The Economics of German Unification – Potential Lessons for Korea
On September 15th, KDI School hosted a special lecture by Prof. Joachim RAGNITZ, from the Ifo Institute of Dresden, who shared the experience of German reunification through the lenses of an economist’s evaluation, and revealed what mistakes should be avoided in case of possible unification of two Koreas.
Prof. RAGNITZ pointed out that the “shock scenario,” or rapid integration, represents the better option rather than the gradual approach, which would delay the unavoidable dissatisfaction and leave the whole integration in an incomplete state. First, Korea should not be discouraged by possibly high economic costs, but rather keep in mind the benefits of unification and prospects of higher economic growth. Second, keeping currencies separate in a short run with flexible exchange rates would be a better choice until two sides could smoothly readjust to a new system without major losses. Third, at initial stages, it would be reasonable to raise the economic stance of the North by gradual privatization process, and initiating “free economic zones,” lower taxes, subsidies for investments etc., preparing the North for harmonious integration with the developed South. Fourth, it is important to have some border restrictions to avoid massive migration and brain drain as it happened in East Germany, and the implications of which are still feasible now such as East’s higher unemployment, low productions and wage rates.
Changing Global Landscape and Cooperation in Development
Ambassador Young Mok KIM, former President of the Korea International Cooperation Agency (KOICA), shared his views with KDIS’s students on the altering trends in the terrain of international cooperation in development on September 27, 2017. Gradual shifts of power accompanied with greater participation of rising economic powers and non-state actors are visibly altering the global landscape. China’s rise, with active diplomacy and remarkable economic growth, promises to be the greatest spectacles of the 21st century along with the implementation of its grandiose One Belt, One Road (OBOR) project with a pledge to invest $100 billion annually in 68 countries with an ultimate goal of making Eurasia a prosperous trading and economic area under its dominion.
Challenges in global development the world is facing today are the un-remedied inequality, weak mobilization of financial resources, and climate change. Recent political polarization in Europe, rise of radical ideologies, increased number of refugees, and surge of nationalism around the globe are the factors which are tremendously hindering the cooperation in international development as a whole. Mr. Young Mok KIM emphasized the need of international community to share responsibility in dealing with regional and global challenges, strengthen coordination and collaboration in international development, and follow SDGs in an individual and collective manner.
International Development Cooperation and Education: The Theory and Case
On October 30, KDIS hosted a special lecture by Dr. CHANG Ji-Soon, senior fellow at Institute of International Affairs at Seoul National University, who shared the way how Korea is engaged in international development cooperation as well as capacity development in practice. Korea’s history as a donor goes back to 1960s when ever since it has become a “lighthouse” for developing countries as a role model for economic development and democratization. Since Korea became a member of international donor’s club OECD DAC in 2010, it has substantially improved its ODA system by concretizing its framework and prioritizing development strategies.
One of the notable examples of Korea’s making difference in assisting to developing nations is the case of Laos, a small landlocked country in Southeast Asia. Korea became the third largest contributor to assisting the Lao government in areas such as water and electricity; human resources development; and health (2013-2015). As education has always been on the priority list, Korea facilitated empowerment and capacity development in Lao as the result of which Souphanouvong University (SU) in Luang Prabang acquired a new campus in 2007 as well as facilities, teaching materials, and exchange of expertise.
Dr. CHANG concluded that private-public partnership enlargement as well as facilitation of multi-stakeholders’ financing, and harmonization of internal cooperation are the priority goals for making Korea’s assistance to reach a new level of making the world a better place for all.