[Viewpoint]It’s all local

The presidential candidate for the governing party has finally been chosen. Although there is still talk about all of the non-Grand National Party candidates consolidating into one, the curtain of the main presidential race is now up. We have two months left to choose our next president, so it’s time to study the visions and policies of each of the top candidates.
Lee Myung-bak, the Grand National Party’s candidate, pledged to make South Korea the seventh-largest economy in the world, with a gross national per-capita income of $40,000 in 10 years by attaining a growth rate of 7 percent a year.
To compete, Chung Dong-young, the United New Democratic Party’s candidate, promised that his presidency would launch an era in which 40 million Koreans would be in the middle class. Raising the per-capita income to $40,000 and upgrading 40 million people to the middle class! They are both exciting enough make our hearts beat.
But neither one is convincing, because they lack any roadmap for implementation. First, there is no regional element to their policies. Any sustainable future growth will not be possible without providing regional initiatives and self-help assistance. Instead, the public pledges of the presidential hopefuls follow the tradition that the center makes the decisions and the region accommodates them with whatever it is allotted.
As Korea has gotten past the point of being a semi-developed country, distributing money aimlessly does not contribute to the creation of jobs or the growth of businesses.
Youth unemployment is a good example. What is even worse is that due to globalization, uncertainties have grown in almost every area. It has become more and more difficult to get the desired effect of a policy if the government does not balance the needs and risks of each project. Local regional governments can get much closer to the individuals than the center. Not to mention the United States, which has a strong tradition of regional independence, even in Japan, traditionally known for its high reliance on the center, government policies have gravitated toward regions.
Let’s take a look at the issue of employment, the main focus of Chung’s campaign pledge. After the bubble burst in the early 1990s, Japan suffered from high unemployment for a long time and came to the conclusion that the unilateral policies of the central government weren’t working. The Japanese government then allowed the local governments to independently promote their own employment policies.
In the metropolitan city of Osaka, which suffered from a high unemployment rate, the implementation of the new policy created 60,000 jobs; another 120,000 were added later with new policies.
Still, the unemployment problem was not easily resolved, due to the mismatch between the problem and the government’s solution.
For example, although the number of jobs grew 2.4 times larger than the number of job-seekers below the age of 24, thanks to the Osaka local government’s efforts, the unemployment rate was still as high as 9.7 percent. The city government realized that simply increasing the number of jobs was not the solution. It began instead to help those who had difficulty finding jobs through their own efforts, such as the young, senior citizens and women with a vocational education and employment referrals that best fit their specific needs. And the city government linked it to the city of Osaka’s industrial policy.
The same applies to the policy of “nurturing industries that fulfill regional characteristics,” which Lee suggested as a way to help regional growth. Japan, too, once provided large-scale support for the development of regional industrial clusters.
After the bubble burst, however, the growth rate of such clusters fell far behind the average growth rate of the nation. Some people pointed out that the industrial areas which formed naturally in the metropolitan areas had more self-surviving vitality than regionally created industrial clusters. The Japanese government realized that uniform government support was not the solution, and created an atmosphere in which the local provinces could decide, manage and take the responsibility themselves.
Yayo is a cozy city with a population of 270,000 located in the center of the Osaka metropolitan area. About 2,000 factories are concentrated in an industrial cluster there. The city decided to try to revive its economy by establishing an “Industry Promotion Assembly,” led by citizens, businessmen and manufacturers. They adopted rules designed to help small- and medium-sized businesses, after close research and consultation, and established a support center for such firms. At the center, three coordinators provided one-stop consultations, ranging from problems related to the adoption of information technology to bank loans.
The above examples of Japan are not simple success stories. They are hard-earned lessons attained through repeated trial and error. There is no reason not to use them as a model.

*The writer is a professor of economics at Saitama University, Japan. Translation by the JoongAng Daily staff.

by Woo Jong-won