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Globalization of the world economy will require cities and metropolitan areas to adapt their economic bases and cultures to meet the needs of international competition. The world economy is being restructured not only by technological changes, but also by the geographic movement of all factors of production. This mobility changes the location of production as well as the direction and volume of flow of trade and investment both across national boundaries and among urban and regional centers within a national economic unit.(1)
The opening of the world economy, the reduction of national government intervention in internal markets, and the expansion of cross-border transactions will not only make nation-states more interdependent but also require their cities to participate more actively in international competition in order to remain economically viable. In the future, urban economic viability will depend not only on expanding international trade but also on using new technology in the production system.
In Korea, the national government has so far played a dominant role in the economic and social development of the country. Since the 1960s, control by the central government over the national economy has substantially increased. Part of the reason for the Korean government to have opted for a highly centralized system of economic and social planning was that the capital-intensive industrialization strategies adopted by the various administrations required strong intervention by the national government in the investment and production processes. Indeed, for much of the post-WWII era, Korea adopted central planning as the key development strategy in order to promote rapid economic growth in industrial output, generate employment, and accelerate social and political change.(2)
Since the early 1990s, on a global scale, central economic planning is no longer considered to be an effective means for promoting balanced spatial development between urban and rural areas or for alleviating widespread poverty. Instead, human and material resources have to be mobilized through administrative structures and planning procedures that are more decentralized. China's march away from central planning in the early 1980s and the collapse of the Soviet Union provided the strongest examples for decentralization. In the case of Korea, in spite of the adoption of policies on local reform and several rounds of power rearrangements between central and local governments, decentralization has yet to become systematic.(3) The Asian Financial Crisis of 1997-1998 served as a timely reminder that Korea had no other choice but to adapt itself to the forces of globalization.
The twenty-first century will be marked by increasing international trade and investment, growing transnational industries and telecommunications, and expanding cross-border alliances in business and industry. Asian cities, including Korea's, in seeking to improve or even maintain their economic positions must provide the labor force, services, and infrastructure that can allow locally based domestic and foreign-owned firms to participate more successfully in the international marketplace. In other words, cities as economic units must change themselves to function as viable units in the global economic system.
Cities in Korea must serve as catalysts for economic and social development, incubators of technological innovation, and sources of national wealth in the twenty-first century. The ability of the Korean economy to thrive and grow in the future will depend on the ability of its regional areas to adjust to the complex international, national, social, political and economic changes that are reshaping international and regional economic centers, particularly those in Northeast Asia.
The objective of this study is to evaluate and suggest development strategies for urban and regional centers in Korea. The focus is on enhancing a local government's governing capacity for global competitiveness in the twenty-first century. It is hoped that findings in this study can offer insights for strengthening a local government's governing capacity not only in Korea but in the rest of developing Asia in general.
Globalization and Regional Economic Development
Globalization means that within the world economic system competition for shares in international markets will intensify. Economic activities will no longer be confined by national boundaries. As such, rapidly expanding global markets will provide Korea's cities and their residents with immense opportunities to prosper, but only to the extent that their businesses and labor forces are prepared to respond to new global challenges. The primary aim of urban economic development in the global economy has shifted away from one based on mass-production industries and low-skill service jobs to a more sophisticated technology- and knowledge-based system of production and services. In the past, urban economists and local analysts focused on the domestic exports of cities to areas outside their immediate region. We must realize, however, that in the future, international trade and investment will play an increasingly important role in urban economic revitalization, job generation, and wealth creation.(4)
The present world economy has more than forty regional economic blocs. Among them the most notable ones are the North …