A government-commissioned study found that the productivity of key industries in non-capital regions is up to 15.5% lower than in the capital area. The researchers said, "The way to revive regions is not to build more infrastructure like roads and factories, but to raise the regions' productivity itself."
◇ Gwangju-South Jeolla key industry productivity 15.5% lower than the capital area
On the 15th, a compilation of ChosunBiz reporting showed that a recent research report titled "Analysis of factors deepening regional imbalance, evaluation of the national balanced development strategy, and policy implications," conducted by Ewha Womans University's industry-academic cooperation group on commission from the Ministry of Economy and Finance, contained these findings.
According to the report, based on 2011–2025, productivity in manufacturing; construction; business, personal and public services; and electricity, transport, communications and finance in Gwangju-South Jeolla was 15.5% lower than in the capital area. Productivity was measured by estimating how much one worker in an industry contributes to gross regional domestic product (GRDP), then aggregating and comparing by region.
Productivity in Daegu-North Gyeongsang was 12% lower than in the capital area, Daejeon-Chungcheong was 9.6% lower, and the southeastern region including Busan-Ulsan-South Gyeongsang was down 7.6%.
Total factor productivity (TFP) in Gwangju-South Jeolla was 4.2% lower than in the capital area. TFP is an indicator of how much added value is created when the same scale of labor and capital-equipment is投入. Daegu-North Gyeongsang was 3.3% lower than the capital area, the southeast was 1.7% lower, and Daejeon-Chungcheong was down 1.4%.
◇ "Infrastructure investment alone has not narrowed the productivity gap"
The researchers said, "Infrastructure investment alone has not narrowed the productivity gap between the capital and non-capital regions." For example, after government department transfers to Sejong began in 2012, large-scale infrastructure investment proceeded, and by 2019 the social expense from congestion—such as housing and commuting costs—known as the population accommodation cost—improved by 65%. However, during this period, the productivity growth rate was 6.4%, falling short of even half the national average (14.7%).
Seok Byung-hoon, a professor at Ewha Womans University who joined the research team, said, "Australia relocated public institutions concentrated in major cities such as Sydney and Melbourne to the regions (Geelong), inducing the accompanying transfer of related private services such as insurance, legal, IT and logistics." He added, "We moved only public institutions," and said, "This alone makes it difficult to create spillover effects on productivity within a region."
The core of productivity improvement identified by the report is not physical facilities but the "human and industrial ecosystem." The researchers proposed, "Create a virtuous cycle of 'education-jobs-industry' by linking regional universities and strategic industries, and prepare a 'settlement-conditions package' that improves job, education, housing and childcare together, along with programs to shift workers from declining industries to new industries." They added, "There is a need to legislate a 20–30 year long-term plan that is not hurt by changes of administration."