Why does South Korea have a higher level of physical and human capital than North Korea? I. Markets constitute much more of the primary organizations of economic activity in South Korea than they do in North Korea. II. Economic incentives are better installed in South Korea. III. South Korea has a different culture from North Korea.

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Both I and II are correct. South Korea has a more market-oriented economy that encourages investment, entrepreneurship, and competition, leading to the accumulation of physical and human capital. Additionally, the incentives for economic growth and development are better installed in South Korea, with a more open and stable political system, stronger institutions, and better economic policies. Culture (III) is a possible contributing factor, but it is not the primary reason for the difference in physical and human capital between the two Koreas.

Why Does South Korea Have a Higher Level of Physical