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Standard models of the costs of unification suggest that the amount of investment needed to raise North Korean per capita incomes to 60% of the South Korean level, are in excess of $1 trillion, or roughly equal to South Korea’s annual national income. (In comparison, the clean-up costs of the 1997-98 financial crisis were about 16 percent of GDP.)
KINU recently put out a report valuing North Korea’s mineral wealth at more than $6 trillion which could make unification not only self-financing, but actually profitable from a South Korean standpoint, depending on the disposition of the property rights.
No one disputes that North Korea possesses valuable mineral resources. The challenge, of course, is getting the ore out of the ground and to market. Under the current regime, Western and Chinese miners have encountered both infrastructure and governance problems that have kept North Korean mineral exports far below their potential. How rapidly that mineral wealth could be tapped for the benefit of the North Korean people depends very much on the policy regime.
