[OUTLOOK]Let provinces lure businesses

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[OUTLOOK]Let provinces lure businesses

The winds of the high-tech industry once blew in Chuncheon, Gangwon province, where I lived for more than a decade. People there had reached the conclusion that there was no other way for them to get out of long-term poverty than to attract advanced industries to their region.
The governor of the province promoted the project, as did the mayor. But despite these efforts, AMK, the largest company in Chuncheon, downsized and moved to Wonju, Gangwon province. The company said the city’s transportation network was in poor condition, and that there were problems with the skilled labor supply.
Chuncheon had to change its strategy and become a city of culture. Though it has no remarkable infrastructure or businesses, Gangwon province itself is a valuable area. It is the nation’s air freshener, providing clean air across the entire Korean Peninsula. Its residents only wish that the region got more recognition for its contributions.
By contrast, domestic and foreign businesses are quite willing to build new plants in Osan and Cheonan in Gyeonggi province, which are farther from the capital than is Chuncheon (which is just 60 kilometers, or 38 miles, from Seoul). The reason is obvious: The area is dense with people and facilities.
Gyeonggi province offers many benefits. Half the population of South Korea lives in this region, and the province has a huge labor pool and world-class infrastructure. There is no reason for businesses at home and abroad not to move to this area, which is rich in information and ideas.
Furthermore, Gyeonggi province is a bridgehead to China, making it a strategic outpost for Korea to tap into the progress of China, which is growing so fast that it is putting a strain on the world. Following professor Kim Seok-chul’s “Hope Project” strategy for globalizing the metropolitan area, a huge industrial cluster has already been created in the region to lead the economic community. This “Yellow Sea Confederation” has the potential to compete with the European Union and the North American Economic Community.
With all the potential it holds, Gyeonggi province should not be bound by domestic policies aimed at balanced development and decentralization. We must broaden our perspective and see the situation from a Northeast Asian viewpoint: how to induce the capital that could give the area the kind of potential demonstrated by China’s economic engine, the industrial clusters of Beijing-Tienjin, Dalian, Chingdao and Shanghai.
I’d also like to comment on the new administrative capital. Countries whose administrative capitals are separate from their business capitals ―such as Australia, Canada, Brazil and the United States ― have three factors in common.
First, each has vast territory, and populations that are dispersed but concentrated in certain cities. Second, they are multiethnic societies, in which each ethnic community insisted on its own center of politics and administration. Third, each had to establish a new political identity in the process of nation-building and integration.
None of these applies to Korea. It is not a multi-ethnic society. The country existed long before the modern state was built. And it is crowded, with 45 million people on a small peninsula. With the exception of Gangwon province, all of South Korea is overpopulated. As a result, policies designed to disperse the population will fall short of expectations. If the new administrative capital reduces the population of the Seoul metropolitan area by 500,000 people, how much of a difference will that make?
Public agencies will have no choice but to follow the order to move. But the government cannot order private companies to move to a region where there are problems with transportation and infrastructure.
Assuming that the construction of a new administrative city costs roughly 10 trillion won ($10 billion), the plan might achieve growth and dispersion at the same time if 10 plants, each worth a trillion won, were built and set up in each area.
The problem will be solved much more easily when the government replaces its policy of “balance and dispersion,” which is bound by domestic politics, to the “Hope Project,” which would build a global economic confederation that covers China, the Korean Peninsula and Japan. The government should make the Seoul metropolitan area a point of attraction within the “Yellow Sea Confederation” to woo foreign businesses with an eye on both Korea’s technological capability and the Chinese market.
Of course, the construction or expansion of factories by large domestic companies should be allowed on a selective basis, and industrial infrastructure should be established in the local areas before large plants are forced to move there. If large companies choose to move to China rather than to local regions, Korea’s declared goal of becoming an economic hub of Northeast Asia will end up being mere talk.
Moreover, an ordinance allowing the establishment and expansion of foreign businesses in Gyeonggi province made no progress for five months, blocked by a political package that linked the administrative city bill and the plan to move public agencies to provinces. There has been an unavoidable gap between the economic goals of local governments ―which had attracted foreign capital totaling 13 trillion won ― and the political vision of the central government. It’s a little late, but I am glad to hear that large, high-tech plants are now allowed.

* The writer is a professor of sociology at Seoul National University. Translation by the JoongAng Daily staff.

by Song Ho-keun
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