Learn From Ulsan`s Developmental Model

Gross regional domestic product in the southern port city of Ulsan was 48.6 million won (41,240 U.S dollars) per capita last year, double Seoul’s figure of 24.5 million won (20,760 dollars). In 2007, the Ulsan figure was 80 percent higher than Seoul’s, and the U.S.-led financial crisis widened the gap last year. Home to leading Korean corporations such as Hyundai Heavy Industries, Hyundai Motor and SK Energy, Ulsan has overtaken Seoul as Korea’s richest city.

Before Ulsan was designated an industrial zone in the early 1960s, it was merely a small village. As large corporations started building factories and petrochemical plants there, Ulsan began to rapidly grow and was designated a large administrative city in 1997, becoming one of Korea’s seven biggest cities. Due to the large number of companies based in the city, Ulsan’s unemployment rate in 2007 was 2.6 percent, the lowest among the seven cities. The jobless rates of the other six cities ranged from 3.6 to 4.1 percent. The average salary of an Ulsan worker was 31.5 million won (26,720 dollars), higher than the 26.7 million won (22,680 dollars) of runner-up Seoul. In short, the companies based in Ulsan generate jobs and income.

Many lessons can be learned from the precedent of Ulsan in the plan to build Sejong City. If Sejong City becomes a competitive industrial city instead of an administrative one that lacks self-sufficiency, both residents and the regional economy will benefit. Other industrial cities such as Pohang, Gumi, Geoje, Changwon and Gwangyang generate higher per-capita GRDP than ordinary cities.

Even the previous Roh Moo-hyun administration, which promoted Sejong City as a new administrative capital to garner votes in the 2002 presidential election, presented a report showing the project’s inefficiency. Drawn up by a presidential task force to study the relocation of the administrative capital in 2003, the report said dispersing administrative organizations into several places is inefficient. It cited the example of Germany, whose dispersion of state agencies in Berlin and Bonn led to inefficiency. The heads of ministries based in Bonn mostly live in Berlin and the ministries have branch offices in Berlin. Even if 13 Korean government offices are relocated to Sejong City, many officials as well as ministers will have to remain in Seoul. The resulting inefficiency could cost the country an estimated three trillion to five trillion won (2.5 billion to 4.24 billion dollars) every year.

The task at hand is to make Sejong City produce jobs and income on its own.