From Introduction:

In his Liberation Day speech on August 15, 2019, President Moon Jae-in of the Republic of Korea (ROK, or South Korea) stated: “We aim to establish a peace economy in which prosperity is achieved through peace and also complete our liberation through the unification of the Peninsula”. While the specific term “peace economy” could be as short-lived as its predecessors, such as Lee Myung-bak’s “new peace initiative for the Korean Peninsula”, or Park Geun-hye’s “trustpolitik” and “bonanza”, the reasoning behind that term is much older and more solidly rooted in Korean political and economic thinking. The key message is that cooperation with the Democratic People’s Republic of Korea (DPRK, or North Korea), and eventual unification, will be economically beneficial for South Korea.

However, the South Korean population is increasingly skeptical regarding such a future, as various surveys demonstrate. This article will discuss the main intellectual foundation of this pessimism: the dominant narrative that German unification was enormously costly, especially for West Germany. The central argument I will make is that the costs of German unification were not nearly as high as this is often perceived in South Korea. In fact, while East Germany benefited from being integrated into an advanced social market economy, data suggest that West Germany might have recorded a net economic gain from unification, making the process de facto a win-win situation and thus – the question of comparability notwithstanding – a reason for Korea to be optimistic, not pessimistic, about unification.