Republic of Korea

South Korea has made the transition from a developing country with a relatively low level of Gross Domestic Product (GDP) per capita in 1960 and an unsophisticated economy, to a developed and highly resilient economy with a GDP about 20 times higher in 2010. It has been one of the fastest-growing economies in the world, despite lacking natural resources and experiencing demographic constraints (an ageing workforce). Over the period 1960-2010, the level of urbanization increased from just 28 per cent to 83 per cent. According to the OECD, “Korea’s economic development since the 1960s has gone hand in hand with fast and unprecedented urbanization”.

South Korea is one of the most urbanized countries in the world, with urbanization focused in Seoul, Busan, Daegeon, Incheon, Daegu, Gwangju and Ulsan. Seoul generates half of Korea’s GDP. Since 1990, the population of a group of medium-sized cities with strong manufacturing bases has also grown strongly. This has created considerable pressure on land and infrastructure through extensive physical development, and serious housing shortfalls.

South Korea’s NUP has evolved through three phases (OECD, 2012). The first involved explicit spatial concentration and sectoral focus because resource limitations prevented spreading investment more evenly across the country. The country’s successful socio-economic development is attributable in large part to a concerted industrial modernization strategy pursued by the government from the 1960s to the 1980s, geared largely to boosting exports. This was centred on a few growth poles, namely Seoul and several other large cities. As a result, these places attracted substantial population and investment which created a severe shortage of housing, infrastructure and land for development.

The physical growth of these cities was also poorly planned and managed, resulting in fragmented and inefficient development. Government legislation and public investment were poorly aligned, and technical capacity in implementing land-use regulation, zoning schemes, floor-space ratios, simple property transactions were slow to develop. Political decision-making was also predominantly short-term and reactive. Another consequence of the focus on industrial policy was the deliberate under-investment in housing. Constrained supply and rising demand caused escalating house prices and speculation.

In the 1980s and 1990s the government sought to move jobs and people away from Seoul. Steps were taken to relocate public administration offices and branches of universities outside Seoul. Financial incentives were also offered for private firms to relocate. This was accompanied by substantial investment in national highway construction, along with a boom in house building. This policy was not successful at rebalancing the spatial economy (OECD, 2012). Ultimately, the government constructed five new cities around Seoul in order to relieve the housing shortage.

At the beginning of this century policy shifted again towards improving the quality of urban development, including liveability, amenities, safety and environmental quality. This was partly a response to the previous emphasis on quantitative economic growth which resulted in inferior quality of the built environment in many urban areas. A second objective was to strengthen the economic competitiveness of all cities through technological upgrading, innovation and diversification into knowledge-intensive industries.

Since 2008, green growth has become a major focus of Korea’s economic. The effectiveness of this agenda will depend a great deal on the contribution of cities to green growth through new technologies, energy efficiency measures, renewable energy, public transport, green buildings and higher density transit-oriented development.

One of the main lessons emerging from Korea’s experience is the importance of aligning territorial planning, urban policy, housing programmes and the provision of land for development. Inconsistent spatial priorities tend to undermine the effectiveness of each of these policies, and a failure to plan ahead produces inferior urban outcomes.

Over the past years under the green growth strategy, different authorities have launched a number of initiatives on urbanisation, including green and smart city projects, eco-friendly energy towns and others. For instance, a number of ministries organised competitions and trial projects to partner with local governments to establish and develop projects, which include the Greening Cities project, the EcoRich City Competition, the Smart Grid Test-Bed project, the Climate Change Adaptation Model City project, the Eco-city project, the Low-Carbon, Green Village project and many more. These pilot projects galvanised local citizens’ attention as they brought in new investments and enhanced the image of their cities. However, unfortunately, those initiatives and projects seem fragmented; as a result, how effective these projects were in helping the cities to meet the national low carbon objective remains questionable.

The cities in Korea have also recognised the role they have to play in advancing green growth at urban level as 80% of the population lives in cities. For instance, Seoul Metropolitan city launched its flagship energy policy and campaign in 2012, called ‘One Less Nuclear Power Plant’. It is a broad effort to respond to climate change and energy crisis in the aftermath of the Fukushima nuclear accident and the nationwide rolling blackout in 2011. It had a target to reduce 2 million TOE, which is equivalent to the capacity of one nuclear power plant, and exceeded its target by 2.04 million TOE in advance. More and more small- and medium-sized cities or islands in cooperation with local municipalities and the central government are also initiating low carbon projects.

The private sector is involved in developing smart and sustainable city projects by providing their cutting-edge technologies. The public–private partnership (PPP) is quite a common format when it comes to implementing the government-led project in Korea, which involves huge investment. For instance, the Jeju Island Smart Grid Test-Bed (http://www.smartgrid.or.kr) project is a well-known PPP effort with a budget of 200 million euros, of which more than two-thirds are sourced from private companies (KT, SKT, and LG Telecom). In this way, the government supports the development of new technologies with companies, and companies can reap benefits from such partnership by developing and testing their newest technologies before commercialisation.

The initiation of the project and the seed investment are mainly from the government; however, often, considerable amounts of funds are channelled through the private sector. This is one of the main reasons why the Korean side has been exclusive for foreign participation in public-led projects.