South Korea has outperformed North Korea in most regards for decades. However, the balance of power on the Korean Peninsula may be shifting.

During the last few decades, most have become used to thinking of South Korea as outperforming North Korea, its turbulent neighbor, in most regards. South Korea is an economic powerhouse, home to world-leading industries and a burgeoning culture of international reach. Meanwhile, North Korea is an underdeveloped communist dictatorship where people struggle even to feed. Yet, this may be changing. Several nascent trends suggest that, in the coming decades, Pyongyang will slowly bridge the gap with Seoul. A state’s total power is basically a combination of its demography, economy, and military capabilities. The North now sees more positive prospects than the South in all three domains.

South Korea’s demographic collapse

South Korea’s population is around 52 million. The country has an abysmal total fertility rate (the number of children a woman is expected to have in her lifetime) of 0.7, the smallest in the world. Hence, its population peaked in 2020 before entering a rapid decline. Some projections expect as little as 36 million people left in 2072. Still, South Korea’s total population significantly exceeds North Korea’s. Indeed, although the details of North Korea’s demography remain mysterious, the country is likely to have around 26 million people. Its total fertility rate is, in all likelihood, also below the replacement level fertility, perhaps having reached 1.8. Despite this reduction, the North remains more fertile than the South, meaning the population gap between the two is slowly but surely closing.

These reversing demographic trends will have long-term implications for the balance of power between the two Koreas. The fertility crisis will notably limit South Korea’s economic growth potential. Fewer young people imply fewer workers and fewer consumers. Companies will find it increasingly harder to recruit, leading wages to increase quickly, while fewer consumers will be left to purchase Korean products. In other words, South Korea’s consumer-good industries are in trouble. This will severely limit the economy’s opportunities for growth. Economic stagnation will constrain the state’s revenues, while the population’s aging will require more and more money funneled into pensions and the health insurance system.

North Korea’s economic lumping vs. South Korea’s stagnation

The ‘Miracle on the Han River’ requires little elaboration. South Korea has swiftly transformed from an underdeveloped nation to a high-income, developed country within just a few decades. It is an innovative economy and a leader in several traditional and high-tech industries. But the country now sees the annual growth rate hovering around two percent. This ‘European’ growth rate has several explanations. As mentioned above, demography is depressing growth potential. But other structural factors are at play.

A key hurdle is that growth is driven by exports. It is a dangerous bet in a world of intensifying political tensions and protectionist trade policies. Moreover, South Korea is now a high-wage economy. It can no longer offer a cheap workforce to produce low and middle-quality consumer goods. Finally, South Korean domestic politics is becoming a drag on the economy. President Yoon’s botched coup attempt last December will leave a mark on foreign investors, who will now ponder whether Korea is a safe environment for business.

What North Korea’s economic future entails is hard to predict. The country continues to depend on a labor-intensive economic model, and its lack of capital and technological capabilities prevent it from kickstarting rapid growth. The regime has a long history of attempting reforms, often just to get cold feet and back out. But several factors are now working in its favor. Unlike the South, the North possesses massive untapped mineral resources, including iron ore, coal, copper, gold, zinc, and rare-earth minerals. Also, China and Russia have lost all interest in applying sanctions on Pyongyang, allowing a modicum of participation in the world economy. Now that Donald Trump is back in power, a diplomatic deal to reintegrate North Korea into international finance and trade could be within reach.

The military balance: a knife to a gunfight?

The demographic crisis and economic stagnation will compound Seoul’s military disadvantage. On the level of conventional forces, both sides have their strengths and weaknesses. North Korea’s military apparatus is gigantic but deprived of modern weaponry. Its air force is small and obsolete. Meanwhile, South Korea has a modern and well-equipped force overall, even if it musters far fewer troops. It notably has a clear-cut, solid lead in air and naval capabilities.

South Korea continues to rely on conscription to sustain its force posture. However, the number of conscripts, roughly half of its armed forces, is projected to decrease significantly—from 330,000 conscripts in 2020 to 240,000 by 2036 and just 186,000 by 2039. Maintaining South Korea’s robust military posture will become untenable without substantial reforms. This population decline poses an existential threat to the country. In contrast, North Korea fields a standing army of around one million troops, while neighboring China boasts a two million-strong military, and Russia’s forces are growing.

An aging and depopulating South Korea would become increasingly vulnerable to coercion. As welfare spending rises and state revenues stagnate, finding money for defense will become increasingly challenging. Assuming North Korean mobilization rates remain the same, the North’s numerical advantage is bound to grow. Furthermore, Russian assistance in the coming years will help Pyongyang modernize its armed forces and acquire new technological capabilities. Worryingly, one day, North Korea might come to perceive that the balance of military power has shifted in such a way that reunification by force is an achievable goal and invade a weakened South Korea.

South Korea relies on its conventional capabilities to deter any nuclear attack from North Korea. It hopes that the threat of air and missile strikes accompanied by special forces attacks will scare Pyongyang’s leaders enough that they never consider nuclear use. Nevertheless, counterforce operations are notoriously perilous, even against a weak nuclear adversary. In the early stages of North Korea’s nuclear development—when it had only a small number of liquid-fueled missiles that required lengthy preparation times—South Korea might have stood a reasonable chance of success. Today, however, North Korea’s nuclear capabilities have grown so much in quality and quantity that a successful counterforce strike has become nearly impossible. To preempt a nuclear attack, South Korea would need to neutralize hundreds of targets within a highly compressed time frame. And North Korea needs only one nuclear warhead to penetrate South Korean defenses to kill tens of thousands.

Due to that, regardless of how South Korea’s conventional capabilities evolve, North Korea’s nuclear weapons will remain a decisive advantage. Only nuclear weapons can deter nuclear weapons. Seoul has to rely on the United States’ extended deterrence. But it is at the mercy of political changes in Washington and reduced to hoping that U.S. commitment will stay solid. Hence, unsurprisingly, building an independent national deterrent is a growingly popular option in South Korea. Until that day comes, however, the balance of military power will remain dangerously lopsided in favor of the North.

An evitable shift?

If you believe that South Korea ought to remain way stronger than North Korea, or if you are a South Korean, these trends are disturbing. But it is not too late to redress the situation. Demography is a complex matter at the intersection of economy, state policies, cultural evolutions, and personal inspirations. Although Korean authorities have declared the demographic crisis a national emergency, more can be done to alleviate the financial burden and the mental charge of raising children. 2024 witnessed a tiny increase in fertility, offering a sliver of hope.

Economic issues are at least as challenging. The economy and the demography are linked, as a declining and aging population cannot generate much economic growth. It will also be necessary to restructure the economy to reduce dependence on foreign trade and focus more on the domestic market. Still, Korean planners may have to reconcile with the fact that the high growth rates of the 1990s or 2000s are not coming back. To compensate, the government must find ways to increase the efficiency of taxing and spending.

Military problems impose painful tradeoffs. Demography will depress the number of troops for the foreseeable future, and less economic growth implies that any rise in military spending will be painful moving forward. A potential remedy is for Seoul to develop its own nuclear arsenal. It will be costly at first, but a nuclear arsenal would benefit from requiring little additional people power compared to its unmatchable deterrence and destructive strength.

In any case, the balance of power on the Korean Peninsula is bound to evolve. It will require serious rethinking by South Korea, the United States, Japan, and all concerned parties.