German Lessons for Korea: The Economics of Unification

The unification of Korea as a democratic capitalist state is undoubtedly in the interests of both Koreans and the world at large. The German experience suggests that this transition when it comes about is likely to be difficult in the short-run, however. Most of the decisions about, and the responsibilities for, unification will be borne by Koreans. The United States, which in part bears responsibility for the division of the peninsula, and fought a war there to preserve the southern state, will have a role to play. Most obviously the United States can work in a supporting fashion, especially in the international lending institutions where the United States is still the single most influential voice.