The Revitalization Policy for Depressed Regions in Korea May 2007 Won Sup Lee Korea Research Institute for Human Settlements

Contents Ⅰ. Introduction Ⅱ. New Policy Paradigm Ⅲ. Strategies Ⅳ. The Revitalization Program V. Interim Evaluation and Future Direction

I . Introduction

Condition of depressed regions Depopulation from urbanization and industrialization Area Population 51.2% 48.8% Other regions Depressed 92.6% 7.7 7.4%

Decreasing social vitality due to aging Population Structure (인) 80세 60~64세 40~44세 20~24세 0~4세 4,000 2,000 Growing 1973 80세 60~64세 40~44세 20~24세 0~4세 4,000 2,000 (인) Decreasing 2003 80세 60~64세 40~44세 20~24세 0~4세 4,000 2,000 (인) 2013 Collapsed

Other common issues Decaying economic vitality and weak financial bases of local governments Weak social capacities due to the lack of human capital Low accessibilities to advanced information, education, health care, culture, etc. Marginal regions neglected from mainstream spatial policy Top down policy led by the central government

Changes in policy for depressed regions Major programs and objective areas 2000s rural villages coastal villages beautiful villages small towns border areas 1990s rural living condition improvement development promotion zones 1980s Islands back countries

Objective areas of selective programs Back countries 47.6% Population 56.4% Mfg. firms 65.0% Major universities 70.0% R&D institutions 85.0% Government agencies 91.0% 100 Largest corporations Promotion zones Border areas Islands 410 islands 361 areas 31 zones 98 areas

Criticism of existing policies Lack of linkages among programs implemented by different departments Dominated by the central government and passive participation of local regions Over emphasis on hardware, mainly roads Low efficiencies due to uncoordinated and fragmented small scale projects

Opportunities for depressed regions Changes in social value favorable to rural areas Increased interests in quality of life, environment, leisure and well-being High-speed transportation and information network enabling to overcome accessibility problems The 40 hours work week system and family oriented rural tourism pattern Movement of retired people to rural areas

New Policy Paradigm

New policy paradigm Balanced and mutual development of rural and urban region Vision Revitalization of depressed region through innovation Objective Local governments and private sector Main actor Focusing on soft power and industrial fusion Strategy

Policy Framework Innovation Revital Win-Win Industrial Fusion Coexit Actor System Project ASP Model Revital Win-Win Rural Urban Coexit Industrial Fusion Agriculture Manufacturing. Service Fusion

Comparison of existing and new policy Soft power and innovation driven Development strategy Hardware and input driven Government and private sectors Major Actor Central (local) government Integrated and horizontal Relationship among actors Disintegrated and Vertical

III . Strategies

Utilizing amenity and resources Technology innovation Establishment of RIS Learning/Planning Utilizing amenity and resources Technology innovation Industrial fusion Local Leaders Universities R&D Institutions Rural natives Businesses

Rural-urban interaction Experience Tourism Residence Amenity Community Infrastructure Experiencing farming, fishing, picking, etc. Rural (green) tourism Staying in rural over weekend and vacation

Industrial fusion Case 1: Ginseng products Production + Processing Agriculture Forestry Fishery Processing Manufacturing Service Case 1: Ginseng products Production + Processing Case 2: Organic farms Production + Sales (Tourism) Case 3: Green tea Production + Processing + Sales (Tourism)

IV . The Revitalization Program

Designation of the revitalization areas Numbers 70 (6 cities, 64 counties) Lower 30% of local regions Area 48.8 % of national territory Population 7.4 % of total population Tax revenue 13.4% against basic expenditure Income tax 2.5% of national total RA designation are effective for 3 years (2005-2007) after that review the eligibility

Financial assistance for RA (mil. $, 2005) No. of regions Assistance per region Total 70 200 Basic allocation - Lower 10% - Middle 10% - Upper 10% 23 24 3.0 2.5 2.0 175 69 60 46 Planning incentive - Upper 20% - Middle 20-50% Assessment incentive 13 22 0.5 0.3 13.1 6.5 6.6 8.4 Family doctor 0.05 3.5 Each RA receives 12 million US dollars for three years from the central government, with incentive or disincentive depending on performance

Topics of the revitalization program Topics of development No. of regions Examples Resource development 35 Various agricultural products Cultural tourism 12 green tourism, folk culture Image marketing 7 Happy 700, alpine village Education 5 Farming experience, language education Health and life 6 Herb, ginseng Marine and fishery Oceanic bio-industry, blue tourism

Implementation process Planning Prepared by local governments Review Reviewed by advisory committee Final plan approved by the joint interdepartmental driving group Implemen -tation Budget allocation by MPB Implementation by local governments Assessment Evaluated by advisory committee PCBND, MAF and MOGAHA are the main bodies of central government

V . Interim Evaluation and Future Direction

Major accomplishment Participation of local residents and emergence of leader group enhance possibility of success Regional innovation network through the formation of forum, education, committee and study group Finding new sources of growth engine through industrial fusion and collaborative efforts

Key success factors Participation and innovation through the ASP model Participation from the public and private sectors Consulting and collaboration of experts Systematic design of industrial development Utilizing regional characteristics and comparative advantages for production, processing and marketing Linkages of existing and new projects Integrates various government programs to generate synergy effect

Problems and difficulties Delayed start in few regions during earlier stage Difficulties in designing the revitalization program Tendencies to rely on hardware projects Deficiencies in human capital Aging population and unstable bureaucracy Lack of understanding on the new program Weak monitoring and evaluation system Evaluation emphasizes budget spending Weak linkage between performance and incentive

Future directions Improving social capacities to lead innovation Encourage group study, bench marking, education, and diffusion of success stories Enhancing capability of local governments to planning, design and implementation Establishing a group consulting system for technical assistance as alternative to the family doctor system

Future directions Managing assessment and incentive system Set numeric objectives and performance indicators Strengthen relationship between performance and incentives/disincentives Creating synergy effects of related policies Revitalization policy linked to rural policies and community development policies

Future directions Promoting interregional cooperation beyond administrative boundaries Save money through joint R&D and marketing Prepare financial incentives for cooperation Encouraging more participation of people Private sector should be major project operator with government providing assistance

Preparing 2nd round policy Selection of the 2nd round RA Evaluate performance and socio-economic indicators of the 1st round RA Drop out and admit a dozen regions Change in the administration of the policy MAF, instead of MOGAHA, will take initiative of the RA program Expect stronger linkage between the RA program and rural policies

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