Chapter 8: Balanced National Development
Harry W. Richardson INTRODUCTION This chapter has several major findings: the dominance of Seoul in the South Korean economy and the persistence of unbalanced spatial growth can partially be explained by the principles of the New Economic Geography (NEG); the goal of balanced national development is difficult if not impossible, and may not even be desirable; preserving and building upon the Seoul Capital Region’s role is critically important (despite the problems that its huge size, congestion and soaring house prices create); and a government office dispersal strategy, whatever its merits, is an overly simplistic solution to the complexities of regional and urban policies. Although the concept of the NEG is usually traced to Krugman (1991), there is little that is new about NEG. The concepts were already embedded in the literature. Examples include: increasing returns to scale, transport costs, distance decay, cumulative causation, space and imperfect competition, centripetal and centrifugal forces, interregional vs. international trade. However, Krugman combined them into a formal model, which permitted him to derive multiple equilibria under different conditions. These were obtained via numerical solutions because Krugman never carried out any empirical work. Nevertheless, the NEG has some value in explaining the economic history of South Korea in general and the Seoul Metropolitan Area in particular. Strong increasing returns to scale, building upon initial advantages, reinforced the economic dominance of Seoul and outweighed any benefits associated with a more dispersed pattern of economic activity. This was also facilitated by low transport costs that permitted a whole...
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