Chungnam "Income Outflow Reduced... But Outflow Scale Still Highest Nationwide"

[Asia Economy (Hongseong) Reporter Jeong Il-woong] The scale of income outflow from the Chungnam region decreased by 3.7 trillion won in 2020 compared to 2015. However, Chungnam is still surveyed to have the largest outflow nationwide.

On the 22nd, Chungnam Province held the '1st Economic Community Sector Consulting Meeting for Economic Development Strategy' based on such statistical data. The meeting was held to discuss measures to alleviate income outflow from Chungnam.

According to the province, the scale of outflow from Chungnam was 26.7375 trillion won in 2015, 27.0237 trillion won in 2016, 30.8481 trillion won in 2017, 28.4899 trillion won in 2018, 23.5958 trillion won in 2019, and 23.0024 trillion won (provisional) in 2020.

After recording the highest outflow scale in 2017, it has steadily decreased since the following year. However, based on the confirmed figures of 2019, Chungnam maintained the highest amount and ratio of outflow nationwide, while the inflow rate within the region was conversely the lowest nationwide at 79.2%. This means the economic scale leaking out is larger than what flows in.

The main causes of income outflow from the region are identified as the outflow of operating surplus (corporate income) to headquarters located in the metropolitan area and other regions, and the outflow of employee compensation (earned income) due to separation of residence and workplace.

In fact, as of 2019, the outflow scale of regional operating surplus was 7.3 trillion won, and employee compensation outflow reached 16.3 trillion won.

The ratio of local residents consuming in other regions (out-of-region consumption ratio, consumption outflow) is also continuously increasing.

Among out-of-region consumption areas, the metropolitan area is noted as the largest consumption area. By region, Seoul accounted for the largest share of out-of-region consumption at 69.3%, followed by Gyeonggi (15.8%), Daejeon (5%), and Chungbuk (1.5%). By industry, distribution (26.9%), services (19.3%), medical (8.4%), and insurance (6.9%) had high consumption shares.

Based on this, Shin Dong-ho, Senior Research Fellow of the Economic and Industrial Research Office at Chungnam Research Institute, proposed at the meeting that the province reduce the scale of outflow by ▲establishing an industrial ecosystem to increase the proportion of in-region intermediate goods procurement ▲inducing local incorporation of attracted companies to prevent operating surplus outflow ▲fostering local talent and expanding in-region employment ▲expanding investment attraction incentives to increase local resident employment ▲expanding consumption through activation of local gift certificates ▲strengthening social responsibility of public institutions for regional economic circulation.

Additionally, as legal and institutional improvement tasks, he suggested expanding the creation of specialized and specialized complexes for core industry materials and parts and codifying related provisions, expanding national fiscal support for relocation of metropolitan area corporate headquarters to local areas and codifying related provisions, enacting separate ordinances or codifying related provisions in existing ordinances to induce local incorporation of large distribution companies and corporations, and the prompt enactment of the regional reinvestment law.

The province plans to review the directions and tasks for alleviating outflow discussed at the meeting and set them as future provincial government tasks to seek implementation plans.

Kim Young-myeong, Director of the Provincial Economic Office, pointed out, "Chungnam has achieved the nation's highest economic growth rate based on export-oriented manufacturing, playing a role as a growth engine for the national economy," but added, "On the other hand, the region does not equally share the fruits of growth and rather bears the full brunt of external diseconomies."

He added, "The province will seek and promote measures to resolve outflow by improving related laws and systems so that the added value of local production reaches a certain level or higher and the benefits are evenly distributed to local residents."

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