KIET Occasional Paper No. 70 The Effect of Transportation on City Distribution： DoesKorean Korean Train Express Industrial and Daejeon Policy Work? Dongsoo Kim May 2008 Dongsoo Kim, Associate Research Fellow Korea Institute for Industrial Economics and Trade(KIET) All Rights Reserved by Korea Institute for Industrial Economics and Trade(KIET) 66 Hoegiro, Dongdaemun-Gu, Seoul, 130-742, Korea TEL：(82)(2)3299-3114 FAX：(82)(2) 963-8540 http：//www.kiet.re.kr ISBN 978-89-5992-180-5 93320 i Contents Ⅰ. Introduction ························································································ 1 Ⅱ. The Effect of Express Rail Service on City Size ····················· 5 1. Express Rail Service ············································································· 7 2. Changes in Japanese City Size by Shinkansen ································· 9 3. Changes in French City Size through the Train a Grande Vitesse(TGV) ·········································································· 10 4. Changes in Germane City by the Inter City Express(ICE) ············ 12 Ⅲ. Theoretical Analysis of Transportation on City Size ············· 15 1. Iceberg Type Price and City Size ····················································· 17 2. Old Economic Geography(OEG) model ·············································· 18 3. New Economic Geography(NEG) model ············································ 19 Ⅳ. Changes in City Size after KTX Opening ································ 21 1. Introduction ·························································································· 23 2. Cities located at both ends of the Gyungbu KTX line (Seoul and Busan) ··············································································· 24 3. Cities located in the middle(Daejeon) ················································ 26 4. Cities located at the Center with New KTX stations (Gwangmyeong, Cheonan-Asan) ························································ 29 5. Population Change Analysis with Moran I ······································· 31 Ⅴ. Summary and Policy Implications ··············································· 35 1. Summary ······························································································ 37 2. Policy Implications ··············································································· 38 References ································································································· 41 <Appendix> ······························································································ 43 ii Table Contents Table 1. World Express Rails ····································································· 8 Table 2. Passenger Traffic by Year(except Seoul Metro Subway) ···· 23 Table 3. Population in Administrative Metropolitan Cities(thousands) 25 Table 4. Population in MSAs(thousands) ················································ 26 Table 5. Employees in Manufacturing Industry(thousands) ·················· 28 Table 6. Population Changes in MSAs(thousands) ································ 29 Table 7. Exports by MSA($ million) ······················································ 30 Table 8. Large MSAs along with KTX line ············································ 43 Figure Contents Figure 1. Shinkansen in Japan ····································································· 9 Figure 2. France TGV ················································································ 10 Figure 3. Germany’s ICE ··········································································· 12 Figure 4. Iceberg Type Price ··································································· 17 Figure 5. Marginal Transportation Cost Decreases and Market Size Changes 1 ····························································· 18 Figure 6. Marginal Transportation Cost Decreases and Market Size Change 2 ····························································· 20 Figure 7. LISA Cluster Map ······································································ 33 Figure 8. Express Rails and Highways ···················································· 39 Figure 9. KTX stops(Gyungbu line) and Korean MSAs ························ 44 1 Ⅰ Introduction 3 Ⅰ. Introduction Since the Korean War, economic activity has been heavily concentrated in Seoul, which has increased the economic gap between Seoul and other areas. Thus, balanced national land development has become an urgent regional policy issue. Obviously, infrastructure investment plays in a key role in regional policy. Recently, Korea has built an express rail, called the KTX(Korea Trail Express), from Seoul to Busan. Nevertheless, the effect of the KTX on the population of Daejeon, located on the middle of the KTX line, is not sufficient. Duranton and Turner(2007) found that a 10% increase in road stock increased the population by 2%. In general, infrastructure investment such as transportation gives rise to more urban concentration by improving the accessibility to and interaction among cities. Thus, reduction of transportation costs is crucial to the manufac turing industry as it creates market expansion. As a result, the beneficiary, the city’s population, increases. For example, according to the US Census 2000, the following Metropolitan Statistical Areas(MSA), located at the crossroads of interstate highway and railroads, or those that have hub airports, have a large population：Chicago(9.2 million), Houston(4.7 million), Dallas(5.2 million), Atlanta(4.1 million), and Phoenix(3.3 million). This urban concentration through improvement in infrastruc ture appears not only in USA but also in Korea. 4 In fact, the Korean Trail Express(KTX) made daily travel possible in Korea by reducing the travel time from Seoul to Busan to 2 hours 40 minutes. In a situation where chronic traffic congestion in highways raises time costs, transportation improvements such new express trains and highways affect cities’ populations. Many cities having an express train stations in France and Japan have significant population concentration from nearby small cities where express trains do not stop. In Korea, heavier population concentrations arise in Seoul’s metro politan area than other areas. Then, it is necessary to scrutinize the population change in Daejeon as a nodal hub of highways and roads in Korea. Furthermore, the effect of the KTX on its population will be assessed, which can serve as a guide for more balanced national land development. In the second chapter, the literature related to express railroad construction and changes in city size in Japan, France, and Germany is reviewed. The third chapter covers the economic geographical theory model that explains the effect of transporta tion improvements on cities located at the edge of transportation nodes and cities located in the middle of the nodes. Next, the passenger share of the KTX established in April of 2000 is estimated. Furthermore, the impact of the KTX on the city’s population structure by comparing the size of the city before and after KTX construction is explored. Last, the relationship between transportation and city population is considered which is meaningful to regional development policy. 5 Ⅱ The Effect of Express Rail Service on City Size 7 Ⅱ. The Effect of Express Rail Service on City Size 1. Express Rail Service Japan’s first country‐run express rail service launched in 1964 has the longest express railroad, 1,863km (see Table 1). France, Germany, Italy, and Spain followed in the 1980s and 1990s. Recently, Asian countries including Korea, Taiwan, and China along with Russia are racing to develop express rails. Some countries such as Germany, Belgium, and Finland run express rails alongside conventional railroads. Each country’s railroad network is different. For example, Japan and Taiwan have straight line networks which means there two ending nodes, while Germany has the same straight line type of express railroad but its railroad network includes radial type railroads like France. The key economic cities are located at the center of these railroad networks. Tokyo is at the middle of the straight express railroad line. Paris, Hannover, and Frankfurt are centers for radial express railroad networks. Milano is located at the cross of the T-shape of Italy’s express railroad network. On the other hand, Korean economic centers, Seoul and Busan, are located at both ends of a tripod express railroad. Taiwan has the same type of economic center as Korea. Taipei is at the end of the straight line type railroad 8 network. In general, the improvement of transportation infrastructure brings about population increases in the transportation hub cities but population decreases in cities around the transpor tation hub cities. Due to improved accessibility, cities at the ends are also beneficiaries of lower transportation costs. Accor dingly, small cities around the metropolitan areas are subsidized not only in population but economically. Table 1. World Express Rails Length Max Speed Country Range Starting Year (km) (km/h) Korea(KTX) Seoul-Busan 412 2004 300 Japan(Shinkansen) Tokyo-ShinOsaka 515 1964 270 ShinOsaka-Hakata 554 1972, 1975 240 Omiya-Morioka 497 1982, 1985, 1991 240 Omiya-Niigata 270 1982 275 France(TGV) Paris-Lyon 426 1981 270 Paris-LeMans, Tours 280 1989, 1990 300 Paris-Lille, Calais 333 1993 300 Germany(ICE) Hannover-Wurzberg 327 1988 280 Mannheim-Stuttgart 100 1991 280 Spain(AVE) Madrid-Sevilla 471 1992 270 Italy(ETR) Tulin-Venice 330