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Overview of Korea’s development experience

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Development Overview
Territorial Development Transport/Logistics

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Transport/Logistics

Infrastructure projects and decentralization

In the late 1990s, the government adopted policy guidelines to encourage more local participation in the planning of infrastructure to promote balanced regional development and improve economic efficiency, reversing a previous focus on top-down management.

Among the issues covered by the policy guidelines were ways to relieve chronically congested sections of roads. Under the Third Comprehensive Territorial Development Plan (1992-2001), proposals called for a grid-shaped expressway system, known as the 7x9 network, comprising seven north-south expressways and nine east-west expressways. Plans also called for the building of radial or loop-shaped arterial expressway networks around the big metropolises, including Seoul, Busan, Daegu, Gwangju and Daejeon.

Building such agargantuan network of expressways could only be done at huge cost. The situation was not financially favorable as road construction costs had risen sharply due to the escalation in land prices following the real estate speculation boom starting in the 1970s. It was not possible to push ahead with the plan under the existing financing arrangements.

The government replaced the Road Special Account Act, which had been enacted in 1988 for road construction, with the Traffic Facility Special Account Act. Under the new act, 67.5 percent of traffic taxes and the entire amount of car-related special excise taxes could be used for the construction of roads, railroads and ports. As a result, infrastructure spending rose from 5.3 percent of central government spending in 1989 to 10.5 percent by 1999.

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.

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