We Must Escape the Black Hole of “Balanced Regional Development”

Our society has a black hole called balanced regional development. It is a slogan well suited for political use, but it has caused great harm to the public. Politicians may be satisfied as long as they gain popularity in the moment, but wasted resources and a distorted urban structure increase the public’s tax burden and inconvenience over the long term.

The development of local regions and allowing local residents to enjoy that prosperity are goals politicians ought to pursue. Good politics helps everyone live better lives. But when balanced regional development is adopted in a way that sacrifices some regions for the sake of others, it negatively affects the country as a whole. Discriminating against certain regions for the benefit of others and reducing overall wealth is a political failure. Politics often produces zero-sum outcomes in which something is taken from one group and redistributed to another, but balanced regional development leads to a negative-sum result that is even worse than a zero-sum approach.

In the name of balanced regional development, the government launched large-scale construction projects such as the building of Sejong City and innovation cities, the relocation of provincial government offices, and the transfer of public enterprises. But the result was a decline in urban competitiveness and prolonged stagnation. As awareness of these side effects has grown, the political world is changing its terminology. Instead of the outdated slogan of balanced regional development, it is now promoting decentralization. A boom in local autonomy is underway, with politicians packaging and promoting their claims as decentralization.

Although the terminology differs under decentralization, the damage is no less than that caused by balanced regional development. In fact, the structure of tax waste is worsening. As seen in the Daejang-dong scandal, corruption tied to local governments has now become central to local politics.

Compared with the phrase balanced regional development, the term decentralization itself is not a bad one. Unlike the fictitious political slogan of balanced regional development, an era of local autonomy is a goal our society should move toward. In fact, local self-government, through which residents improve their own lives, needs to be expanded further. But it is wrong to disguise interest-sharing politics as decentralization.

The problem arises when the political class invokes decentralization while dividing political privilege within a region. For local regions to develop, they must break away from a system that creates political privileges and distributes them politically. To do so, institutional reform must support the efficient use of taxes and resources. On that foundation, local residents can improve their own lives.

There are 226 basic local governments nationwide. There are so many that quite a few have populations of 300,000 or less. These should be consolidated so they can function as meaningful units of local autonomy. The governance structure of metropolitan local governments also needs to be upgraded so that roles and functions are shared around economic zones that reflect actual shared living patterns.

There is froth in local administration. Excessive budgets are being poured in compared with actual outcomes and productivity. Budgets are sometimes spent redundantly, and because funds are allocated in a formalistic manner, they are also wasted on meaningless projects. Even while knowing that taxes are being wasted, local political power is using its influence not to save money but to manufacture justifications for receiving even larger budgets.

When the economy grows, local regions grow with it. Because our society remains open, all regions share in the fruits of growth. In fact, the gap in per capita income among regions is not particularly large. As of 2020, the region with the lowest income was North Gyeongsang Province, where per capita personal income was 19.56 million won, which is not a large gap from Seoul, the highest, at 24.06 million won.

Our society has now developed to the level of an advanced country. The level of politics is also rising. In particular, this is a time of transition from a centralized political system to a decentralized structure in which local regions exercise autonomy and authority on their own while also bearing responsibility. It is time to modernize the governance of government.

Decentralization should move in a direction that strengthens local competitiveness. Rather than dividing privileges and prioritizing political fixes, the focus should be on improving the institutional environment so that local residents can exercise their own economic capabilities and generate income.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: ‘지방균형발전’의 블랙홀에서 벗어나야

Author: Sung-no Choi

Date: 2022-04-18

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24698