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S. Killelea: Address to World Summit 2022, Session IV

Address to World Summit
February 11-13, 2022


A closer integration between the economies of North and South Korea would come with many benefits, including peace. But first, I would like to talk to the connection between peace and economic prosperity, because there are many benefits for the economy which come from peace, and stronger economies tend to generate more peace as well. It is a cycle which works together—a virtuous cycle, one improving the other.

Let’s look at a few simple statistics. In 2020, the economic cost of violence to the global economy was approximately $15 trillion, which is about 13.6 percent of global GDP (gross domestic product). That is a conservative number. At the Institute for Economics and Peace, we count what we can count, but there are other factors which come with the cost of violence, which we cannot count.

When we look deeper into this relationship, we find countries which are high in positive peace, or improving in positive peace, compared to those that are deteriorating. On average, countries with high or improving positive peace have 2 percent higher GDP growth rates. Their inflation rates are lower, as are their interest rates.

In fact, when looking at inflation, the volatility is three times greater in countries which are deteriorating in peace compared to countries which are improving. Foreign direct investment is twice as high in countries of greater peace. We also find that sovereign debt ratings also improve over time for countries that are higher in peace than countries which are lower. These are just some of the economic benefits. But there are a lot of other benefits which are also statistically associated with peace.

We find measures of well-being and happiness are higher. We find the performance and measures of ecological sustainability are also better. We find that measures of inclusion are stronger. We also find that countries which are higher in peace, and particularly positive peace, which is a form of peace, are much more resilient, better able to absorb shocks, and better able to adapt so future shocks will not have the same impact.

Now, we were looking at countries which are improving in peace compared to the global average.  When we look at GDP growth rates, we find over the last decade that the countries which have been improving in peace have a 34 percent higher growth rate in their GDP than the global country average, which is quite remarkable.

Let’s come back to and talk about the two Koreas. The difference in the economic benefits of the two is stark. In looking at South Korea, we see a $2.4 trillion economy. That is about $47,000 annual per capita income. In comparison, North Korea is a $40 billion economy with a per capita income of about $1,800 per head. These are substantial differences.

If we look at the economic costs of the lack of peace for North Korea, it is 31 percent of its GDP compared to five percent of South Korea’s GDP. Most of the money in North Korea is spent on defense. It is a big, big drain on the economy.

If we really want to start to improve, we need to take small steps towards integration or economic integration.  I think establishment of business parks in North Korea with South Korean firms is an excellent idea. This will help to boost the GDP of North Korea, but it will also start to involve engagement between the two countries and the two peoples who really are the same.

Peace is not created by accident. There is a whole number of conceptual factors that create peace. We call that positive peace, which I previously mentioned, and it consists of eight pillars. This includes a well-functioning government, high levels of human capital, a strong business environment, equitable distribution of resources, free flow of information, acceptance of the rights of others, and good relationships with neighbors. All of these come together systemically. It is not one that causes the other; it is systemic. To improve the underlying prospects of peace and resilience of society, one needs to work on a whole range of these issues, which South Korea has done very well over time.

Finally, both North and South Korea have an array of diplomatic relations. In fact, the two countries have diplomatic relationships with over 157 countries. Call on all these countries to work together with North and South Korea to try and help them become better integrated economically. It does not have to be in great leaps and bounds. Small starts are always good—even they will come with an economic windfall for both nations.



To go to the World Summit 2022 Schedule page, click here.