Abstract
This paper investigates the potential impact of economic integration between North and South Korea on the economy of South Korea. A nine-sector, trade-focused, computable general equilibrium (CGE) model is constructed. The model is used to quantify the likely consequences of various forms of economic integration between the two Koreas. The simulation results indicate that unless factor movement (labor inflow from the North, and capital outflow to the same) are considered, any preferential trading system between the two Koreas has an inconsequential impact (positive or negative, aggregate or sectoral) from the viewpoint of the south. Much greater effects, however, follow from factor movements. [C68, D68, F13, F15]
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