NK better off under Hong Kong-style unification: report

North Korea would be better off economically if it is made a Hong Kong-style autonomous system in case of unification with South Korea, rather than full integration of the two sides as in the case of German unification, a report showed Sunday.

The report by Bank of Korea senior researcher Moon Sung-min and Soongsil University professor Yoo Byung-hak looked into the economic aspects of inter-Korean unification based on three possible scenarios -- full integration, a federation system where the labor market is separated, and the so-called one-nation, two-systems unification like China and Hong Kong.

If the two Koreas are fully integrated politically and economically, it would cause high unemployment in the northern part of the Korean Peninsula because North Korean workers are less competitive than their South Korean counterparts, the report showed.

In that case, the average unemployment rate of the northern part of a unified Korea would amount to some 36.4 percent over two decades after unification, while the northern region's economy is expected to grow at about 3.35 percent annually, the report showed.

Should the North be made a Hong Kong-style region, it would leave North Korean workers to compete among themselves and make unemployment in the region low -- an average of only 1.6 percent -- and help their wages rise gradually in line with their productivity, the report said.

The region's economy is also expected to grow at 5.21 percent on average annually, it said.

The per-capita gross national income in the northern region is estimated at $2,399 in case of full integration, and $3,370 in case of a Hong Kong-style autonomous system, 20 years after unification, the report showed.

The authors cautioned that the report only looked into the economic side of unification, and other political and social aspects should also be studied before determining which option would be most favorable in case of unification. (Yonhap)