[비즈한국] It is expected that the relocation of public institutions—still heavily concentrated in the capital region—to regional areas will gain full momentum following the June 3 local elections. The government's resolve regarding the regional relocation of public institutions is firm, and candidates running in the local elections are also highlighting the attraction of these institutions as key campaign pledges. While the second phase of public institution relocation is expected to come into focus after the local elections, it has been revealed that the economic effects of the first phase have failed to reach initial targets, even seven years after its completion.
Surveys indicate low residential satisfaction in the relocated areas, as the number of houses provided for the regions fell short of targets despite the relocation of public institutions. Experts point out that for the relocation of public institutions to successfully revitalize regional areas, measures to prevent the recurrence of issues observed during the first phase must be implemented concurrently.
The ruling Democratic Party of Korea, in its top 10 pledges for the local elections, prioritized 'completing a 5-pole, 3-special system for region-led growth' and 'nurturing core regional industries and expanding living infrastructure' as its first and second goals, respectively. To achieve this, it promised to provide incentives for corporate relocation and investment in regional areas, create stable living environments for young people, and establish essential medical care systems.
Local governments are also actively persuading both political circles and the public institutions themselves, aiming for the second phase of relocation that will intensify after the local elections. North Jeolla Province, where the National Pension Service is located, has launched a 'Pan-Provincial Promotion Committee' and is focusing on attracting public financial institutions to leap forward as a financial hub. North Gyeongsang Province has formed an 'Institution Attraction Committee' with a strategy to bring in organizations like the National Agricultural Cooperative Federation and the Korea Racing Authority.
It is reported that Gangwon Province, being close to the capital region, hopes to attract key financial institutions like the Bank of Korea and the Financial Supervisory Service, as well as the Korea Institute for Defense Analyses. South Gyeongsang Province is focusing its efforts on attracting aerospace and defense-related organizations in line with the establishment of the Korea Aerospace Administration. This is because there is a high possibility that the number of institutions subject to relocation will be significantly higher than in the first phase, as the government is reviewing up to 350 institutions for relocation from the capital area.
However, although many institutions relocated to regional areas between 2012 and 2019, the economic results were not particularly impressive. Among the regions where public institutions moved, nine local governments saw a decline in population, and the construction of multi-family housing fell short of targets. Furthermore, regional development failed to materialize properly, as regional development project funds were not effectively executed.
According to the National Assembly Budget Office, the initial supply target for housing in 'Innovation Cities' was 92,599 units, but only 87,313 units were actually supplied by December of last year. Essentially, the housing required for employees moving to regional areas was not adequately provided. Due to this lack of proper housing, many areas actually saw a decrease in population despite the arrival of public institutions.
Among the Innovation Cities, only five local governments—Naju in South Jeolla, Wonju in Gangwon, Jincheon in North Chungcheong, Seogwipo in Jeju, and Sejong City—experienced population growth, while other regions saw a decline. This contrasts with the fact that the national population grew by 0.05% between 2019, when the first phase was completed, and 2024. During the same period, Busan's Yeongdo District saw its population drop by 9.4%, while Busan's Nam District and Haeundae District saw declines of 6.7% and 6.8%, respectively. Ulsan's Jung District saw a 1.9% decrease, while Wanju County in North Jeolla, Gimcheon in North Gyeongsang, Jinju in South Gyeongsang, and Dong District in Daegu saw decreases of 4.0%, 2.7%, 2.3%, and 0.4%, respectively.
Regional development also failed to keep up with plans. In 2024, 1.14726 trillion won was earmarked for regional business development projects by relocated public institutions, but only 925.7 billion won, or 80.7%, was actually executed. For Busan, the execution rate for these project funds was only 56.9%, while Gwangju/South Jeolla and Gangwon stood at only 22.5% and 10.4%, respectively. Linkages between public institutions, universities, and research centers are also lacking. As of 2024, the occupancy rate for industry-academia-research cluster sites stood at 56.6%, with a sales rate of 81.8% compared to the original plan.
Doubts are also being raised about whether the relocation of public institutions has actually improved the lives of local residents. In 2024, 53.8 billion won was allocated for projects supporting local residents by relocated institutions, but only 40.8 billion won, or 69.9%, was executed. South Gyeongsang Province, in particular, saw an execution rate of only 28.4%. This is reflected in the sluggish growth of the Gross Regional Domestic Product (GRDP). While the national GRDP growth rate from 2020 to 2022 was 12.9%, areas like Dong District in Daegu (2.1%), Jeonju (4.8%), and Jincheon County (8.0%) fell short of this mark.