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1. Introduction 2. Trends in Regional Divergence(Or Inequality) in Korea

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1. Introduction 2. Trends in Regional Divergence(Or Inequality) in Korea 1. Introduction GRDP measurement does not appear to exhaus- tively explain regional convergence or divergence Regional issues have been one of the subtlest trends, it is useful in identifying the dynamics of and most persistent issues in Korea, as shown by regional disparities. the terms: the 'East-West Divide' and, more recent- ly, ‘the Capital regions versus the Non-Capital 2. Trends in regional divergence(or regions'. And in spite of a great deal of govern- inequality) in Korea ment effort to solve the issue, regional divergence (or inequality) can still be regarded as one of the The overall trend in regional inequality in Korea most pressing problems in Korea. during 1989∼2000 is depicted in Figure 1. It To more closely examine this situation, the fol- plots two indicators, the population-weighted stan- lowing questions have to be asked: How dynamic dard deviation/mean (WSD/Mean) and the popu- and successful were Korea's regional economies in lation-weighted mean absolute deviation (WMAD), the 1990s? Are differences in their economic per- i.e. weighted coefficients of variation, to measure formances widening or shrinking? To answer these the degree of inequality in per capita GRDP questions, this short paper outlines the overall trends in the economic performances of Korea's provinces during the period 1989∼2000, drawing upon variations in their gross % % 25.0 20.0 regional domestic product (GRDP), 18.0 20.0 which is a measure of the value of all WSD/Mean 16.0 the market and collective sector goods 14.0 15.0 12.0 and services produced in an area or WMAD 10.0 produced by the employed residents 10.0 8.0 of an area. Put more succinctly, it 6.0 measures an area's capacity for eco- 5.0 4.0 2.0 mean absolute deviation) WMAD (Weighted WSD/Mean (Weighted standard deviation/Mean) WSD/Mean (Weighted nomic activities or for involving its res- 0 0 idents in the creation or appropria- 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 tion of wealth. Therefore, while the between 15 of the nation's provinces. (Gyeongnam and Ulsan provinces are treated as a single region because their data just started to be published % % 25.0 separately in 1998.) The results indi- 20.0 18.0 cate that, except for a reversal dur- 20.0 WSD/Mean 16.0 ing the first few years of the 1990's, 14.0 there was an overall clear increase in 15.0 12.0 inequality from 1989 to 2000, with 10.0 10.0 WMAD 8.0 the WSD/Mean reaching 21.7 in 6.0 2000 from 14.1 in 1989, an 5.0 4.0 2.0 mean absolute deviation) WMAD (Weighted increase of about 53.9 percent, and standard deviation/Mean) WSD/Mean (Weighted 0 0 with the WMAD rising by about 87.1 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 percent from 11.6 in 1989 to 21.7 in 2000. Differences in per capita GRDP can be divided into two parts: differ- ences in productivity, which them- selves reflect differences in physical productivity, prices and earnings, and % % differences in the share of the popu- 7.0 6.0 WSD/Mean 6.0 lation in employment (employment 5.0 rate). More formally: 5.0 4.0 4.0 3.0 3.0 WMAD This disaggregation produces a 2.0 2.0 number of insights into the determi- 1.0 1.0 WMAD (Weighted mean absolute deviation) WMAD (Weighted nants of regional disparities in devel- standard deviation/Mean) WSD/Mean (Weighted 0 0 opment. To examine the role of these 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 two elements in GRDP per head, Figure 2 plots the variation in region- al productivity and employment rates. In terms of span of the 1997∼98 financial crisis, after which productivity, in the first few years of the 1990's, there were falls in inequality once again. there was a very slight drop in productivity differ- Employment rate differentials reached their lowest entials. Except for this very short phase of declin- record in the mid-1990's. ing productivity differentials, the trend was basi- In sum, it seems clear then that productivity dif- cally upwards, especially since the mid-1990's. ferentials accounted for the overall increase in In regards to the employment rates, there were regional divergence (or inequality) over the 1989∼ short phases of rises and dips in the employment 2000 period in Korea. This implies that they can rate differentials. Specifically, there were initial be regarded as an important determinant of the dif- reductions in inequality until the first half of the ferences in the levels of regional development in 1990's, followed by increases in inequality over the Korea. By comparison, there existed a decline in the variations of the employment rate, except for 2000. (It reached an apex of 144.6 percent in the rising trend posted during the 1997∼98 finan- 1998, gradually declining after that.) Looking at cial crisis in Korea. the other eastern provinces of Korea, Gyeongbuk's per capita GRDP increased from 103.5 percent of 3. Differential trends in regional economic the Korean average in 1989 to 124.8 percent in performance 2000, with a relatively sharp rise after the 1997- 8 financial crisis in Korea. In contrast, Daegu and How large were the differences in development Busan showed gradually declining trends in GRDP between Korean provinces, i.e. the performance per head over 1989-2000 and never reached the of regional economies, in 1989∼2000? To nation's average, with a range from 79.0 and 88.1 respond to this question, Figure 3 charts esti- percent in 1989 to 59.0 and 72.2 percent in mates of provincial value added (=GRDP) as a 2000, respectively. percentage of the entire nation's average (see also The western part of Korea, including the Table 1). provinces of Jeonnam, Jeonbuk, Gwangju and Breaking down the data, over the 1989∼2000 Jeju, also exhibited an underperforming pattern. period, Korea's leading province was Gyeongnam The lone exception was Jeonnam, which experi- (including Ulsan whose separate data has only been enced a sharp rise from 86.5 percent in 1989 to officially available since 1998), which saw its 112.3 percent in 2000, with an apex of 126.2 GRDP per head jump from 133.0 percent of the percent in 1998 (declining afterwards). All other Korean average in 1989 to 134.3 percent in provinces, including Jeonbuk, Gwangju and Jeju, Notes : 1) Numbers in parenthesis indicate the order of rankings. 2) Ulsan, whose GRDP has been released since 1998 due to its administrative separation, is included in Gyeongnam. never even reached the national aver- age of 100 percent during 1989∼ 2000, except for Jeju in 1989 and % 1992. (av.=100) 150.0 Seoul In the so-called capital region, 140.0 Busan Daegu Gyeonggi, Incheon and Seoul exhib- 130.0 Incheon ited a gradual decline in GRDP per 120.0 Gwangju Daegeon 110.0 head until the first half of the 1990's. Gyeonggi 100.0 Gangwon Chungbuk Since then, the provinces, excepting 90.0 Chungnam Gyeonggi, have continued to see 80.0 Jeonbuk 70.0 Jeonnam decreases, with Seoul and Incheon Gyeongbuk 60.0 Gyeongnam maintaining a level below the Korean Jeju 50.0 average from 1999 and 1992, 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 respectively. By comparison, Gyeonggi experienced a dramatic increase from 1998. In the northeastern region, the southeastern region, Daegu and Busan record- Gangwon, which is adjacent to the capital region, ed the lowest rate and a below-average rate, never reached the Korean average in the 1989∼ respectively, in the 1990's in regards to GRDP per 2000 period. For its part, the central region of head. Also in the southeast, the provinces of Korea that is comprised of the Chungnam, Gyeongbuk and Gyeongnam, which contain major Chunguk and Daejeon provinces displayed an industrialized areas such as Ulsan, Masan, increasing GRDP per head pattern in the 1990's, Changwon, Pohang, and Gumi, maintained per excepting Daejeon, which saw an overall declining capita GRDPs far in excess of the Korean aver- trend during this time. age, while the provinces of Jeonbuk and Gwangju The most striking feature of this chart (Figure 3) fell below. But the most dramatic change occurred is the remarkable growth trend of both the central in Jeonnam; its per capita GRDP rose impressively part of Korea, except for Daejeon, and of until 1998, probably due to industrialized areas Gyeonggi just from 1998. It seems to imply the such as Gwangyang, Yeocheon, and Yeonsu. southward expansion of the capital region in In order to identify the relative roles of the vari- Korea, revealing the divide between the capital and ations in productivity and the employment rate, the non-capital regions. However, it should also be data for each province were plotted with GRDP per noted that the provinces of Gangwon, Daegu, person employed (productivity) on the horizontal Busan, Jeonbuk, Daejeon, and Gwangju continu- axis and the employment rate on the vertical axis ously underperformed the Korean average over the of the graph. Each variable was measured as a per- 1989∼2000 period. (Incheon and Jeju recorded centage of the Korean average (see Figure 4). the largest declines- see the variation in ranking in The four quadrants show different combinations Table 1). In addition, this chart reveals a trend of of the relative productivity and employment rate accelerating decline for six metropolitan regions: growth (see Table 2).
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