Alternative Paths in Inter-Korean Relations and Their Economic Implications

Abstract

This paper establishes three scenarios regarding the development of inter-Korean relations until the year 2000, "Status Quo," "Complete Unification." and "Partial Rapprochement." The conditions leading to each scenario are examined and the economic implications of these scenarios are discussed. The major economic benefits to South Korea from inter-Korean cooperation can be captured only in the long run, possibly after year 2000. even with the most rosy assumptions regarding the potential difficulties associated with cooperation and unification, Contrary to some very optimistic beliefs regading an early unification, it is argued that the collapse of North Korea is not imminent, and that the status quo is expected to last much longer than is commonly believed.