Jun Il Kim: Achieving balanced growth and promoting economic
development
Opening remarks by Mr Jun Il Kim, Deputy Governor of the Bank of Korea, at the
International Seminar 2012, hosted jointly by the Bank of Korea and the Daegu-Gyeongbuk
Development Institute, Daegu-Gyeongbuk, 14 November 2012.
* * *
Good afternoon.
Distinguished speakers, participants, and ladies and gentlemen,
It is a great pleasure for me to speak at this international seminar hosted jointly by the Bank
of Korea and the Daegu-Gyeongbuk Development Institute. I am very grateful to all
speakers, particularly those who traveled from abroad to attend this seminar, and President
Seong-Keun Lee of the Daegu-Gyeongbuk Development Institute.
I find this seminar is quite timely, and addresses very topical issues that we should tackle to
achieve balanced growth. Balanced growth has received a great deal of attention not only at
the national level but also at the international level. Global imbalances were at the root of the
global crisis.
The euro's fragility as a common currency also stems from the growing imbalances within the
euro area, particularly between the core and the periphery. Indeed, the central theme of the
G20 process is to achieve strong, sustainable and balanced growth.
Balanced regional growth is an imperative from Korea's perspective, given its far reaching
implications on economic resilience and social cohesion. For instance, uneven economic
development across regions over the past five decades or so has resulted in too much
concentration of economic activities in the Seoul Metropolitan area and therefore too little
utilization of available resources of other regions.
Such regional disparity has then undermined social cohesion, political unity, and economic
competitiveness of the national economy. Moreover, it is never optimal from the efficiency
point of view because the marginal return on investment is far from being equalized across
regions.
Daegu-Gyeongbuk region is a victim of such regional disparity. At present, it accounts for
about 10 percent of national GDP and population, down from above 12 percent two decades
ago. It was a home of Korea's prospering textile industry until the 1980s but gave its way to
China afterwards. This region has struggled since then to find a new engine of growth,
despite some limited success in attracting investment in mobile electronics and steel
industries.
I believe that key to successful regional economic development is the quality of less mobile
production factors such as government services, institutions, human capital, and natural
environment, among others. The quality of less mobile factors of a region will determine the
extent to which it can attract mobile factors for production such as physical capital and
finance.
In this respect, the recipe for success is very much the same between regional economic
development within the national border and globalization beyond the national border. In a
globalized world, economic success of an individual country would be determined largely by
how much productive investment and finance it can attract. And the abundance or lack of its
own mobile factors would be neither a constraint nor an advantage that a country would face
in its economic development.
Likewise, regions within a country are competing with each other for investment resources
available domestically or internationally, and their success depends on how attractive they
are as the destination of investment. As such, the essence of such competition should focus
on how to upgrade the quality of less mobile factors of each region.
In this light, I should emphasize the leading role of local governments and also the central
government in promoting regional economic development. To be specific, local governments
should provide a clear vision and framework for sustainable development with detailed
strategies to support business and human capital development. Deregulations, supportive
tax system, and administrative services would then be designed within the framework.
The central government could incentivize regional development by delegating more
authorities to local governments for their autonomy and, more importantly, by prioritizing the
allocation of fiscal resources among local governments according at least in part to their
supportive performance in regional economic development. It would be ideal if regional
development strategies are closely nested with national development strategies in the first
place.
Ladies and gentlemen,
Promoting economic development is always a highly complex task. It requires a myriad of
inputs including knowledge, information, network, dedicated efforts of the people, and good
luck as well. And we all know that economic development is an evolutionary process of
learning and adaptation.
Today's seminar is particularly meaningful in that we will learn from the rich experiences of
our advanced peers, especially Germany and Japan. I believe that learning from others'
experiences is as important and productive as learning by doing. And I am sure that this
seminar will offer very useful guidance to our long journey to rebuild this region's economy.
I look forward to your active exchange of ideas and in-depth discussions.
Thank you once again for joining us today.