'De-Seoulization' critical to tackling low birthrate: BOK, Statistics Korea

Bank of Korea Gov. Rhee Chang-yong, sixth from left, Statistics Korea Commissioner Lee Hyoung-il, fifth from left, and guest speakers pose for a photo during a conference at the bank's headquarters in Seoul, Wednesday. Yonhap

Korea should promote decentralization, granting fiscal and policy autonomy to municipalities with populations between 5 million and 10 million to enhance economic growth and administrative efficiency, according to the country’s central bank and statistics agency, Wednesday.

The "de-Seoulization" efforts will be further solidified through improvements in living conditions for highly skilled workers in research and development, as well as region-specific policies that ensure a steady inflow of investments.

This will help reduce the economic polarization between the Seoul metropolitan area and the rest of the country, a gap that has widened since the 2000s, as reflected in low birthrates and sluggish economic growth.

These were the key findings of a study jointly conducted by the Bank of Korea (BOK) and Statistics Korea, presented at a conference hosted by the central bank. Officials from state-run think tanks and economists also shared their insights.

Bank of Korea Gov. Rhee Chang-yong speaks during a conference at the bank's headquarters in Seoul, Wednesday. Yonhap

The current balanced growth initiative fails to account for the rapid population declines taking place in a number of cities, according to Nam Chang-woo, senior vice president at the Korea Development Institute, a state-run think tank.

“Industrial conditions of each region vary, but the status quo provides few solutions as to how the declining quality of living conditions for the residents can be improved,” he said during the conference.

The policy focus is primarily on attracting new investments for economic growth, without sufficient emphasis on strengthening existing entities and supporting current residents.

The problem is the accelerating population exodus, a growing concern that demands a major shift in the government's priorities.

“The so-called population cliff is driven by the rapid decline of the young, working-age population in the 25 to 34 age group. Up to 90,000 people in the age group leave for the Seoul metropolitan area each year,” he said.

Policy remedies for this troubling development could include a data-driven, accurate assessment of the status quo, according to the statistics agency.

Chief among them is Gross Regional Domestic Product (GRDP), a quarterly measure of rapid and integrated value-added economic growth.

“The newly developed measure helps with fast, easy and comprehensive understanding of regional economic trends, thereby supporting [the] balanced growth drive,” statistics agency official Lim Dae-hwan said during the conference.

“The data are available within 90 days of the last day of each quarter, and the annual figures are provided nine months earlier than the status quo. The new measurement follows the guideline of the International Monetary Fund, and is an extension of high-frequency data.”

The new data method will advance the balanced growth initiative, according to BOK Gov. Rhee Chang-yong.

“BOK has long advocated for creating regional hub cities to spur de-Seoulization, a remedy to reduce sustained elevated housing costs in the capital city and low birthrates,” he said during his speech.

While Seoul offers greater job opportunities and higher income levels, this comes at the expense of the country's long-term sustainability, in his view.

“Non-Seoul residents and municipalities have a better chance of benefiting from the growth of nearby hub cities than the trickle-down effects from Seoul’s growth.”

The quarterly data in that sense will help navigate the mounting challenges of population cliff-oriented and low growth, he added.

“The GRDP will play a key role in outlining policies for balanced growth.”