SEOUL -- A united South and North Korea could boast an economy larger than France, Germany and possibly Japan by the middle of the century, according to a Goldman Sachs Group Inc. study that challenges conventional wisdom about unification.

Since the reunification of West and East Germany 20 years ago, South Korean leaders and economists have convinced many people here that reuniting with North Korea would be costly and disruptive. In the latest gloomy forecast, a government think tank last month said the tax-burden ratio,...