The economics of the two Koreas

The official told FOX News there are no signs of
instability in North Korea now, but the likelihood of a smooth
transition of power in that country is not high.

Here is the story, fully speculative throughout.  Many people think Kim is in very bad shape.  Apparently the U.S. and China are drawing up contingency plans for what comes next, financed in part by those interest payments on the agency debt.

One topic at today’s lunch was to guess the chance that the North Korean communist regime might collapse forever in the next few years.  I said p = 0.3, which others found to be a high estimate.  A second topic was, if reunification of the Koreas occurred (itself an open question), how long it would take for the South to grow again, given the amount of reconstruction it would have to finance in the North.  I said twenty years, though upon reflection I’ll revise that downwards a bit.

It’s hard to say much about these topics with any grounding, but since no one else in the econ blogosphere is talking about them, I will.  It’s by far the most important drama going on in the world right now.


Comments for this post are closed