[Choi Jun-young's Urban Pilgrimage] Innovation City Season 2

After the 21st National Assembly elections, metropolitan local governments outside the Seoul metropolitan area have become eager. This is because there is a prospect that the ruling party's pledge of 'Public Institution Relocation Season 2' will become a reality. Efforts by local governments to attract about 150 public institutions to be relocated have already begun. Those who failed to attract large public institutions in the first relocation are seeking consideration from the perspective of fairness, while those who attracted large institutions are claiming to complement and strengthen existing functions. However, when considering whether the relocation of 115 public enterprises and related institutions has significantly contributed to regional balanced development and local progress, the answer is not positive.

Starting with the announcement of the policy to promote the relocation of public institutions for national balanced development in June 2003, and the announcement of the 'Public Institution Relocation Plan' in June 2005, the 'Innovation City' project was launched in earnest and concluded with the relocation of 115 public enterprises and related institutions to 10 innovation cities. The towering public institution buildings, spacious roads, well-arranged parks, and green spaces in the innovation cities appear to symbolize regional development. However, upon closer inspection, these cities lack vitality, commercial areas are empty, and it is often difficult to find people after working hours and on weekends. Innovation cities demonstrate that building a city does not necessarily lead to regional development.

Public Institution Relocation in 2005 Launched in Earnest
115 Institutions Relocated to 10 Innovation Cities
Empty Commercial Areas... Ghost Towns on Weekends
Lack of Regional Capacity to Utilize Innovation Cities
Minimal Effects on Balanced Regional Development from Relocation

Frankly speaking, it is unfair to evaluate whether innovation cities have succeeded or failed as of 2020. It takes a long time for institutions to relocate and for those institutions to be filled with residents. Since the demand for relocation is limited to those with young children or those who have already sent their children to college, it is difficult to assess the success or failure of the city until newly hired personnel make up the majority of the workforce. It can take at least 10 years, or up to 20 years, for a city to be established and properly settled, as seen in Gwacheon and Bundang. Therefore, discussing the success of innovation cities based on family relocation rates is not appropriate.

However, what must be considered ahead of the second relocation of public institutions is whether public institutions can truly contribute significantly to local employment and regional industrial development. Many local governments believed that when public institutions relocate, not only headquarters employees but also related companies would move down, increasing the population and establishing industries centered around the public enterprises in the region. Therefore, they even prepared land to form related industry-academia-research clusters around the public institutions. However, it is rare to find such structures properly formed and operating in any innovation city. Why has this happened?

Choi Jun-young, Senior Advisor at Yulchon LLC

Most public institutions in South Korea hold a dominant position in their respective fields, and many related companies do strive to establish stable relationships with them. However, it should not be forgotten that this relationship is not one-sided. It is not reasonable to expect that private companies related to public institutions will relocate nearby just because the public institutions have moved. Since there is little special benefit to being adjacent to a public institution, companies have no compelling reason to relocate accordingly. For example, even if the National Pension Service Fund Management Headquarters relocates to Jeonbuk, there is no reason for securities firms to move their headquarters to Jeonju or to reassign large numbers of personnel there.

If the second relocation of public institutions becomes a reality, the issue of where to place them arises. It must be decided whether to add them to existing innovation cities, create new innovation cities, or place them in existing cities. Utilizing existing innovation cities is advantageous in terms of efficiency but may provoke local opposition due to accelerating intra-regional imbalance. However, unconditionally creating new cities elsewhere is inefficient, making this a difficult decision. While relocating to existing cities is discussed as a desirable alternative, it is not absolutely correct due to the burden on relocating institutions from high land prices and the possibility of relocation avoidance due to relatively poor living conditions. Each region must seek the optimal alternative considering their circumstances, but such decisions are difficult to make amid rampant parochialism.

Ahead of the Second Public Institution Relocation
Local Governments Eagerly Compete to Attract Institutions
Repeating the Same Mistakes Without Analysis or Alternatives
Need to Consider the Effectiveness of Regional Industrial Development

The lack of balanced development effects from the innovation city relocations is not due to an insufficient number of relocated public institutions but rather the absence of regional capacity and strategies to promote regional development using those institutions. For example, Gimcheon City, where Korea Expressway Corporation and Korea Transportation Safety Authority are located, should lead autonomous vehicle demonstration operations, and Jinju City, home to Korea Land & Housing Corporation (LH) and the Housing Management Corporation, should be a pioneer in urban regeneration. However, such movements are very weak in reality. The reality of South Korean local governments is a lack of capacity and will to lead change and innovation. Unless local governments change, the positive effects of public institution relocation will inevitably be limited.

Relocation of public institutions does not simply mean physical relocation of the institution. Employees and their families must endure significant sacrifices and changes, and the institution must bear extreme measures such as weakened organizational capacity and reduced work efficiency. Relocating without careful consideration and evaluation of what can be gained after paying these sacrifices and costs is undesirable. The decline in efficiency and capability of public institutions is not just a problem of a single institution but a national loss.

Before promoting the second relocation, it is necessary to evaluate the achievements obtained through the first relocation of public institutions by region and jointly present accurate analyses and alternatives for reasons why expected outcomes were not achieved by the local governments and public institutions involved. Promoting the second relocation without presenting solutions is merely repeating the same mistakes. It is also necessary to reconsider unilaterally designating relocation areas for public institutions. Local governments should propose the institutions they wish to attract and their attraction plans for comparison. The opinions of the employees and families of the institutions should also be partially reflected.

This content was produced with the assistance of AI translation services.