South Chungcheong Province Records Highest Regional Growth

South Chungcheong Province recorded the fastest per capita GRDP growth between 1990 and 2001. GRDP stands for Gross Regional Domestic Product, and it reflects the added value produced in each city and province as opposed to Gross Domestic Product (GDP), which shows value generated nationwide.

Referring to the result, some people are pointing out that balanced regional development, the government’s logic behind the relocation of the administrative capital, can become less justifiable if investment for relocation is concentrated in a region already showing high economic growth.

--High growth backed by the “sub-metropolitan premium”

According to a July 9 report released by the Seoul Development Institute (SDI), per capita GRDP of South Chungcheong Province grew by an annual average of 8.5 percent between 1990 and 2001.

This is the highest growth rate among 15 cities and provinces nationwide, excluding Ulsan, which became a metropolitan city in 1997. Growth rates of Seoul, Gangwon Province and North Jeolla Province were lower than national average of 5.4 percent, recording 4.4 percent, 3.9 percent, 5.1 percent respectively.

South Chungcheong Province also showed the highest regional growth rate in manufacturing industry, an industry that entails a significant spillover effect. The growth rate of the manufacturing industry in the region, based on per capita GRDP, was 13 percent. This is 5.8 percentage points higher than the national average of 7.2 percent, surpassing Gyeonggi Province, whose GRDP grew 8.6 percent.

According to some analyses, the high growth rate of South Chungcheong Province was possible because companies expanded or built factories in the province relatively close to Seoul in order to avoid continued regulations in metropolitan area. In other words, South Chungcheong Province has clearly benefited from the so-called “sub-metropolitan premium.”

--Controversy over the location of the new capital

Citing the premium, some analysis say that the relocation of the administrative capital to an already high-growth region would only lead to further concentration of investment which will, in turn, worsen the imbalance with less developed regions.

“The growth rate of South Chungcheong Province has been much higher than that of less developed Gangwon and Jeolla Provinces,” said Jung Hee-yun, director of the Research Center for Capital Relocation Issues at SDI and argued, “If investment is concentrated in South Chungcheong as a result of capital relocation, balanced regional development will become even more unachievable.”

However, Director of Planning and Promotion Kim Young-dong at the Presidential Committee on Administrative Capital Relocation rebutted the argument, saying, “The growth rate itself cannot be the determinant of the controversy over balanced regional development because even a slight increase in values can push up growth rates when the size of the economy measured is small.” He added, “Discrepancies between metropolitan areas and non-metropolitan areas are still wide in terms of fiscal independence and all other issues.”

--Goal of balanced development under attack

“Capital relocation to South Chungcheong Province may stimulate investment only in the region. If that happens, the conflict of ‘metropolitan areas vs. non-metropolitan areas’ could become the ‘Chungcheong area vs. non-Chungcheong area,’” said economics professor Kim Kyung-hwan at Seogang University, showing concern over the issue.

In fact, SDI projects that the Chungcheong area will account for 52.5 percent of the production increase and 53.4 percent of added-value generated by capital relocation.

Director Kim insisted, “The government will ensure balanced regional development by encouraging some 180 public organizations to move to non-Chungcheong areas,” and said, “We must eliminate imbalance between metropolitan and non-metropolitan areas now.”

In contrast, Director Jung reasoned, “Because the new capital is close to Seoul, it might become “Gongju” under the governance of Seoul.” “If that happens, the relocation can only bring adverse effects—an expansion of the metropolitan area to the Chungcheong area.”

In regards to the argument that policies to limit construction or expansion of factories in metropolitan areas should also be implemented in Chungcheong region, the government commented, “The issue is currently not under consideration.”

Jong sik Kong kong@donga.com