or group which has got the acquired right. Third, appropriate income policy is needed in order to allay the controversy between economic growth and stabilization policy.

Keywords: Transition Economies; Eastern Europe; Korea Economic Integration (search for similar items in EconPapers)
JEL-codes: F15 P20 P30 (search for similar items in EconPapers)
Date: 1999
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