Regional Policy and Industrial Location in South Korea

Abstract

U ntil very recently studies in economic development were concentrated at the national level. Much less attention was paid to the structural changes in depth that accompany the development gains reflected in the national aggregates. Among the areas that were briefly acknowledged but less often studied were the problems of regional economic development. In many ways the gap between national and regional studies is now being closed. In Korea, regional problems are quite significant because -of the very rapid rate of economic growth during the past decade, the high population density and the partition of the country following World War II and the Korean War. A complete review of the current situation would go far beyond the limits of this presentation which emphasizes the problems of industrial location because much of Korea's recent economic growth has come from the expansion of the mining -and manufacturing sectors. In addition, it was felt desirable to attempt economic interpretations of the major policy changes made by the central government in late 1971. As an introduction we describe briefly the nature of the regional problem in Korea, postwar development in regional planning, and discuss possible goals of a regional economic policy. Then we examine the limitations of a direct policy on migration to show that the location of industry is the cornerstone of a sound regional economic policy in Korea. The recent decisions made by the Korean government are examined in the light of the experience of other countries. This framework of regional policies is followed by a discussion of the organizational features required for an efficient implementation. In conclusion, the possible outcomes of the industrial location policy under the constraints imposed by national policies are discussed.