Economic Policy in the Unified Germany -Privatization and Investment Promotion Policy-

There are various methods in the privatization of state enterprises in the former socialist countries. The German method of privatization by the 「Treuhandanstalt」 has merits such as managerial efficiency and speed; however, it has some problems from the view of social acceptance. In the Korean case, it might be recommendable to combine the German method with employee"s stock sharing system. As to the former ownership of real estates, compensation would be preferable to restitution since problems of ownership are far more complicated in Korea than in Germany. To pursue effectively investment promotion policies in the northern part of Korea, wages must be kept down on the level of labour productivity. Thus, the 「high wage - high tech policy」 pursued in Germany would not suitable in Korea. Industrial adjustment policy in unified Korea must be formulated on the assumption that dual industrial structure would be unavoidable on long-term perspective. Otherwise, mass unemployment and huge budget deficit would cause severe socio-economic side-effects