The scarcity of land presents one of the most serious obstacles to the continued growth of the Korean economy today. This study analyzes the land prices in Korea from the perspective of economics, and it explores how land speculation affects the efficiency and fairness of resource and income distribution. Land is a crucial factor of production that concerns all goods and services, and it is also a key instrument for aggregating assets and wealth. Land provides both income benefits and capital benefits for the landowner. Land speculation therefore refers to the act of selling and buying lots of land for the capital benefits thereof. The price of land is high in Korea because of the high population density and the labor-intensiveness of its industrial structure, both of which conspire to raise the cost of land in the overall production cost. Income generated by land prices also forms a significant part of Korea’s gross national product (GNP).
It is impossible to explain with any measure of consistency how the land price bubbles arise and collapse in Korea. The rapid industrialization and urbanization of the country since the 1960s has caused unpredictable and dramatic changes to land prices. The land price bubble here results from the backwardness of the Korean interest market and the particular characteristics of the land policy that the Korean government has implemented so far. The price of land soared particularly in urban areas as the demand peaked amid the rapid population influx, while the supply was inhibited. In the meantime, the financial sector, under the state’s heavy-handed control, has failed to evolve on par with the real sectors. Land thus came to serve as a key instrument of income and resource distribution, while its price continues to rise. The financial market in Korea is still subjected to the state’s rigorous and distorting control, and the land price will remain high as a result. The concentration of land ownership may encourage monopoly and the irrational increases in land price. It is therefore crucial to develop a realistic model that can empirically analyze and demonstrate the land price bubble.
한국의 지가(Land price in Korea)
토지투기와 시장실패(Land speculation and market failure)
|Series Title; No||정책연구시리즈|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Territorial Development < National Land Development|
|Holding||KDI; KDI School|