US Strategic and Economic Cooperation in an Early Stage of a Hypothetical Korean Reunification: Opportunities and Constraints (통일 한국 초기단계에서 미국의 대한반도 경제협력: 기회와 제약)

282 Pages Posted: 2 May 2017 Last revised: 10 May 2017

Date Written: December 30, 2016


English Abstract: Our assignment in this paper is to consider the question of “management under temporary separation and international cooperation after Korean unification”: more specifically, to examine “U.S. strategy for economic cooperation with unified Korea, particularly with a focus on investment in North Korea” (and, to the extent feasible, the) “prospects of changes in East Asian value chain after Korean unification: from the U.S.’s perspective”.

The basic assumptions about the nature of the hypothetical future re-unification for this exercise are laid out as follows:

Of the many scenarios of Korea’s unification, this research project will focus on the “compromising scenario” which is a scenario that has achieved political unification through governmental negotiations but have not yet begun full-fledged economic integration. Economic integration in this case will be a gradual process.

This scenario involves one political and economic system (market capitalism), but will have two separate economic units (North and South) which eventually is expected to reach full integration. Initially there will be integration of the commodities market and capital market (1ststage) then there will be labor market integration (2nd stage), then adaptation of a common currency (3rd stage), which will gradually reach full integration into a single market.

This project will focus on the 1st stage of this process, where we assume an integration of the commodities and capital market, but not yet labor market integration or a unified currency. In this paper we will propose an alternative method for attempting to quantify economic performance for the DPRK - and by extension, for a future northern Korea in a re-unified peninsula. This is based upon an approach of modeling economic performance on the basis of international data-files which do include estimates of North Korean socioeconomic conditions. This approach seems to produce generally robust results, and affords a novel method for estimating possible macroeconomic performance and international trade and financial performance for a northern Korea in a re-unified peninsula. Developing this model and presenting its results is the main contribution of this paper... (The rest is omitted.)

Korean Abstract: 이 연구의 목적은 "한반도 통일 후 한시적 분리와 국제 협력하의 관리체제"라는 문제를 고찰하는 것이다. 더 구체적으로는 통일 한반도와의 경제적 협력을 위한 전략, 특히 북한 투자와 (가능하다면) "통일 이후의 동아시아 가치사슬의 변화 전망:미국의 시각"에 초점을 맞추고자 한다. 이 연구를 위해 설정한 통일 시나리오의 성격에 대한 기본 가정은 다음과 같다.이 연구에서는 한국의 통일 시나리오 중 하나인 정부 협상을 통해 정치적 통일은 이루었지만 본격적인 경제 통합을 시작하지 않은 시나리오인 '타협 시나리오'에 초점을 맞춘다. 이 경우 경제 통합은 점진적인 과정이 될 것이다. 이 시나리오는 하나의 정치 및 경제 시스템(시장자본주의)을 포함하지만, 궁극적으로 완전한 통합에 도달할 것으로 예상되는 두 개의 별도 경제 단위(남과 북)를 가정한다. 처음에는 상품시장과 자본시장의 통합(1단계)이 있을 것이며, 다음으로 노동시장의 통합(2단계)이 있을 것이고 점차적으로 단일 시장으로 완전히 통합될 공통 통화(3단계)의 단계가 있을 예정이다... (이하 생략)

Note: Downloadable document is in English and Korean.

Suggested Citation

Eberstadt, Nicholas, US Strategic and Economic Cooperation in an Early Stage of a Hypothetical Korean Reunification: Opportunities and Constraints (통일 한국 초기단계에서 미국의 대한반도 경제협력: 기회와 제약) (December 30, 2016). KIEP Research Paper. Long-term Trade Strategies Study Series 16-05 . Available at SSRN: or

Nicholas Eberstadt (Contact Author)

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

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