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According to IMF projections, South Korea will equal or surpass Japan as the leading developed economy in Asia on a per capita basis by 2016.If city and quasi city-states like Singapore, Hong-Kong and Macau are set-aside, South Korea will be the most dynamic developed economy in Pacific-Asia until 2025.
Between 2011 and 2025, South Korea’s working age population (15-65 years) will be at its peak earning power.
By 2026, two significant developments will pressure Korea. The regressive effects of ageing and growing retiree population will over-burden the working population’s economic and social contributions. Japan is already experiencing this phenomenon.
Secondly, China will overtake US as the largest economy in 2016, and become a fully developed economic dragon by 2025 if geopolitical and natural events continue to evolve in its favour.
China’s military will then seriously challenge rapidly declining American economic and even military influence in Pacific Asia.
Unforeseen or calculated skirmishes will morph into a hydra-headed tsunami of deep sea and eventually coastal conflicts.
South Korea cannot control China’s rise, but it will be better placed than Japan to mitigate the effects of ageing, since it will learn and adapt by studying Japan as a case study in ageing.
Like Japan, it will successfully restructure its high-tech economy to expand the share of healthcare and green energy sectors and raise the legal retirement age to 70 years. South Korean life expectancy is 81 years and rising.
Korea also has a deeper imprint of Confucianism than Japan. In fact, outside China – Korea, Taiwan and Vietnam remain the three most “Confucianized” countries in the world.
Confucian cultural influence might help South Korea restructure its society by offering incentives for 3-Generation households and curbing the rising proportion of single-generation or single-person/lonely households to make the entitlements more solvent.
Very high population density and low food/fuel self-reliance makes high fertility unnatural in modern South-Korea.
Still, the most favourable window of opportunity for Korean merger is between 2011 and 2025, and conservatively by 2020.
German re-unification is the only major case study before Korea, where a victim of Marxist socio-economic system was more or less able to re-integrate under welfare-capitalistic system, albeit with marked side and after-effects.
On the eve of German re-unification in 1990, West Germany had 4-times the population and more than twice the land of East-Germany. In comparison, South Korea has twice the population, with an area only 83% of North Korea.
On the eve of merger, both East and West German fertility rate (TFR) was an anemic 1.45 babies/woman. In comparison, the North Korean TFR is 1.9 babies/woman compared to 1.2 babies/woman for South Korea.
Germany has so far poured $2-Trillion+ to bring the depressed East up to West-German standards.
However, in the larger scheme of things, 100 million central Europeans who were part of the Warsaw-pact were leaving Marxist tyranny to join the welfare-capitalism/mixed economic systems.
The ageing Teuton had to shoulder the lion’s share of heavy lifting to bring central Europe up to Western European standards.
In comparison, North Korea is a much bigger and lucrative pie (25 Million people) for South-Korea but a tiny shrimp surrounded by a rising dragon, an ageing samurai and an alcoholic Scythian.
Furthermore, the power of Deutsche-Mark was simply in another dimension compared to Korean won. The venerable Mark was anywhere between 11-18% of global currency reserves during the 1980s-1990s, and the only serious safe-haven competitor to the dollar.
In comparison the volatile Won is a negligible component of global currency basket.
The Euro is essentially the obese diabetic baby of muscular Mark.
Germany suffers from considerable mineral and energy deficit, but North Korea is mineral rich. An estimated $6 Trillion dollars in mineral wealth are deposited in the North, a mouth-watering bonanza for South-Korea, but so far mostly China is eating the Korean lunch.
Without doubt, the potential investment benefits for South Korean conglomerates like Hyundai, POSCO, Samsung and LG will be beyond imagination. Small and medium Korean businesses will also reap promising returns.
International energy giants such as BP and Exxon-Mobil also might make limited hay.
Totalitarian Marxism has extinguished the creative, entrepreneurial and animal spirits of North Koreans through fear, coercion, intimidation and terror. The talented or well-connected North-Koreans have migrated and embedded themselves in the Media:State-Finance:Security complex.
South Koreans will have to make sure they weed out the bad kimchee from North Korean power structure before attempts to imperil the integration process are made, while training and absorbing its well-meaning bureaucrats.
But unification will not be stable and perhaps might remain an unattainable mirage unless rapidly declining US withdraws its troops and war-machine from the peninsula and focus on its own imperiled Mexican border.
Lawless Mexico is now considered the greatest proximal national security threat according to intelligence reports.
The three pre-conditions for stable Korean merger and prosperity are 1) immediate withdrawal of US troops; 2) the 2011 to 2025 window during which the two Koreas could work-out the integration dynamics; and 3) stable international conditions.
After 2025, South-Korea will be super-aged and China might become too hegemonic and unyielding, so that South Korean elite’s “drang nach norden” will be a vanishing fantasy.