South Korea Raises $500 Billion For Reunification

South Korea has big plans for a future reunification, it is said that they will raise $500 Billion from the public sector without raising taxes and help support North Korea in an event of a reunification said a top financial regulator on Tuesday.

A financial plan for a future North-South Korea unification, the cost according to Financial Services Comission (FSC) is said to be an estimated $500 billion in order to raise North Korea GDP per capita from a $1,251 to $ 10,000 withing 20 years after a possible unification and another $175 billion would be required to build infrastructure and industrial developement.

In 2013, North Korea GDP was $31 billion and was equivalent of South Koreas GDP in 1971 and a mere 2% of the South Korean GDP in 2013. In short, South Korea spends more on their military than what the North has in GDP.


Up to 60% of the cost will be handed to state agencies to run developement project in North Korea, while the rest will be raised by collectic overseas developement aid with both public and private investments.

"In the initial stage of unification, the government will lead the North Korean development by using state funds and projects, and then the ODA and private investments can be utilized," said FSC Chairman Shin Je-yoon.

Exchange rate would be a major issue in an event of a unification as the exchange rate are largely conditioned on negotiations and consensus.

At the time of the German unification, the market exchange rate was 1 East German mark to 4
West German mark, although it was exchanged for 1:1 as part of the unification.

This created a huge wage spike which was good to stabilize the likehood of East Germany, but caused damage to East German companies as the wage skyrocketed.