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I often find North Korea-South Korea comparisons a little tendentious. After all, the gaps are pretty huge so what’s the point of underlining the obvious? But we have few natural experiments in the great debate on the growth of whole countries, and North and South Korea come about as close as we are likely to get. You could argue that the wartime destruction in the North—including from American bombing—was more substantial than in the South and because of the location of Japanese investment in the North, the losses also larger. The South enjoyed some advantages in arable land, which arguably contributed to industrialization. But neither country has comparative advantage in agriculture and these differences seem unlikely to drive the vast divergence that subsequently ensues. It clearly has more to do with the nature of the two political economies and the friends the two sides kept.
A recent graphic in The Economist provides a quick overview summary, and although known it is a worthwhile recitation. In addition to the obvious political differences (political prisoners), human development differences are among the most striking: a decade of difference in life expectancy (81 in the South, 70 in the North) and height (the metric is a five year boy in 2002, which could imply a strong famine effect via the mother’s health. In any case, the difference is 113 v 104 centimeters.) Also interesting is broader demographics: North Korean fertility is higher (2 v. 1.2) and the country is younger (average age 34 vs. 40 in the South); both of these metrics are sources of handwringing in the South, and with reason.
But the most important metrics are in the accumulated effects of long-run growth. Measured by Gross National Income in 2014, the differential is 44 times, despite a population difference of only about double (50.3 million in the South to 25.2 in the North). This leaves a GNI per capita gap of just under 22 times. Ironically, these huge gaps—as well as the continued commitment to the military (1.19 million members in the North compared to 650,000 in the South)—constitute one of the major barriers to unification. The data should be taken with a few grains of salt; as my colleague Marc Noland always says, one should never trust a datum on the North Korean economy that comes with a decimal point attached. Nonetheless, the vast differences that have emerged between the two countries make Korean unification vastly more complicated than the process in Germany.
