June 20, 2001	atimes.com

The Koreas PYONGYANG WATCH One country, two planets By Aidan Foster-Carter If and when - definitely when, in my view - Korea is eventually reunited, not the least of the myriad challenges will be how to bridge the huge economic gulf that has opened up between the two Koreas. That's not to downplay all the other problems that will arise: in politics, society, culture, everything. But economics is basic: Karl Marx was right about that. Besides, we already know the numbers - and they're so startling that it's not too soon to be thinking hard about Lenin's question: What is to be done? Some background first. In the beginning there was one Korea, and it farmed. Economies were largely local, separated by mountains. Wealth or poverty hinged on the soil, favoring fertile south Korea over the colder, hillier north. That changed a century ago when Japan began Korea's industrialization (still hard for Koreans to admit), as the North had most of the peninsula's mineral and hydropower resources. By 1945, the broad pattern saw mines and heavy industry in the North, with light industry and farming in the South. The whole economy was integrated with that of Manchuria, and oriented to serve Japan. The partition of 1945 thus posed huge challenges for both new states. The North lost its granary, while the South lost access to northern industry and electricity (Pyongyang switched it off in 1947). Both at first were cut off from Japan, and reoriented economically as well as politically to their superpower sponsors. That hadn't gone far before the Korean War destroyed much of both, especially the North. Inter-Korean economic competition began in earnest after the 1953 armistice. Astonishing as it now sounds, for at least 20 years North Korea was ahead. Rapid industrialization, starting a decade before Seoul's, gave the North higher incomes per head until at least the 1970s. One leading expert, Professor Hwang Eui-gak of Korea University, reckons South Korea didn't overtake until 1986. (Besides lack of data from Pyongyang - in their glory days, the late 1950s, they were happy to give figures - it depends how you calculate and compare national income as between capitalist and communist economies.) What's not in doubt is that since then the South has soared, while the North first stagnated then slumped - big time. By 1989, Southern income per head was twice the North's. The 1990s were catastrophic for the North: first Moscow pulled the aid plug, and then famine struck. As a new century dawned, living standards for Koreans on either side of the DMZ were worlds apart - and the gulf was still growing. Just how wide a gap has been quantified by the (Southern) Bank of Korea (BOK). The BOK reckons that in 2000, South Korean gross national income (GNI) totalled 514.6 trillion won, or US$455 billion at the then won-dollar exchange rate. (The trouble with using the dollar figure is that exchange rate fluctuations, such as have occurred since, make it look as if Seoul's GNI is falling, when it isn't. Even in dollar terms, South Korea is the world's 13th largest economy. Before the 1997 crisis it was just outside the top 10.) By contrast, North Korean GNI really has fallen, although the BOK thinks it turned the corner in 1999. In 2000, it was just under 19 trillion (Southern) won, or $16.8 billion - a mere 3.7 percent of the South's. To make the point: even in a bad year, like this one, South Korea's extra growth equals the North's entire output. In a good year, like 1999 or 2000, the South put on the equivalent of two or almost three North Koreas. To be fair, South Korea has twice the North's population - about 47 to 23 million - so on a per capita basis the gap is less. But at 12.7:1 - almost $10,000 for Seoul, under $800 for Pyongyang - it's still extreme. And whereas even a decade ago Hwang Eui-gak reckoned that neither actual living standards nor indicators like life expectancy showed much North-South difference, famine has changed all that. In a staggering statistic, Nicholas Eberstadt of the American Enterprise Institute in Washington reckons that North Korean seven-year-olds are now 20 centimeters shorter and 10 kilograms lighter than their Southern peers. Numerically, the starkest gap of all is in trade. Last year Pyongyang's grew by a third to $1.97 billion - while Seoul chalked up $332.7 billion, a ratio of 169:1. With the gap still widening, soon the South will trade more in two days than the North in a year. Eberstadt, again, notes that in real terms North Korea's trade as of 1997 may have been worth less than it was in 1970. So it's not just that a slowing North was passed by a soaring South. The Great and Dear Leaders actually flung the jalopy into reverse. Why that happened is another story - as is how to put Humpty together again. But Korea's economic reunification now will be a vastly different task than had it happened 20 or even 10 years ago. Then, it could have been a merger of relative equals. Now it is more a case of one country, two planets. What on earth will it be like by 2010 or 2020, if the gap continues to grow? The continued east-west gap in Germany, a decade after reunification, suggests that Korea's far wider chasm will not soon be bridged. Not soon, or not easily, is one thing. But a gulf this size prompts a desperate thought: maybe not ever? ((c)2001 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)

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