Abstract: This paper reviews the performance of the East German economy in the turbulent quarter-century following reuni?cation and draws some conclusions for the reuni?cation of North and South Korea. In this period, the gap in output per capita between East and West Germany declined at a speed not far from empirical estimates of the neoclas- sical growth model, yet systematic total factor productivity di¤eren- tials persist despite identical institutional frameworks and signi?cant investment in the eastern regions. At the same time, regional dispar- ities in income, well-being, and health are little di¤erent from those found within West Germany, and net migration has ceased. On this human metric, German uni?cation has been an unquali?ed success. For Korea, an e¤ort of this dimension will be costly. A back-of-the- envelope calculation suggests that Korean uni?cation will cost roughly twice as much as its German counterpart.

Key Words: East Germany, convergence, total factor productiv- ity, Korean uni?cation