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This country survey briefly outlines the defence and economic background of the two Koreas and the security environment in the Korean Peninsula. It shows how defence spending to deter a potential North Korean attack has crowded-out the South Korean civilian economy and considers the possibility of arms control between the two adversaries. The military capabilities of both countries are described and empirical results are presented on the arms race between the two Koreas since 1963 using a Richardson action-reaction model. The development of South Korean defence industries and the problems of those industries are also examined, as well as the future prospects for inter-Korean relations and South Korea's defence policy.
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Keywords: Arms race; Defence industry; Defence spending; Economic growth; North Korea; South Korea

Document Type: Research Article

Affiliations: Department of Economic and Related Studies, University of York, Heslington, York, YO10 5DD, United Kingdom

Publication date: 2002-01-01

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