Regional Development Policies

The History

The strategy undertaken in the early stage of Korean development can be characterized by growth pole strategies: key industries and selected areas. In an industrial policy sense, it was import-substituting manufacturing industries and heavy industries. In a regional policy sense, it was the Capital Region (Seoul, Incheon, Gyeonggi Province) and southeastern costal regions (Busan, Ulsan, etc.). In the first CNDP (1972-1981), main instruments were massive infrastructure provisions and tax incentives in free export zone with regionally concentrated investment strategies.

However, this concentration of investment in selected areas caused and deepened regional disparity. Since the second CNDP (1982-1991), Korean government has presented explicit emphasis on balanced regional development, in recognition of regional disparity. In 1982, Capital Region Readjustment Act was legislated to restrain the construction of new factories, universities, and other large-scale projects in the Capital Region. Accordingly, the third CNDP (1992-2001) continued to focus the development of lagging regions by strengthening industrial centers along the west coast and the regional and provincial cities.

As a result, Korean government during this period introduced the Development Promotion Districts (DPD). However, despite the sincere efforts in the 1980s and 1990s trying to improve the economy and living conditions of non-capital regions, concentration in the Capital Region continued.

Cooperation among Local Governments

Policy Challenges

The current administration, or the Participatory Government, newly launched the “Balanced National Development Plan (hereafter BNDP)” in 2004, one year after its inauguration. The government identified three sets of policy challenges: regional disparity; stagnated economic growth ; and globalization

Policy Goals and Strategies

For the three policy challenges, the Participatory Government decided to formulate the first BNDP rather than revise the CNDP. The first BNDP states the national goal to be “Re-take-off of the national economy through balanced development,” to be achieved through independent localization and through regional innovation. Four strategies are presented:

Innovation-led regional development

Development of rural communities in harmony with the development of urban communities

Redirection of the developmental trajectory of the Capital Region

Construction of network- structured territory in terms of functions and physical infrastructures

Current Policy Frameworks

Presidential Committee on Balanced National Development was established in 2003. The council is organized under the direct authority of the President, involving twelve related ministries and fewer than 30 experts from the private sector. For the institutional settings, the Participatory Government enacted Special Act for Balanced National Development in January, 2004. The committee finalized the first BNDP in Auguest, 2004. In order to mobilize financial resources for the implementation of the BNDP, the Korean government set Special Accounting for Balanced National Development. The special accounting is for funding development projects that agrees with guidelines for several types of policies announced by the committee. This first BDNP covers a broad sphere of action beyond physical spatial policy. It has innovation policy, industrial policy, balance policy, spatial policy, and quality policy. These five policies are implemented by multi-sector annual programs.

Further Direction in the Future

The time framework of the first BNDP is between 2004 and 2008. The main goal of the first BNDP is building an innovative base for regional endogenous growth. Currently, the Korean government is preparing the second BNDP in order to utilize the innovative base now established. The basic ideas of the second BNDP are to foster environments good enough for living conditions as well as favorable to doing business. Through higher qualify of life in regions, regions are able to be equipped with more pull factors that attracts employees as the next engines for economic growth such as high value-added industry and creative industry.