Chapter 16: Fiscal Policy and Regional Development
Young Geol Lee I participated in policy-making for regional development in 2003 on the Presidential Committee on Balanced National Development, a predecessor of the Presidential Committee on Regional Development (PCRD). This chapter will contribute to navigating through the global economic crisis and finding new opportunities for regional development policy. The Korean government has taken swift action to overcome the global financial turmoil triggered in the second half of 2008, by implementing fiscal measures to prevent the Korean economy from falling into a recession. For example, Korea will continue to cut public spending and implement tax reductions up to 2012, equivalent to 6.9 percent of gross domestic product (GDP). In April 2008 a 28.4 trillion Korean won supplementary budget plan for 2009 was approved by the National Assembly, which is expected to create 400 000 jobs and increase economic growth rate by 1.5 percentage points. As a result of these efforts, the Korean economy is showing signs of stabilization. These efforts have led Korea to become the only country among Organisation for Economic Co-operation and Development (OECD) members to have achieved a positive growth of 0.1 percent during the first quarter of 2009. The industrial production index increased for four consecutive months up to April 2009 and both coincident and leading economic indicators back this up. This prompted the OECD and World Bank to project that Korea is among the countries to recover fastest from the crisis. However, to overcome the economic crisis fully, we need to ensure that regional development...
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