Reshaping Regional Policy
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Reshaping Regional Policy

Edited by Harry W. Richardson, Chang-Hee Christine Bae and Sang-Chuel Choe

Originally initiated by the Presidential Committee on Regional Development in South Korea, this wide-ranging volume investigates the new directions in regional development policy taking shape around the world. In addition to contributions with individual emphasis on regional policy in Korea, the book compares, contrasts and extends regional policy thought in the European Union and other Asian countries.
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Chapter 14: Inequity and Regional Development Policies

Chang-Hee Christine Bae


Chang-Hee Christine Bae INTRODUCTION This chapter examines whether income equity can be improved by regional development policy. I avoid the term ‘balanced national development’, in part because it is so vague, in part because it is so interlinked with the specific policies of the Roh administration. There are many arguments that might be suggested for decentralizing more economic activity and possibly population out of the Seoul Metropolitan Area. For example, some may suggest that such a strategy is consistent with economic efficiency. If so, the obvious response is: if that is the case, why cannot it not be left to market forces? The counter-argument is market failure. Seoul is subsidized in that its negative externalities are not fully priced, if at all. There are a few toll roads and tunnels, but little else. There is very little private provision of infrastructure in the provinces, with almost everything supplied by the public sector, and this may also be interpreted as a signal of market failure. A somewhat related argument is that promoting regional development would relieve congestion in Seoul; and if successful, it would. However, in very large cities such as Seoul there are always substantial congestion costs, and the key question is whether these costs are more than offset by agglomeration economies. Seoul is locked in a competition for world city status with Shanghai, Tokyo and Hong Kong, and it is possible, but not clear, that congestion relief might also erode agglomeration benefits. Alternatively, reduced congestion might induce in-migration into...

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