Study on Effective Relocation of Public Agencies outside the Capital Region of South Korea
Korea RResearch IInstitute ffor HHuman SSettlements
KRIHS
SPECIAL REPORT
2007
Tae-Hwan Kim & Gwang-Ik Kim
Copyright 2007 Korea Research Institute for Human Settlements
All rights reserved. Printed in the Republic of Korea. No part of this publication may be reproduced in any manner without written permission from KRIHS except in the case of brief quotations embodied in critical articles and reviews. For more information, please address inquiries to: Korea Research Institute for Human Settlements, 1591-6, Gwanyang- dong, Dongan-gu, Anyang-si, Gyeonggi-do, 431-712, Korea.
Anyang: Korea Research Institute for Human Settlements, 2007 p.cm
Includes bibliographical references ISBN 978-89-8182-477-0
Currently, the capital region of Korea is suffering from severe overcrowding whereas the rest of the nation is extremely stagnated. Half the country’s population lives in the capital region which takes only 11.8% of the entire territory. As a result, the capital region is experiencing serious problems with traffic, housing and the environment, and it appears that it is difficult for the capital region to see improvement in quality of life while it keeps growing in size. On the other hand, the population of regions continues to decrease and their industries are getting increasingly depressed.
In order to tackle the overpopulation problem in the capital region, various policies have been implemented for a long time including restrictions on location of factories in the capital region; however, these restriction-oriented policies have proven to be ineffective in solving the unbalance. Consequently, the incumbent Participatory Government has initiated a variety of policies for balanced national development which are geared to achieving harmonious development of the capital and non-capital regions. The core of the policies is the Relocation of Public Agencies outside the Capital Region, along with the Construction of the Multi-functional Administrative City. In fact, countries such as France, Japan and the United Kingdom have promoted public sector relocation to regions targeting balanced national development, and Korea itself has been promoting relocation of public organizations to regions since the 1970s, moving approximately 60 agencies outside the capital region so far.
The Study on Effective Relocation of Public Agencies outside the Capital Region of South Korea, launched to support government policies for balanced national development, explores methods to select and effectively relocate public entities to localities, with a view to alleviate excessive concentration in the capital region and boost regional economy. In addition, the study presents suggestions for futuristic state-of-the-art Innovation City construction which will host the relocating public agencies. The construction is intended to facilitate the relocation and help those employed in the relocating agencies enjoy a comfortable life in a new environment.
I would like to offer my compliments to Dr. Tae-Hwan Kim and Dr. Gwang-Ik Kim, the primary researchers of this study, and other researchers involved for their passion and effort in completing the study, which, I believe, is significantly conducive to implementing relocation of public agencies to regions and achieving the goal of balanced national development. Lastly, I would like to extend my compliments to the Presidential Commission on Balanced National Development and the Ministry of Construction and Transportation for their official support for the study.
Byung-Sun Choe President Korea Research Institute for Human Settlements
FOREWORD
Study on Effective Relocation of Public Agencies outside the Capital Region of South Korea
7
8 8 10 13
15 15 17
22 22 24
31 31 33 35 37
Summary
1. Backgrounds
1) Concentration in the Capital Region and Regional Disparity 2) Decentralization of Pivotal Administrative Function to Regions 3) Need for Public Agencies Relocation to Regions
2. Case Study of Public Agencies Relocation 1) Domestic Cases
2) International Cases
3. Promotion Plans for Relocation of Public Agencies 1) Public Agencies to be Relocated to Regions
2) Plans for Regional Distribution
4. Plans for Innovation City Construction 1) Innovation City: Concept and Development 2) Plans for Innovation City Construction 5. Tasks Hereafter
Bibliography
11
Summary
The study aims to raise government capacity to implement the public agencies relocation plan and contribute to achieving balanced development of the nation by presenting an effective and systematic plan for relocation of public agencies in the capital region to localities. First of all, the study explores methods to select public agencies to be relocated and how to relocate them, along with the process of distributing public entities to different regions. After reviewing various measures, the study suggests a method of packaged distribution of the agencies by the central government as an effective way to promote the relocation.
Regarding regional distribution of the relocation agencies, the study suggests the following three principles: the principle of equality aimed at balanced national development, the principle of efficiency directed to specialized regional development, and the principle of full consideration of major players of the relocation. Then, the study examines the process of the distribution while dividing the process into four stages: classification of the functions of the relocating agencies, calculation of regional gap, analysis of opinions of the relocating agencies, and review of regional connection.
After that, the study reviews incentive measures and financial schemes designed to support the relocation. The study divides the incentive measures into two categories: incentives for relocating agencies and those for their employees, and explores how to provide them.
According to the study, in principle, the relocation costs should be directly financed by selling buildings and properties possessed by the agency concerned while the central government supports for other costs, relocating expenses costing the employees, in particular.
Lastly, the study reviews plans to promote regional development by utilizing relocation of public organizations as a momentum, and examines construction of the Innovation City, to which public agencies that are closely related to each other are collectively relocated. The study suggests three ways to approach Innovation City construction depending on the location of the region concerned and size of the Innovation City to be constructed. Finally, the study suggests that in order for the Innovation City to be successful, it is crucial to come up with detailed plans for the construction that fully reflect different situations and characteristics of each individual region.
Keywords: public sector relocation, capital region, decentralization, Innovation City, regional development
12
1. Backgrounds
1) Concentration in the Capital Region and Regional Disparity
The concentration in the capital region of Korea has reached a serious level. In spite of continuous efforts over the past several decades, the capital region has continued to attract population and industries, exacerbating the inequal structure of the territory.
Accordingly, the economic gap between the capital region and the rest of the nation has been increasingly widening with dependence of regions on the capital region con- tinuing.
In particular, the population of the capital region has continuously increased over the past 30 years, and as of 2004, 23.24 million people, or 47.6% of the whole population lives in the capital region, which takes up mere 11.8% of the entire land.
Notably, 39.1% of the entire population resides in the overpopulation control zone within the capital region, which accounts for 2% of the entire territory. According to a recent population estimation of the Korea National Statistical Office, the population of the capital region will reach 50% of the nation’s total population by 2010 and 53.9% by 2030.1)
Also, as shown in Table 1, in terms of the Gross Economic Capacity, which
〈Figure 1〉Trends in Population Concentration in the Capital Region
1) The Special Estimation of Population by City and Province (Korea National Statistical Office, 2005).
* NCRs: Non Capital Regions
11
〈Table 1〉Comparison of Gross Economic Capacity between the Capital Region and NCRs (As of 2005)
Note 1) The population is based on the resident registration; employment in the manufacturing is based on the mining and manufacturing industries statistical survey report; employment in the wholesale and retail includes those employed in the food and lodging industries; the amount of financial transactions is based on the combined amount of deposits and loans of commercial banks; lastly, taxation revenue refers to the combined amount of the national tax (direct tax) and local taxes.
2) Gross Domestic Product and employment in the manufacturing and in the wholesale and retail are based on the statis- tics of late 1999.
Source: Park, Yang-Ho (2001), revised.
〈Figure 2〉Trends in Gross Economic Capacity of the Capital Region and NCRs between 1995 and 2005
Note: The Gross Economic Capacity is the average calculated by dividing the combined amount of the ratios of the NCRs’
Gross Domestic Product, the number of those employed in the manufacturing, retail and wholesale, and food and lodg- ing industries, the number of economically active population, deposits & loans of commercial banks and taxation rev- enues (direct national tax plus local taxes) to each of those of the nation.
Source: Park, Yang-Ho (2001), revised.
12
indicates the overall conditions of regional economy, the gap of economic capabilities between the capital and non-capital regions (NCRs) have remained unchanged over the past several decades, and dependence of NCRs on the capital region has continued with the gap further widening in recent years. Under these circumstances, regions with a weak foundation for growth suffer economic difficulties, which will ultimately lead to weakening of national competitiveness. Accordingly, it is highly significant to consistently promote decentralization of the capital region at the national level while controlling concentration of population and industry in the capital region, targeting balanced national development.
2) Decentralization of Pivotal Administrative Function to Regions
The background of public agencies relocation to regions can be examined by looking into the pivotal administrative functions concentrated in the capital region. According to the Comprehensive Plan for Readjustment of the Seoul Metropolitan Area estab- lished in 1984 under the Seoul Metropolitan Area Readjustment Planning Act, policies to control and relocate facilities causing population increase within the capital region have been implemented for more than two decades now. However, concentration of economic activities in the capital region has kept deepening, concentration of the piv- otal administrative functions of central government agencies, state-run companies, headquarters of major corporations and prestigious colleges, in particular. As shown
〈Table 2〉Concentration of Pivotal Functions in the Capital Region
Source: Park, Yang-Ho et al. (2002).
11 in Table 2, both the population and manufacturing sector employment of the capital
region are around 46% of the nation’s. However, concentration in the capital region of central government agencies, headquarters of large corporations and prestigious col- leges is severe; approximately 83% of the head offices of state-run companies, and 83%
of the headquarters of the 500 largest corporations are located within the capital region.
As shown in Table 3 below, 86.2% of the central administrative agencies and 85.8% of the government-affiliated agencies are located in the capital region.
Especially, as the locations of most of the public corporations indicate, concentration of government-affiliated agencies in the region is getting worse.
The reason concentration of public agencies including central administrative
〈Table 3〉Public Agencies Located in the Capital Region
Note 1) Central administrative agencies exclude the National Assembly and the Judicature.
2) Attached agencies refer to primary public offices and exclude special regional administrative agencies.
3) Government-invested agencies include their subsidiaries such as the subsidiary of the Korea Electric Power Corporation.
4) Government-financed agencies exclude those that are under the privatization process.
5) Public corporations are those stipulated in the Seoul Metropolitan Area Readjustment Act as facilities attracting excessive population, and those established under a separate Act.
12
agencies is problematic is that such agencies are the main factor for concentration in the capital region of population, industry and other various functions. According to a survey of the National Land Agency of Japan, ‘contact with central administrative agencies’ is the second most important factor among the 13 factors corporations locate their head offices in the capital region, following ‘collection of information on other companies and on the industry concerned’.
A domestic survey2)also shows that the biggest problem companies encounter in relocating their head offices to regions arises from concentration of information and national administrative agencies in the capital region. This indicates that only when the public sector, primarily national administrative agencies, take the initiative can relocation of headquarters of corporations be expedited. In this aspect, decentralization of public agencies to regions has emerged as a significant issue in achieving balanced national development.
Another reason decentralization of public agencies is important is that relocation of public agencies can minimize restrictions on the private sector. That is, even though
2) Park, Yang-Ho et al. (2002).
〈Figure 3〉Reasons for Locating Head Offices in the Capital Region (the case of Japan)
Note: Above is the result of a survey among 560 corporations including listed companies, life insurance companies and for- eign capital companies of Japan.
Source: A Survey on the Relation of Centralization and Decentralization of Head Office Functions - a Survey on the Future Vision of People and the National Land (III) (The National Land Agency, 1983). (Cited in the 分散硏究會, 1989: 45).
11 ease of concentration in the capital region is a national priority, achieving the goal by
restricting private enterprises dose not conform to the principles and policy directions of the market economy. Currently, concentration in the capital region is controlled mainly by imposing restrictions on the private sector; however, if the concentration is mitigated by relocating public agencies to localities, this provide a room to relax restrictions on the private sector.
Lastly, it is considered that, as demonstrated above, restriction-oriented policies for decentralization are not effective enough to stop a variety of functions from being concentrated in the capital region but a more aggressive method is required. Up to now, policies regarding the capital region have been putting too much stress on restricting location of population-attracting facilities such as factories and universities whereas they have been passive in decentralizing functions to localities.
3) Need for Public Agencies Relocation to Regions
What differentiates this initiative for relocation of public agencies to regions from previ- ous policies against capital region concentration is its stress on regional base for growth.
While policies for capital region concentration mitigation have been promoted without any consideration of a regional growth base so far, for an effective control of capital region concentration, it is essential for regions to establish a foundation on which func- tion relocated from the capital region can be settled in the region. In order to establish a foundation for growth, it is crucial for regions to be equipped with not only the tradi- tional manufacturing industry but elements which have innovation capacity to lead regional development, such as universities, research institutes, highly-trained human resources and pivotal administrative functions. Here, relocation of organizations with such capacity will facilitate establishment of the foundation for regional growth.
Relocation of public agencies to regions is expected to make a crucial factor for regional growth foundation, functioning as a positive drive for regional development.
As public agencies possess highly-educated human resources with expertise, most of all, they will help strengthen innovation capacity of the region. The location of public agencies will enhance the image of the region, and this will provide an opportunity for regions to attract investment. Furthermore, the relocation will give regions a chance to make the most of existing competitive edge and potentials of the region, resources of underdeveloped regions, for example.
Secondly, relocation of public agencies to regions is significant in that by so doing, the public sector will take the leading role in achieving balanced national development. So far, policies for the capital region have been limited to unilaterally restricting location in the area of the private sector such as large corporations,
12
manufacturing companies and office buildings. Also, in regard of the capital region, only passive policies have been enforced against the public sector such as restrictions on location of public agencies within the capital region. However, as illustrated above, under the current relocation policy, the public sector takes one step ahead and tries to pro-actively take part in the effort for balanced national development. Furthermore, it is expected that, through this, a condition can be created under which the private sector is encouraged to voluntarily relocate themselves to regions.
In conclusion, decentralization of public agencies to regions is a win-win strategy for both the capital region and NCRs since the initiative will help alleviate overpopulation in the capital region and solve such problems as shortages in housing and infrastructure. Further, it will help the capital region to foster special functions including finance, and create an environment in which Seoul can develop into a global city. In turn, the effort will enable regions to establish key functions for regional growth such as pivotal administrative functions and a research function, and create an environment for self-sufficient regional development.
〈Figure 4〉Need for Public Agencies Relocation
11
2. Case Study of Public Agencies Relocation
1) Domestic Cases
In Korea, relocation of public agencies to regions was firstly attempted in 1964 by the Ministry of Construction under the aborted measures against population concentra- tion in the metropolitan city area. However, plans for public agency relocation aimed at alleviating concentration of pivotal functions in the capital region have been contin- uously implemented since the 1970’s, recognizing its comparatively more significant effect on employment creation and regional economy than other economic activities.
Up to date, policies for public agencies relocation to localities have been established 14 times under the presidential order and others, with the policies implemented three times in 1973 under the population dispersion measures for metropolitan cities, in 1980 under the initiative for decentralization of the capital region and in 1990 under the plan for relocating central administrative agencies to regions. During the first round of the public agencies relocation in 1973, a total of 46 public agencies (24 governmental and government-funded agencies and 22 government- invested and government-financed agencies) were planned to be relocated, with 40 of them actually moved. During the second round, relocation was implemented primarily to Gwacheon and the Daedeok Science Park. The third round of the plan established in 1985 was revised later and relocated nine agency-level public entities and others to Doonsan in Daejeon.
Apart from this, during the period of 1973-1992, the government built the Daedeok Science Park in Daejeon, 100km south of the capital region, and relocated government-funded agencies to the complex. As of May 2005, a total of 255 organizations have been moved in within the research complex with a total of 22,395 people living in it; there are 19 government-sponsored research institutes including the Electronics and Telecommunications Research Institute, 9 government-invested research institutes including the Water Resources Research Institute of Korea of the Water Resources Corporation, and 5 advanced educational institutes including Information and Communications University in the Daedeok Science Park.
The country’s policies on public agencies relocation up to now can be evaluated as follows:
First of all, major targets of the policy are government agencies, state-run corporations and government-funded research institutes, and some 20,000 people of a total of 59 organizations have been relocated so far. The ratio of actually relocated agencies to those originally planned to be relocated is around 85%. However, the regions a majority of the organizations planned to relocate themselves to were still
12
<Table 4> Policies for Public Agencies Relocation to Regions in Korea
11 within the capital region, and thus, the policy effect on balanced regional
development has not been satisfactory. This is because, it appears that, the organizations try not to move out of the capital region due to the unfavorable environment for their highly educated workers to settle in.
In most cases, relocation was carried out separately by each individual organization except that of research institutes to the Daedeok Science Park and of agency-level government organizations to the Daejeon Government Complex. The actual effect of decentralization is considered to be mere with part of the relocated agencies returning to Seoul or to the capital region later on, and with some of them installing branch offices in Seoul. Most of all, the policies had been inherently limited since they lacked comprehensive measures to support the relocating agencies and those employed in them.
2) International Cases
Advanced countries such as France, the U.K. and Japan have been consistently pro- moting from early on policies on relocating public agencies located in the capital area to regions in order to solve overcrowding in the capital region and achieve balanced national development. These policies, along with other various policy tools for regional development, have been recognized as producing significant accomplish- ments.
(Continued)
12
<Table 5> Korea's Relocation Plans and Accomplishments
11 France moved approximately 25,000 people to underdeveloped regions from the
1960’s to 1990, with the intent to ease concentration in the area of Paris (Stage 1). In the 1990’s, the government led by the Prime Minister Cresson promoted relocation of public agencies even more vigorously in order to stabilize the population of the Paris area (Stage 2). During this second stage over the past ten years from 1991 to June 2004, a total of 34,000 from approximately 270 agencies were relocated, a better performance than the Stage 1 over a 30-year period.
The relocation mainly targeted public corporations, semi state-owned enterprises and research institutes, and distributed to regions organizations which are considered to contribute to specialized development of the target region. The public agency relocation committee (CITEP) was established to organize the relocation of the agencies suggested by the ministerial meeting for territorial development (CIADT).
Later on, local authorities provided the relocated agencies with support to facilitate the operations and settlement of the employees in the regional community. In regard of regions to which public agencies are relocated, the main objective of relocation in stage 1 was to develop underdeveloped regions. However, since 1991, local cities with a competitive edge have been preferably selected as target regions of relocation with a view to actively respond to globalization and the strengthening European Union.
The United Kingdom has promoted public agencies relocation to regions in order to ease overcrowding in the London area and revitalize underdeveloped regions. In particular, decentralization of public agencies that are not necessarily to be located in the London area has been actively implemented targeting balanced
<Table 6> Differences from Previous Relocations
12
<Table 7> International Cases of Public Agencies Relocation
11 economic development between regions and efficient public services provision. Since
1963, approximately 50,000 people were moved to regions over three periods of time.
Recently in 2004, the Office of the Deputy Prime Minister took the initiative and a plan has been confirmed to move 20,000 people to regions by 2010.
In Japan, a plan to relocate public agencies to regions was confirmed in January 1988, with a view to relieve Tokyo concentration and formulate a decentralized multi- pole structure of territory. As a main body to promote the initiative, a council on promotion and contact for governmental organizations relocation, comprised of vice- ministers of relevant institutes within the central government was established. In 1988, the Act on the Promotion of the Decentralized Multi-pole Structure of Territory was enacted, which contains provisions stipulating governmental agencies relocation.
The policy targeted 49 national agencies and 30 public corporations when it was announced, and, as of 2002, a total of 40 national agencies and 19 public corporations have completed their relocation.
In Sweden, the government led the policy of public agencies relocation in the late 1960’s in order to deal with expansion and overcrowding in the Stockholm area.
The decentralization committee was established to this end, relocating approximately 11,000 people from 52 agencies in the Stockholm area. In this process, 16 cities with a population of 50,000 or more were selected to host the relocating agencies, based on their economic feasibility and efficiency. That is, the cities were selected after their urban infrastructure and development potential considered so that the workers of the relocating organizations can enjoy the same level of living standard to that of Stockholm.
As shown in the international cases, many countries with similar territorial conditions to Korea’s have chosen public agencies relocation to regions as a main policy for stabilizing the population of the capital region. Also, the aforementioned cases suggest that it is necessary to promote the policy on a legal basis and at the national level since relocation of public agencies to regions involves a lot of stakeholders and requires a long-term time frame. Lastly, as the French case implies, it is crucial to prepare diverse and comprehensive measures to advance relocating workers’ settlement in regions for a successful relocation of public agencies.
12
3. Promotion Plans for Relocation of Public Agencies
1) Public Agencies to be Relocated to Regions
The plan for public agencies relocation to regions is basically directed to relocating all the public agencies to localities except those with special reasons to be located in the capital region, and aims to relieve over-concentration in the capital region and pro- mote regional development based on regional characteristics. In regard of selection of the regions to host the relocating agencies, a rational set of selection criteria has been established while keeping in mind the big picture of co-prosperity of the capital region and NCRs.
Of the entire 410 public agencies of the nation, 346 agencies located in the capital region were closely examined on their characteristics and functions, in order to identify those that are inevitable to remain in the capital region. As a result, a total of 175 organizations have been selected to be relocated to regions.
In particular, organizations that are regarded as essential for the capital region to perform its due functions are allowed to remain: agencies necessary to create a financial hub of Northeast Asia, and agencies considered to be naturally located in the capital region, or having symbolic significance for the capital region, while most of the organizations that are considered to potentially contribute to regional specialized development have been selected to be relocated (See Table 9).
<Table 8> Public Agencies to be Relocated
* 13 committees, 22 educational, training and research institutes, and other 32 organizations
11
<Table 9> Criteria for Selecting Agencies to be Relocated
12
2) Plans for Regional Distribution
The regions to host the relocating public agencies are 12 metropolitan cities and provinces across the nation except for the capital region and Daejeon Metropolitan City, which also differentiates the current policy from previous ones. Daejeon is excluded from the host regions since it already has a number of public agencies in the Daejeon Government Complex and the Daedeok Science Park. The reason there was not a single case in the past of relocating public agencies to south of Daejeon is that previous policies only targeted alleviation of overcrowding in the capital region. In contrast, the current policy has target regions across the nation since it aims at handling problems with the capital region and promoting regional development at the same time.
The plan suggests three principles of distributing the relocating public agencies to regions as follows: firstly, the organizations are distributed to cities and provinces differently under the principle of equity so that the initiative may consider development gap among regions and contribute to balanced national development.
Secondly, under the principle of efficiency, the plan selects regions to host the relocating organizations after comprehensively considering functions of the relocating organizations and characteristics of host regions. This is to maximize the synergy effect on regional development using the relocation as a positive drive. Lastly, the plan tries to reflect opinions of the relocating agencies and of host regions on their preferences as much as possible regarding the relocation process.
According to the principle of equity, firstly the disseminating effects of each individual agency have been assessed on various factors such as the number of workers in the headquarters, amount of local tax paid and scope of budget, and then, converted to score points. Status of regional development has been assessed taking into account such considerations as various factors indicating current status of the region, population increase rate, GRDP per capita, income tax and corporation tax per capita, local tax per capita, employment increase rate and degree of financial independence. Then, the total score of each organization distributed to cities and provinces with similar development status and size is modified to become close to each other, and finally, more organizations have been arranged to be distributed to comparatively underdeveloped regions so that the relocation can exert maximum effects on balanced national development.
According to the principle of efficiency, agencies with similar characteristics are categorized into the same function group and relocated together. That is, in order to maximize the relocation effect, the target organizations are divided into a number of function groups and those carrying out similar functions or closely related to each other are moved together. To be specific, the relocating public entities are divided into 12 industry-specialized function groups, which are closely related to regional strategic
11 industries, and 9 interrelated function groups, which are contributable to pivotal
regional administration and expansion of regional capacity, and those belonging to the same group are collectively relocated to regions.
Each of the function groups is distributed to regions taking into account directions to regional development suggested in the Fourth Comprehensive National Territorial Plan and the Five-year Plan for Balanced National Development, regional strategic industries, and industrial structure and characteristics of the region. The rest of the agencies are moved to regions after considering their work efficiency, industrial characteristics, relatedness to the region, and preference of the agency concerned for specific regions.
Table 10 shows the function groups to be relocated to regions by city and province, and prospects for regional development. Busan Metropolitan City is planned to host the marine and fishery function group, considering its current status as the center of the marine products industry, and of marine and logistics. Also, organizations related to the financial industry will be relocated to the city in order to improve the city’s function of international finance and trade since the city currently enjoys its status as the center of the area-wide economic zone in the Yeongnam Region. In addition, movie-related agencies will be moved to the city, and it is expected to contribute to revitalizing the film industry, a strategic industry of the city.
Daegu Metropolitan City will securely establish itself as the center of the Daeju Gyeongbuk Industrial Cluster through public agencies relocation. The policy will distribute the industrial support function group to Daegu, aiming at strengthening the function of an industrial cluster for the city, and then an organic network will be formulated with existing support organizations in the region. Also, education and academy-related organizations will be relocated to the city, with the intent to encourage academic exchange among more than 30 universities in the Daeju region and grow innovation capacity of the region. The relocation will also help foster competent human resources of the region, ultimately contributing to improving regional competitiveness.
Gwangju Metropolitan City has established the foundation for building an area- wide energy industry cluster with the relocation of the Korea Electric Power Corporation and agencies related to the company. The city will be nurtured to become a new center for the national energy industry in connection with agencies and corporations related to new, renewable and clean energy including the solar energy, hydrogen fuel cells, nuclear power and wind energy.
Ulsan Metropolitan City is planned to host the energy function group considering its petroleum refining industry and high energy-consuming industries.
This is intended to complement the region’s heavy chemical industry-oriented industrial characteristics, and contribute to establishment of an innovation-led growth
12
<Table 10> Relocating Function Groups and Regional Development Prospects
11 foundation focused on the energy industry. In addition, the labor welfare-related
agencies will be relocated to Ulsan considering the nature of the city as the nation’s largest industrial city. With this, Ulsan intends to improve the workers’ welfare and welfare conditions of the city, and strengthen its status as a sustainable industrial city.
Gangwon Province will host the functions of mining industry promotion, tourism, health and bio technology (BT) so that the relocating agencies can make harmony with the characteristics and strategies for industrial development of the region. The relocation is expected to contribute to development of the future tourism industry combined with the clean and clear natural environment. It will also help the region to securely establish itself as the mecca of bio-health industry. In addition, the relocation will be conducive to development of the region’s strategic industries, the medical equipment industry and bio industry.
Under the relocation policy, Chungbuk Province will accommodate the IT function group based on the potential for growth of the IT industry within the region and the region’s close connection to the BT. It is expected that the relocation, in connection with the existing Osong Bio Science Complex and the Ochang Science and Industrial Complex, will contribute to formulating an area-wide innovation cluster in the region. In addition, the human resources development function group has been determined to relocate to Chungbuk considering the region’s competent educational infrastructure and high accessibility to other regions.
Chungnam where the Multi-functional Administrative City will be built, will host governmental agencies and their affiliated organizations whose daily operations are closely connected to them. In addition, government-funded research institutes that support policy decision-making of the central government will be collectively moved to the region with the intent to improve the synergy effect among the organizations and efficiency in policy support.
Jeonbuk Province is planned to host the agricultural support function group in order to create an innovation cluster of the bio/ life science industry in connection with food, BT and oriental medicine industries. By linking the relocating organizations to the region’s cutting-edge agricultural technologies, traditional fermented food and BT venture industries, the relocation will lead agriculture, the region’s base industry to become a high value-added industry, and enable the region to function as the hub of Korea’s bio/ life science industry. Also, relocation of the territorial development function group, which is promoted based on Jeonbuk’s high relatedness to regions of large-scale national projects such as construction of large national industrial complexes and the Multi-functional Administrative City, is expected to have high disseminating effects on the regional economy, and once combined with related industries in the region, it is expected to observe the synergy effect.
To Jeonnam Province, the function group of information and telecommunications
12
technology (ICT) will be relocated in order to foster high-tech industries as a new growth engine and promote formulation of an area-wide cluster linked to Gwangju.
The relocating group of agencies will contribute to advancing the region’s industrial structure in connection with Gwangju’s power industry cluster and film and culture industry. The agricultural support function group will be also relocated to the region to lead the region’s strategic industry, agriculture and bio-industry, and support
〈Figure 5〉Major Functions to be Relocated to Cities and Provinces
11 advancement of the agricultural structure of the region.
To Gyeongbuk Province, the road transportation function group will be relocated considering the region’s close connection to main highway networks of the nation. The relocation is expected to lead expansion of investment in the region’s social overhead costs, and promote development of backward areas in the region. In addition, the agricultural support function group will be moved in to the region, and this will facilitate growth of the region’s industries specialized in agriculture and livestock farming. It is forecast to generate synergy once combined with universities and research institutes in the region.
Considering the high demand for housing, Gyeongnam Province will host the housing industry function group, which is intended to facilitate development of related industries in the region including the housing construction industry. The industrial support function group is also planned to be moved in to the region with the intent to raise regional strategic industries such as knowledge-based machinery and aviation and space industry, and will further reinforce industrial competitiveness of the region.
Jeju will be developed into the center of international exchange taking advantage of tourism and resort, the specialized fields of industry of the region. The relocation of agencies related to international exchange will help raise the world’s awareness of the Jeju Free International City and strengthen the city’s capacity for international exchange. In addition, the planned transfer of education and research institutes will bring increase in the number of visitors, greatly contributing to boosting regional tourism industry.
Lastly, one of the most important factors for review with regard to the promotion of public agencies relocation to regions is support for relocating agencies and their employees, one crucial point differentiating the current policy from previous policies for public agencies relocation. In order for the relocation to succeed and achieve its objectives, work efficiency of the relocating agencies should remain high after the moving, and those employed in the organizations should feel comfortable working in the new environment.
The support is intended to provide a better work and living environment to the relocating workers by establishing a relocation plan at the government level.
Accordingly, the plan promises to address, from early on, difficulties following the relocation. For example, the plan will support the relocating agencies in selling their properties and purchasing new office buildings, and facilitate the relocation process of the agencies by providing tax credits and giving more operational autonomy to the agencies. For the relocating employees, the plan will support for housing purchase and attract prestigious schools to the target regions. It will also provide benefits to the workers if they have children to transfer schools. Here, it is important to provide
12
direct monetary support to the employees such as relocation allowance, moving costs, and education allowance for those with children to go to college in order to reduce negative perception on public agencies relocation.
11
4. Plans for Innovation City Construction
1) Innovation City: Concept and Development
The initiative for Innovation City construction, a new strategy for regional develop- ment, has been proposed with the intent to maximize public agencies relocation effects and create a future growth pole for the region. The Innovation City is a new- level futuristic city equipped with optimal innovation conditions, under which relo- cating pubic agencies can keep a close relationship with industries, universities, research institutes and the government of the region, along with a settlement environ- ment of high standard housing, education, culture, and natural environment. In par- ticular, the initiative is intended to construct an innovative and dynamic specialized city or zone, utilizing public agencies relocation as a catalyst, and nurture it to become a center for regional growth.
From a conceptual perspective, the Innovation City is, most of all, a network city where public agencies, enterprises, universities and research institutes interact with each other. Secondly, it is a knowledge-based city which constitutes a ground for knowledge creation and technological innovation. Thirdly, it functions as an education
<Figure 6> Innovation City: the Concept
12
city where the main actors of innovation creation learn from each other and therefore, their innovation capacity is further strengthened. Lastly, the Innovation City is an environment-friendly city where nature and human beings co-exist in a harmonious manner.
The three components that constitute the Innovation City are firstly, the main actors of innovation: corporations, universities, research institutes and relocating public agencies, all of which are connected to strategic industries of the region;
secondly, the environment in which innovation can occur - such environment requires facilities, organizations and conditions to promote cooperation and networking between industries, academy, research institutes and the government; lastly, quality facilities for residence, education, culture and leisure activities, and urban environment such as transportation network infrastructure and high-tech information and telecommunications network. Considering the three components, the Innovation City is differentiated from existing New Towns or the Enterprise City which is currently under promotion as a major policy tool for regional development.
The Daedeok Science Park and the Osong Bio-health Science Technopolis are the two examples that are in the initial stage of the Innovation City or District in the nation. Aiming to become an Innovation City, the former tries to form a cluster by attracting high-tech enterprises, commercializing research and strengthening the industry-university-research institute network. The latter is currently being developed to become an industrial complex with research and production combined, as four
〈Table 11〉Comparison: Innovation City and Similar Initiatives
11 government-sponsored research institutes including the Korea Food & Drug
Administration, Korea Health Industry Development Institute and National Institute of Toxicological Research, and corporations related to pharmaceuticals, health and medical equipment and food are moved in to the complex.
Internationally, the cases are rare where cities have been formulated in direct connection with public agencies except for some countries including France. France has established a total of 46 Technopoles, and moved universities and public research institutes related to region-specific industries to them. In particular, the Sophia Antipolis has hosted the National University of Technology (ENSMP), National Computer Science and Control Research Center (INRIA) and National Health and Medical Research Center (INSERM), developing itself into a world-class complex of innovation through an organic network among research institutes and corporations within the complex. Other global examples of cities or complexes close to the Innovation City in characteristics are science parks in Europe and Asia (Cambridge of UK, Sista of Sweden and Oulu of Finland) and innovation-type industrial parks (Toyota City of Japan and Shin-Chug of Taiwan). A close network has been formulated among industry, academy and research institute in most of the regions, with relocating public agencies serving as a catalyst for innovation in some of them. In addition, collaboration and networking take an important part in creating innovation in the regions, on the basis of highly trained technicians, venture capital, entrepreneurship and favorable urban infrastructure.
2) Plans for Innovation City Construction
The Innovation City is classified into three types according to the function and loca- tion. Firstly, the Innovation City can be constructed through redevelopment of existing cities. That is, this type of Innovation City is located near the urban center and utilizes urban districts or industrial complex previously built. This method is suitable for a small-scale innovation city construction. Secondly, construction of the New Urban District is another method to build the Innovation City utilizing existing cities, which is appropriate for medium-sized Innovation City construction. Here, the Innovation City can be built in urban outskirts. Lastly, the New Town development type is a method to create a new town in close proximity to existing cities. The construction site is spatially separated from the existing cities, and the New Town maintains its func- tional independence from them. However, the two areas are closely linked to each other with transportation networks. This method can be considered when building a large scale Innovation City.
It is desirable for the public sector to take the initiative in Innovation City
12
development since the project is promoted at the national level. However, if necessary, various players can be allowed to participate. It is most desirable to build one Innovation City in every city and province each except for the capital region and the Daejeon Chungnam area, while considering the size and effects of the relocating public agencies. However, depending on regional circumstances, joint construction of the Innovation City among upper-level local governments can be also considered. The Innovation City should be located in a place having great transport accessibility so that it can maximize the effects of balanced national development. In addition, the Innovation City should be built in a location which can strengthen the linkage among existing cities, industrial parks and universities. In regard of location selection for Innovation City construction, the government should present the principles and criteria. Then, according to them, heads of cities and provinces concerned should collect opinions of basic level local authorities and relocating agencies, finally selecting the site.
<Figure 6> Innovation City Development Type
11
5. Tasks Hereafter
Despite strenuous efforts over the past several decades, concentration of population and industry in the capital region has persisted, with the unbalance in the nation’s spatial structure deepening. Various policy efforts have been made to curb concentra- tion in the capital region and promote regional development; however, they have been hardly rewarded to date. Rather, the problem has gotten worse. Based on the consen- sus that existing policies of simply imposing restrictions on the capital region cannot solve the problem, the incumbent government has come up with special measures to fundamentally address the problem: those that are expected to substantially mitigate regional disparity and raise self-sufficient regions.
In this context, the government is currently pushing forward public agencies relocation to regions and Innovation City construction as the top policy priority for balanced national development. Most of all, the relocation is expected to contribute to population stability in the capital region since relocation of pivotal administrative organizations such as public agencies will encourage relocation of private enterprises to regions, and consequently help curb expansion of the capital region.
Next, relocation to regions of public agencies performing professional and advanced functions is anticipated to help boost regional vitality. That is, location of research, education and training-related organizations will complement the research function of local universities, and contribute to establishing the regional innovation system by helping industry, academy and research institutes of the region to cooperate with each other.
Public agencies relocation to regions and Innovation City construction will lead to improvement in quality of local education by expanding an employment opportunity for the highly educated in the region. In general, public agencies, considering the nature of their duties, hire university graduates, and therefore, relocation of public agencies will increase job opportunities for local college graduates. This will lay the ground for absorbing quality labor force of the region, and contribute to enhancement of quality of local universities, and research and educational organizations.
Adversary effects of the initiative are, first of all, relocation of public agencies in a short period is likely to lower productivity of the relocating agencies. Furthermore, relocation itself might cut off them from the already established network with related organizations or reduce the size of the network. Also, change in the environment might cause difficulty for those employed in the relocating agencies in their settlement. These problems will have to be addressed in the process of implementing the relocation project.
12
The most important one of the remaining tasks is to materialize the relocation plan from the perspective of the region. In other words, it is crucial to prepare detailed action plans to implement the relocation so that, as originally planned, the relocating agencies can be settled and rooted in the region without difficulty, helping boost the regional economy and ultimately contributing to balanced national development.
Here, it is necessary to go beyond the notion of public agencies relocation as a simple moving of public agencies outside the capital region and therefore, as a simple relocation of central government agencies to regions. That is, public agencies need to appreciate that what they do can create, attract and support activities of the private sector. Until now, such disseminating effects have been concentrated in the capital region, causing unbalance in regional development across the nation. In order to fully realize the relocation effects, it is necessary to take into consideration these strategic aspects of public agencies relocation, and further, the strategies should be integrated into those for regional development.
In order to maximize the effects of public agencies relocation and Innovation City construction, it is crucial for each region to prepare development strategies for their region which can make the most of the function of the relocating agencies.
Again, it is important for all the players involved to collect wisdom and explore measures to connect the relocating public agencies with strategic industries of the region and existing potentials for regional growth.
11
Bibliography
CIADT du 9 juillet 2001 à Limoges: 3. L’implantation des publics (2001). DATAR, viewed December 2003, <http://www.datar.gouv.fr>.
DATAR (1992). Delocalisations: adaption du plan social d’accompagnement. Lettre, no.
137, pp. 4~7.
Evaluation de la politique de transferts des emplois publics. CITEP, viewed December 2003, <http://www.citep.gouv.fr>.
Experian Business Strategies (2004). The impact of relocation: a report for the independent review of public sector relocation. London: Experian Ltd.
Fouché, A. (1997). Délocalisations administratives et dévelopment local, conseil economique et social. Paris: DATAR.
Goddard, J. B. (1975). Office location in urban and regional development. London: Oxford University Press.
Hwang, Hee-Yeon (2003). Unbalance in territorial development and the solution: pub- lic agencies relocation to regions. Land Development, vol. 14, no. 1.
Jefferson, C. W. & Trainor, M. (1996). Public sector relocation and regional develop- ment. Urban Studies, vol. 33, no. 1, pp. 36~48.
Ju, Seong-Jae (2003). International cases of administrative capital and public agencies relocation and the implications. Journal of the Korean Regional Science Association, vol.
19, no. 2, pp. 187~208.
Kim, Tae-Hwan (2005). Public agencies relocation to regions and balanced national development: focusing on the French case. Journal of the Korean Association of Regional Geographers, vol. 11, no. 1, pp. 71~82.
Kim, Tae-Hwan (2004). Major issues and problems of public agencies relocation to regions. Industrial Location, vol. 14, pp. 2~10.
Kim, Tae-Hwan, Lee, Dong-Woo & Kim, Gwang-Ik (2003). Analysis of factors for concen- tration in the capital region and methods for decentralizing the functions. Gwacheon: Min- istry of Construction and Transportation.
Lyons, M. (2004). Well placed to deliver? Shaping the pattern of government service. Lon- don: HMSO.
12
Marshall, J. N., Aderman, N. & Thawaites, A. T. (1991). Civil service relocation and the English regions. Regional Studies, vol. 25, pp. 499~510.
Montricher, N. & Thoenig, J. (1993). Délocalisations des emplois publics. Paris: DATAR.
Park, Hun-Ju & Kim, Gwang-Ik (1997). Current issues and improvement of policy for the capital region: public agencies relocation outside the capital region. Anyang: Korea Research Institute for Human Settlements.
Park, Yang-Ho (2001). “Diagnosis on regional economy and methods for the revital- ization”. Proceedings of the Symposium on Revitalization of Regional Economics. Council for Economics, Humanities and Social Sciences, KRIHS Hall.
Park, Yang-Ho & Kim, Chang-Hyun (2002). Spatial restructuring of pivotal functions for balanced national development. Anyang: Korea Research Institute for Human Settle- ments.
Yliskyla-Peuralahti, J. (2003). “Relocation of government activities as a regional policy measure”. Proceedings of the 43rd European Congress of the Regional Science Association.
Jyvaskyla, Finland. pp. 27~30.
