A Story of Urban Development in Korea From Overconcentration toward Balanced Territorial Development and Urban Regeneration 2024 © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “World Bank. 2024. A Story of Balanced Territorial Development and Sustainable Urban Regeneration. © World Bank.” All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522- 2625; e-mail: pubrights@worldbank.org. Table of Contents 1. Introduction 1 1.1 Background: Korea’s Economic Growth and Urbanization 3 1.2 Objective and Structure of the Report 5 2. Land and Housing Development in Seoul 7 2.1 Population Growth and Overurbanization in Seoul 7 2.2 Efforts to Improve Infrastructure in Seoul 10 2.3 Residential Land Development Strategies 12 2.4 Land Reclamation on Public Water 14 2.5 Land Pooling 16 3. New Towns in Seoul Metropolitan Area: Public-Led Development 19 3.1 Regulatory and Institutional Arrangement for Public-Led Land Development 20 3.2 New Town Development in the Seoul Metropolitan Area 23 3.3 A First-Generation New Town: Bundang 25 3.4 The Second-Generation New Town: Pangyo 27 3.5 The Third Generation New Towns: Toward Green and Smart Cities 31 4. Promotion of Regional Balance: Creation of Multifunctional Administrative City and Innovative Cities 32 4.1 Sejong: A New Administrative Capital 34 4.2 Innovative Cities: Strategic Hub Cities 40 4.3 A Success Story: Gyeongnam Innovative City in Jinju 42 5. Inclusive Urban Regeneration: Equity, Sustainability, and Quality of Life 47 5.1 Housing Redevelopment: A Circular Housing Redevelopment Project in Seongnam 47 5.2 Green Recovery Project: Transforming Solid Waste Landfill to Ecological Park in Sang-am 50 5.3 People-Centered Participatory Regeneration in Busan and Gunsan 52 5.4 Local Government-Led– Initiative: Busan Youth Urban Regeneration Expert Training Program 53 5.5 Private Sector–Led Initiative: Local: Rise Gunsan 55 6. Conclusion 59 7. Bibliography 62 List of Figures Figure 1. Global Urbanization by Region 1 Figure 2. Rise in Urban Population with Economic Development in Korea, 1960 - 2020 4 Figure 3. The Stages of Urbanization and Policy Interventions in Korea 5 Figure 4. Population and GRDP Growth of Seoul over Time 7 Figure 5. Seoul’s Poor Living Conditions in the 1960s 8 Figure 5.1 People doing laundry in the Han River 8 Figure 5.2 Seoul used to suffer from chronic flooding every year 8 Figure 5.3 Unauthorized settlements all around Seoul 8 Figure 6. Expansion of Administrative Districts in Seoul (1914–1963) 9 Figure 7. Expansion of Seoul’s City Center toward the South of the Han River 9 Figure 8. Seoul Metropolitan Government's Fiscal Budget and Infrastructure Expenditure Budget (1966–1970) 10 Figure 9. Availability of Infrastructure in Seoul Over Time 11 Figure 10. Growth of Households and Homeownership in Seoul (old calculation method) 13 Figure 11. Rate of Increase or Decrease of Tax Revenue per Capita of Seoul 13 Figure 12. Concept of Land Reclamation on Public Water 14 Figure 13. Locations of Land Reclamation on Public Water Project Sites of Table 1 15 Figure 14. Development of Yeouido 16 Figure 14.1 Development Site of Yunjungje Embankment (1968) 16 Figure 14.2 Construction of Sibum Apartment Complex in Yeouido (1973) 16 Figure 14.3 Current view of Yeouido (2020) 16 Figure 15. Principles of Land Pooling 17 Figure 16. Changes of Development Plan of Jamsil District over time by Land Pooling 18 Figure 17. National Industrial Complexes and Expressways Built in the 1970s 19 Figure 18. Development of Changwon Industrial Park over Time 20 Figure 18.1 Undergoing Construction in the 1976 20 Figure 18.2 Developed Status in the 1988 20 Figure 18.3 Current Status of Industrial Park 2016 20 Figure 19. Financing Model for Housing Supply in Public-Led Development 23 Figure 20. Korea’s New Towns in the Capital Region (first through third generations) 24 Figure 21. Increase in Price of Housing in Gangnam and Yeoui-do Areas, 1971–2002 25 Figure 22. Outrage of the Public Due to Lack of Houses and Rising House Prices 26 Figure 23. Before and After the Development of Bundang New Town 27 Figure 24. Before and After the Development of Pangyo New Town 29 Figure 25. The gap between the Capital Region and Other Regions 32 Figure 26. Overview of Korea’s Balanced Regional Development 33 Figure 27. A View of Contemporary Sejong 34 Figure 28. Organization of the Administrative City Construction Master Plan Establishment System Province, Jinju City, and Gyeongnam Innovative City (2015-2019) 36 Figure 29. Development Plan of The Ring-type Balanced Circular Structure of The City 37 Figure 30. Main Features of Innovative Smart and Green Strategy 38 Figure 31. Main Features of Smart Services Based on AI and Blockchain Technology 39 Figure 32. The Basic Concept Behind Innovation Cities 41 Figure 33. The 10 Innovation Cities and Their Thematic Concentration 41 Figure 34. A View of Contemporary Gyeongnam Innovation City in Jinju 42 Figure 35. Growing Number of Companies and Employees over time in Gyeongnam Province, Jinju City, and Gyeongnam Innovation City (2015–2019) 43 Figure 36. Satisfaction on Residential Conditions of Each Innovation City (2022) 44 Figure 37. Concept of Circular Redevelopment 48 Figure 38. Before and After Redevelopment in Seongnam 50 Figure 39. Before and After Nanjido Transformation 51 Figure 40. Increase in Species of Plants and Animals in Nanjido between 2000 and 2013 52 Figure 41. Process for Training Youth Urban Regeneration Experts 54 Figure 42. Busan Youth Urban Regeneration Expert Training Camp 54 Figure 43. Revitalization of the Gupo Marketplace 55 Figure 44. Development Strategy of Local: Rise Gunsan 56 Figure 45. Achievements of Local: Rise Project over Three Years 57 List of Tables Table 1. Examples of Public Water Reclamation in Seoul 15 Table 2. Examples of Land Pooling Projects in Seoul 17 Table 3. Examples of National Industrial Parks and Industry-Supporting New Towns 20 Table 4. Comparison between the Housing Site Development Promotion Act and the Urban Development Act 21 Table 5. Overview of Bundang New Town Development Plan 26 Table 6. Policy Transformation of Korea’s Industrialization 28 Table 7. Overview of Pangyo New Town Development Plan 29 Table 8. Pangyo New Town Smart Service Classification 30 Table 9. Major Roles by Implementing Entities in Administrative City Construction 36 Table 10. Overview of Gyeongnam Innovative City Development Plan 42 Table 11. Satisfaction Scores of Residential Conditions of Gyeongnam Innovative City 44 Table 12. Main Regional Development Projects conducted by LH in Gyeongnam Region 45 List of Boxes Box 1. Evolution of the Seoul Metropolitan Government’s role and authority in urban development from the 1960s to the 2000s 12 Box 2. Establishment of Industrial New Towns 19 Box 3. Sejong National Pilot Smart City Project 5-1: Designing Tomorrow 38 Box 4. Lessons Learned from the Innovation Cities 46 Box 5. Insights from a Redevelopment Specialist: Interview with Professor Keong Gu Hong, general architect of Seongnam City and professor at Danguk Universitya 48 Box 6. Seoul Metropolitan Government’s Announcement of the Transformation of Nanjido 51 Box 7. Busan’s Youth Urban Regeneration Expert Training Program: Interview with the Program’s Implementersa 53 Box 8. A History of Local: Rise Gunsan 55 Box 9. Thoughts from a Start-up Participating in Local: Rise Gunsan 58 Acknowledgment This report was prepared as a joint effort by the World Bank and Korea Land and Housing Corporation (LH) under the World Bank’s Green and Smart Cities Program. The World Bank team is led by the Urban, Disaster Risk Management, Resilience, and Land Global Practice (GPURL) and consists of Gyongshim An (Lead Urban Development Specialist), Narae Choi (Senior Urban Development Specialist), John Hosung Lee (Urban Specialist), Minkyung Kim (Junior Professional Officer), and Jisoo Lee (Urban Consultant). The LH team is led by Beckhee Cho (Former General Director) and Jaeyong Kim (General Director) and consists of Sem Oh (Manager), Narae Hong (Assistant Manager), and Jun-Woo Kang (Senior). A research team at the Land and Housing Research Institute (LHRI) led by Janghwan Seong (Executive Research Fellow) and Yeunwoo Jeong (Senior Research Fellow) also contributed to the work. The team extends its appreciation to Jason Allford (Special Representative of the World Bank Group Korea Office) and Yoonhee Kim (Practice Manager for GPURL) for their guidance and support. Special gratitude goes to the peer reviewers at the World Bank for their insightful comments: Luis Miguel Triveno Chan Jan (Senior Urban Development Specialist) and Zhiyu Jerry Chen (Senior Urban Economist). The final appreciation goes to the World Bank Korea Office and the Government of Korea for their generous funding. 1. Introduction 1. Introduction Today, approximately 56 percent of the global population or 4.4 billion people reside in urban areas. This trend is expected to continue, with the urban population projected to more than double by 2050. At that time, nearly 70 percent of humanity, or an additional 2.3 billion people, will live in cities. Figure 1 depicts the growth trend of urbanization globally. A significant 90 percent of urban growth is anticipated to occur in Asia and Africa.1 The shift from rural to urban living is driven by demographic and economic changes, which are intrinsically linked as people migrate to cities in search of better economic opportunities, a trend that shows no signs of abating. For example, India's urban population, currently 36 percent of the total is set to grow substantially, with cities like Mumbai, Delhi, and Bangalore at the forefront of this rapid urbanization. Similarly, Nigeria's urbanization rate stands at 54 percent, surpassing the Sub-Saharan African average (42 percent), yet still below the global average (56 percent).2 Figure 1. Global Urbanization by Region Sources: World Bank Development Indicators. United Nations Population Division. World Urbanization Prospects. 2018 Revision. The scale and speed of urbanization present both opportunities and challenges. Cities are economic powerhouses, generating over 80 percent of the global Gross Domestic Product (GDP). When effectively managed, cities can harness the potential to drive sustainable growth through increased productivity and innovation. However, the benefits of urbanization are contingent upon addressing the growing need for affordable housing, robust infrastructure, basic services, employment opportunities, and much more. The concentration of people often leads to strained infrastructure and increased resource demand in urban areas. Rapid urbanization often outstrips infrastructure development, resulting in inadequate housing, transportation, water, sanitation, and energy. Notably, nearly 1 billion urban poor 1. United Nations (2018). 2. Data from World Bank Development Indicators. United Nations Population Division. World Urbanization Prospects. 2018 Revision. 1 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration live in informal settlements, often near economic opportunities but lacking basic infrastructure and services. Further, 1.6 billion urban dwellers are estimated to face housing inadequacies by 2025.3 Compounding challenges can further undermine cities’ competitiveness and livability. In addition to generating negative environmental externalities such as pollution and loss of biodiversity, cities exacerbate climate risks by contributing to 70 percent of global carbon emissions.4 Cities are also vulnerable to climate impacts such as extreme urban heat. For example, Southeast Asian metropolitan cities and other East Asian cities with warmer climates suffer significant economic losses during heat events.5 Social inequalities may worsen, with marginalized communities having limited access to services, education, and jobs, while several cities face pressures from the influx of forcibly displaced individuals, over half of whom seek refuge in urban areas. Increasingly, cities in developing countries are seeking a model for enhancing economic vitality while managing urban forms to improve overall livability. In Sub-Saharan Africa, rapid urbanization is not strongly linked to economic growth any longer, largely due to inefficiencies in land governance and urban planning that limit coordinated infrastructure investments to enable economic density and connectivity within cities.6 Even in highly urbanized regions such as Latin America and the Caribbean, countries are experiencing an urban productivity paradox: its highly dense cities should be among the world’s most productive, yet they are not.7 Latin America and the Caribbean cities have been held back by a lack of dynamism in their industries, poor connectivity within and between countries, and divisions into disconnected poor and affluent neighborhoods in cities. For inclusive growth, countries must more efficiently transform natural wealth into human capital, infrastructure, and institutions and improve the competitiveness of the urban economy. Urban forms matter for efficient infrastructure and service delivery, stronger connectivity, and overall urban management. Yet, an analysis of urban spatial expansion in 9,500 cities from 1990 to 2015 reveals that low-income countries may see a 65 percent increase in urban expansion, with lower-middle-income countries potentially experiencing a 107 percent surge. This growth, primarily through unmanaged horizontal sprawl, can have negative effects on cities' economic, environmental, and social fabric by increasing the total resource input for cities to reach the desired service delivery and quality of living. In this context, proactive urban planning and management are crucial, especially in developing countries where most of the global urban expansion is expected to occur. Building cities that are smarter, greener, and more inclusive has never been more self-evident. Having gone through the full urbanization process, the Republic of Korea can offer insights on how to tackle key urban challenges of overcrowding and inadequate infrastructure and service delivery, while achieving economic, social, and environmental goals. 3. McKinsey Global Institute (2014). 4. World Economic Forum (2022). 5. World Bank (2023). 6. World Bank (2017). 7. World Bank (2024). 2 1. Introduction 1.1 Background: Korea’s Economic Growth and Urbanization Over the past 70 years since the Korean War (1950–1953), the Republic of Korea (hereafter Korea) has transformed dramatically, with government-led initiatives leading to rapid economic development of the country and playing a pivotal role in addressing the challenges following the rapid growth. Korea's urban development has been an intrinsic part of its remarkable economic growth. The paths of economic and urban development are intertwined, whereby economic prosperity is attributed to the significant effort and ambition aimed at elevating both standards of living and productivity, including in urban areas as growth poles. This section presents a short history of Korea’s post-war development as a background to the deeper analysis of the evolving urban policies that aimed at addressing the challenges of overconcentration around Seoul, promoting a balanced territorial development, and regenerating old towns in more recent years. Before the Korean War, Korea was a predominantly agrarian country. In 1944, approximately 71 percent of the population was in the agriculture sector and only 13.2 percent of the population lived in urban areas (Soh, Koh, and Aridi 2023). The war destroyed Korea’s infrastructure and economy, leaving 72.3 percent of the population below the poverty line by the end of the war (Yoon 2015). The country’s dire situation prompted the government to pursue state-driven economic growth through industrialization. The first Five-Year Economic Development Plan was launched in 1962, followed by seven Economic Development Plans. They guided Korea’s transition to an industrialized nation with a self-reliant industrial base (1962-1971) and spurred the growth of an export-driven economy through heavy and chemical industries and the development of a skilled labor force (1972–1981). The focus on advancing technology-intensive industries and fostering research and development (1982–1991) paved the way for the expansion of high-tech sectors, including bioengineering and aerospace, in the later stage (1992–1996) (Chung 2007). The Five-Year Economic Development Plan had a huge impact on Korea’s economy. Since the 1960s, Korea has experienced a remarkable economic transformation, characterized by a sharp decline in poverty rate from 56.4 percent in 1960 to 14.9 percent in 1975 and 9.7 percent in 1980 (Yoon 2015). Korea joined the Organisation for Economic Co-operation and Development (OECD) in 1996, marking its start as a high-income country. Korea’s economic boom has been accompanied by rapid urbanization, which increased from 28 percent in 1960 to 79 percent in 1996 when the Five-Year Economic Development Plan ended. Physical expansion of urban areas was necessary to accommodate the economic activities and vice versa, with more economic activities leading to more urban growth. GDP per capita significantly increased from US$158 in 1960 to US$31,721 in 2020 (World Bank Data). Figure 2 overlays the percentage of the urban population and GDP per capita since the 1960s when the migration from rural to urban areas began, which peaked in 2010. From the beginning of the 1990s, the growth of the urban population slowed down as the government promoted balanced development policies across the country. 3 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Figure 2. Rise in Urban Population with Economic Development in Korea, 1960 - 2020 1960s 1970s ~ 80s 1997 00s Agriculture industry Manufacturing industry IMF currency crisis Knowledge industry Sources: World Bank national accounts data; OECD national accounts data files (for GDP); Korean Statistical Information Service (KOSIS); United Nations (for urbanization rate). Note: * IMF = International Monetary Fund Over the decades, Korean cities have gone through a cycle of growth, maturity, decline, and regeneration, and the government has implemented major urban planning policies within Seoul and nationwide in response to varied and distinctive urban challenges during this evolution (Figure 3). The initial stage is characterized by a rapid urban population increase, propelling the expansion of Seoul. The growth stage highlights improvements in public services and infrastructure in urban areas, achieved through enhanced land supply and management strategies. The mature stage illustrates the government’s strategies to mitigate housing shortages and overcrowding in Seoul by developing new towns in satellite cities. The first-generation new town in the 1990s accommodated a population of 1,170,000. 4 1. Introduction Figure 3. The Stages of Urbanization and Policy Interventions in Korea Source: Korea Land and Housing Corporation drawing on Li and Zhou (2020, Figure 1) In the 2000s, Korea adopted initiatives aimed at reducing the gap between the Seoul Metropolitan Area (that is, the capital region) and suburban areas, promoting balanced territorial development. This phase saw the decentralization of governmental functions and empowerment of local governance and market forces nationwide. Finally, the regeneration stage focuses on green strategies to build sustainable cities, community revitalization, and housing redevelopment projects. 1.2 Objective and Structure of the Report This report presents Korea’s experience of adopting adaptive, proactive, and interactive urban policy measures that can shed light on some of the common global urban challenges that other countries face in their pursuit of economic growth. The focus is on drawing lessons from Korea’s urbanization experience of addressing overcrowding in Seoul and the shortage of infrastructure and housing, developing a metropolitan area through public-led new town development, and striving to achieve balanced territorial development by creating administrative and innovation cities and regenerating old urban towns in a participatory manner. The report targets the World Bank partner governments and development practitioners as the primary audience and aims to share inspiration and insights for tackling urbanization challenges and reaping the urban dividend. The report is structured according to three evolving models of Korea’s urban development, namely, adaptive, proactive, and interactive urban development approaches. Chapter 2 discusses land and 5 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration housing development in Seoul. Early interventions from the 1960s to 1970s were in response to the challenges of overconcentration in Seoul and the surrounding capital region and targeted at addressing housing shortages and rapid urbanization. This required new methods of supplying urban land by land reclamation on public waterways and land pooling. In later stages from the 1980s to the 2000s, policy efforts focused on proactively building new towns starting from the capital region, and then across the country to promote balanced regional development. Chapter 3 describes the model of public-led land and housing development, especially its creation of new towns outside the capital. Chapter 4 looks at the government’s strategies to promote regional balance by creating a multifunctional administrative city and innovation cities. Projects were in most cases funded through the sale of land after being acquired and redeveloped into more desirable land by public corporations. Although the prevailing key concept was new town planning, elements of smart, green, and inclusive development were applied to some extent. Chapter 5 describes Korea’s inclusive urban regeneration policies, emphasizing equity, sustainability, and quality of life. For the past decade from the 2010s, the urbanization rate remained constant, and the need for revitalizing declining cities emerged. This calls for a more interactive model of development through smaller-scale urban regeneration projects, for which engagements with and participation of local authorities, residents, businesses, academics, and civil organizations are critical. Finally, Chapter 6 summarizes the key lessons drawn from Korea’s urban development journey, offering valuable insights for policymakers, urban operators, and practitioners to foster balanced territorial development and sustainable urban growth. 6 2. Land and Housing Development in Seoul 2. Land and Housing Development in Seoul Seoul, the capital of Korea, has experienced significant transformation due to rapid urbanization and industrialization since the 1960s. The city attracted a large influx of people seeking employment opportunities, which strained the existing basic infrastructure. Recognizing the challenges, the government swiftly implemented top-down urban planning policies aimed at enhancing infrastructure and providing sufficient housing for the growing population. These measures led to a dramatic change in Seoul's landscape. This chapter explores the evolution of Seoul into a metropolis, characterized by the expansion of its urban area, provision of quality public services, and development of well-planned residential zones. 2.1 Population Growth and Overurbanization in Seoul The drive for economic growth and industrialization led to concentrated urbanization and an increase in nonagricultural jobs in Seoul, the capital city. Meanwhile, in the rural areas, the supply of foreign agricultural aid often surpassed the actual shortage, causing a sharp decline in agricultural production.8 Consequently, a large number of people from rural areas migrated to the capital for employment. For 15 years since the early 1960s, Seoul’s population increased by 200,000 people annually, resulting in a population surge of 3 million. By 1988, the city’s population reached 10 million, over a sixfold increase from the 1.6 million in 1955 (Figure 4). Figure 4. Population and GRDP Growth of Seoul over Time Source: KOSIS data, https://kosis.kr Note: GRDP = gross regional domestic product. 8. As the food situation worsened due to the Korean War, the government received foreign assistance in the form of grain. The US military, aid organizations, and the Korean government distributed food aid to provide wartime relief, while also using food aid supplies as a means of stabilizing grain prices. However, because the agricultural products provided as aid often exceeded the actual shortage, grain prices fell sharply to the detriment of the farm economy (Heo 2009). 7 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration In the early 1960s, Seoul began to experience rapid urbanization in the absence of adequate infrastructure. Living conditions in the city were poor, lacking basic sewage, water, and housing systems. Tap water was available to only 60 percent of the population and less than 30 percent had access to the sewage system. Residents washed clothes along the banks of the Han River, leading to the contamination of the Han River. Moreover, residential areas were full of inadequate housing and unauthorized settlements, leaving them vulnerable to disasters such as floods (Figure 5). Figure 5. Seoul’s Poor Living Conditions in the 1960s Figure 5.1 People doing laundry Figure 5.2 Seoul used to suffer Figure 5.3 Unauthorized in the Han River from chronic flooding every year. settlements all around Seoul © Seoul Metropolitan Archives 1962 © Seoul Museum of History 1967 © Seoul Museum of History 1969 The ongoing population growth raised the need for additional urban space to accommodate the expanding population and enlargement of the administrative districts in Seoul. As the city’ periphery and outlying areas became more densely populated, the need for public services in slums and unauthorized settlements promoted government action. In response, the government enacted the City Planning Act in 1962 and the Land Division and Organization Project Act in 1966,9 laying the groundwork for comprehensive urban planning in Seoul. These legislative measures enabled the city to identify zones needing development regulation and empowered the public sector to facilitate planning and implementation. Figure 6 illustrates the progressive expansion of Seoul’s administrative districts, which extended southward across the Han River in 1963. 9. The City Planning Act made the central city planning committee responsible for development and implementing city plans. The Land Division and Organization Project Act established the implementation procedures, method, and finance for land projects (Kim 2017). 8 2. Land and Housing Development in Seoul Figure 6. Expansion of Administrative Districts in Seoul (1914–1963) 1949 1944 1936 1914 1963 Source: National Geographic Information Institute 2019, 564. Today, the north of the Han River is known as Gangbuk,10 a region that preserves Seoul’s cultural heritage and is the heart of Korean politics. The south of the Han River, Gangnam, symbolizes modernization and wealth. Figure 7 shows the division between Gangbuk and Gangnam areas, as well as the significant expansion of Seoul’s territory from 1957 to 1997. Figure 7. Expansion of Seoul’s City Center toward the South of the Han River Today's Administrative Area of Seoul 1957 1972 1985 1997 Source: Kang and Park 2000 Before its incorporation into Seoul’s administrative districts, Gangnam was a largely undeveloped area with empty rice fields. The development of Gangnam stands as a pivotal chapter in Seoul’s urban history, as it served as a large-scale testbed for implementing urbanization strategies that included infrastructure construction, land supply and management, and execution of various private and public projects. 10. Gangbuk means north of the river and Gangnam means south of the river. 9 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration While the physical expansion of Seoul enabled the provision of additional land, the city’s rapid population growth and market development required sustainable strategies for urban planning. The government recognized the need for systematic policies to remove and redevelop the remaining slums, create high-quality residential areas, build roads and bridges, and provide public services, including public transportation. 2.2 Efforts to Improve Infrastructure in Seoul In the late 1960s, the Seoul Metropolitan Government (SMG) began to rapidly improve infrastructure. From 1961 to 1970, Seoul’s mayors prioritized systematic urban planning initiatives. The government’s efforts included increasing the water supply by 9,200 tons for the residents, launching a five-year plan to dismantle unauthorized buildings, implementing sewage systems, and building roads and bridges to accommodate public transit and private vehicles (Seoul Institute 2012). Kim Hyun-ok was appointed by President Park Chung-hee as the 14th mayor of Seoul Metropolitan City.11 He was nicknamed ‘Bulldozer’ and actively reshaped Seoul’s landscape during his term from 1966 to 1970. His administration was characterized by the implementation of a comprehensive development plan for Han River, the development of Yeouido, the construction of a three-dimensional overpass, the expansion of major arterial roads, the building of more than 400 apartments, and the undertaking of large-scale land pooling projects (Seoul Metropolitan Archives, Seoul Museum of History). Box 1 explains the evolution of the SMG’s role and authority in urban development. The city's financial records from 1966 to 1970 show an intense focus on urban planning and infrastructure development. Out of the total finances of approximately US$522 million during these years, about US$367 million was dedicated to infrastructure, representing 70.2 percent of the total budget. Figure 8 indicates that infrastructure expenditures consistently accounted for around 70 percent of the budget throughout the five years. Figure 8. SMG's Fiscal Budget and Infrastructure Expenditure Budget (1966–1970) Source: Seoul Statistical Yearbook, Seoul Metropolitan Government. 11. The mayoral election was introduced only in 1995. 10 2. Land and Housing Development in Seoul Note: a. The Amount of Expenditure Budget for Infrastructure is the sum of the expenditure budgets of the following detailed items—urban planning costs, construction projects, water supply costs, housing costs, land readjustment costs, construction materials production costs, sewage treatment plants, transportation projects, toll road projects, Han River construction projects. b. The US dollar notation was converted by applying the average exchange rate by year based on the Bank of Korea's economic statistics system. By 1980, the availability of tap water had reached 90 percent, while access to the sewage system had reached 60 percent. The proportion of unpaved roads stood at 40 percent in 1980, and by early 2000, the city had eliminated unpaved roads in the city (Figure 9). Figure 9. Availability of Infrastructure in Seoul Over Time Source: Seoul Institute, “Seoul in Numbers (2010),” https://data.si.re.kr/node/55521. 11 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Box 1. Evolution of the SMG’s role and authority in urban development from the 1960s to the 2000s. Seoul has served as the center of urban development in Korea making the institutional contributions of the SMG particularly noteworthy. The trajectory of urban development within the country has been shaped by a framework of regulations and strategic plans. Notably, Seoul has implemented a series of Comprehensive City Plans since the 1960s, each with evolving emphases and a forward-looking vision spanning 10–20 years. The initial plans of the 1960s prioritized zoning and infrastructure investment. Subsequently, from the 1970s through the 1980s, the focus shifted to providing quality housing and further expanding infrastructure. The 1990s saw the plans directing the creation of new towns in the vicinity of Seoul and enhancing public transportation networks to foster regional connectivity. From the 2000s, the city’s aspirations have been reoriented toward becoming a sustainable, environmentally friendly, and well-balanced global megacity (Kim 2015). The evolution of Seoul’s urban planning has been marked by significant institutional changes and a dynamic process in the establishment and execution of urban projects. In the initial phase of urban development, spanning from the 1960s to the 1970s, the central government—mostly the presidential office and the Ministry of Land, Infrastructure and Transport (MOLIT)—was at the forefront of leading Seoul’s Comprehensive City Plans and their implementation. As the 1980s progressed, the planning process became a joint endeavor between the central government and the SMG. The 1990s saw a pivotal change with the abolition of the Urban Planning Act, which led to an increased leadership role for the SMG in practical decision-making and project execution. This was exemplified by projects like the Sang- am green recovery initiative, which was directed entirely by the SMG. The 2000s witnessed a further expansion of the SMG’s authority, with a growing emphasis on gathering citizen inputs through public hearings during the formulation of the Comprehensive City Plans. Although these plans still necessitate MOLIT’s endorsement, it is widely acknowledged that Seoul autonomously determines its urban planning trajectory, ensuring it is congruent with the city’s physical, social, and economic realities, and customizes the planning and management system to address the needs of its residents (Amalia 2019). The initial top-down approach to urban planning in Seoul was marked by strong presidential leadership and commitment, which proved effective. However, as time passed, the evolving complexity of social structures and demographic shifts necessitated a more flexible response from both central and local governments, as well as urban operators. The key to Seoul’s success has been the adaptability of its management system, coupled with comprehensive plans that continuously analyze new challenges. These plans set forth the city’s agenda and vision, making Seoul’s experience a valuable reference for cities in developing countries considering similar urban planning benchmarks. 2.3 Residential Land Development Strategies Despite government efforts to improve infrastructure, housing issues persisted in Seoul. The rate of house construction failed to meet the surging demand from the influx of new households into the city, making home ownership or the aspiration to live in one’s own house an increasingly common goal as the economy grew. The 1965–1970 period saw a steady rise in the rate of housing ownership, as depicted in Figure 10. 12 2. Land and Housing Development in Seoul Figure 10. Growth of Households and Homeownership in Seoul (old calculation method) Source: Seoul Institute, “Seoul in Numbers (2010),” https://data.si.re.kr/node/55521. Increasing the housing supply and provision of public services required sustainable financial strategies for the city. The SMG successfully increased tax revenues, thanks to a rise in employment. After adjusting for inflation, tax revenue in Seoul grew by approximately 20 percent annually in the five years following 1965. This upward trend persisted into the 1970s, except for the global oil shock period (Figure 11) (Korea Land and Housing Research Institute 2019). Figure 11. Rate of Increase or Decrease of Tax Revenue per Capita of Seoul Source: Korea Land and Housing Research Institute (2019) The rate was calculated based on the accounting data of Seoul Metropolitan City for each year and adjusted the inflation rate. Despite this revenue growth, the scale of public works required during this era outpaced the city’s financial capacity, leading to budget deficits. Consequently, the involvement of the private sector in urban planning became essential, along with the adoption of a land value capture12 strategy. Instead of directly supporting the low-income population with taxpayers’ money, the government decided to generate residential land, sell it to middle- and high-income individuals, and then utilize the profits to enhance infrastructure and support low-income citizens. Working with the private sector, the government introduced innovative land development strategies to facilitate extensive urban infrastructure projects, including land reclamation on public water and land pooling. 12. Land value capture is a financial mechanism used by city governments to charge fees and/or taxes on the increase in land value as a result of an action or investment by the government. The increase in government revenues is reinvested in new infrastructure development and/or city services. 13 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration 2.4 Land Reclamation on Public Water During the Chosun dynasty, Seoul was strategically located about 5 km away from the Han River. Hence the frequent flooding, especially during the monsoon season, could be managed. However, with the advent of industrialization in the modern area, Seoul’s population swelled, and a growing number of people began to live near the Han River.13 To prevent disaster and minimize damage, authorities implemented preliminary measures, such as constructing embankments. Upon taking office in 1966, Seoul Mayor Kim Hyun-Ok prioritized the construction of arterial roads. These roads were built along the Han River, and the process led to the reclamation of a significant amount of land within the embankment. The construction of embankment roads transformed previously unused sandy fields adjacent to the river into valuable inland areas under government ownership, as shown in Figure 12. Figure 12. Concept of Land Reclamation on Public Water Source: Korea Land and Housing Research Institute 2019. This method was prevalent in the late 1960s and the 1970s, following the enactment of the Land Reclamation on Public Water Act in 1962. Recognizing the potential profitability of selling this newly reclaimed land, the SMG initiated a large-scale Han River maintenance project (Jang 2010). The positive outcome of land reclamation on public water was that it created a new form of land value capture: The government could expand the drainage system on the new land, develop it into desirable residential areas, and finance the cost of this work by selling the new land to developers. Today, some of the most affluent residential areas with the highest real estate value in Korea are located along the riverbank where water reclamation projects were implemented (Figure 13). Table 1 presents a selection of land reclamation on public water sites along the Han River. These residential zones were developed by a mix of public and private entities, encompassing city government, public corporations, and construction corporations. Also, the government turned small islands like Yeouido and Jamsil into residential and commercial areas (Figure 14). 13. For those who needed to be relocated due the land reclamation on public water, the government provided compensation for land and building, and gave opportunity to move to other houses in nearby areas (Korea Land and Housing Research Institute 2019). 14 2. Land and Housing Development in Seoul Figure 13. Locations of Land Reclamation on Public Water Project Sites of Table 1 Source: Original figure for this publication Table 1. Examples of Land Reclamation on Public Water in Seoul Area Developer Year Site Name Land Use Note (km2) Name ● Constructed a 20-m wide and 16-m (Public) Public, high embankment surrounding 1967– 2.87 Seoul Yeouido Residential, Yeouido (about 7,000-m length) 1968 km2 Metropolitan and Retail ● Constructed Sibeom Apartment City Complex in 1971 (1,596 households) (Public) ● K-Water sold the residential land Public, Korea Water 1968– Dongbuichon- 0.40 (about 0.3 km2) to both public and Residential, Resources 1969 dong km2 private developers for building and Retail Corporation apartment complexes (K-Water) ● Land for building infrastructure (road Public, (Private) and embankment) was vested in the 0.16 Hyundai 1969 Apgujeong Residential, government (about 0.02 km2) km2 Construc- and Retail tion ● Hyundai Apartment Complex was constructed in 1977 (5,909 households) ● Land for building infrastructure (road and embankment) was vested in the (Private JV) Public, government (about 0.10 km2) 1970– 0.63 Hyundai, Banpo Residential, ● The entire residential land (about 0.53 km2) 1972 km2 Sambu, and Retail was sold to Korea Housing Corporation Daelim (currently LH) for building public housing (3,605 households) 15 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Area Developer Year Site Name Land Use Note (km2) Name ● By reclaiming a part of the mainstream of Han River, the northeastern part of (Private JV) Jamsil Island was converted to land Public, Hyundai, ● Land for building infrastructure (road Residential, 1971– 2.50 Daelim, and embankment) was vested in the Jamsil Green, 1978 km2 Kukdong, government (about 0.36 km2) Retail, and Sambu, ● Seoul Metropolitan City Government so on Dongah announced the Basic Plan for Comprehensive Development of Jamsil District in 1974. Source: Rearranged based on the data and explanation of Jang (2010) Figure 14. Development of Yeouido Figure 14.1 Development Site of Figure 14.2 Construction of Figure 14.3 Current view of Yunjungje Embankment (1968) Sibum Apartment Complex in Yeouido (2020) Yeouido (1973) © Seoul Museum of History © Seoul Museum of History © Seoul Museum of History The land reclamation on public water project achieved two objectives: it enhanced disaster risk management by improving drainage systems and constructing embankments to mitigate flood risks, and it created new land for residential use. The project proved to be highly profitable with minimal risk in an environment where land was scarce. During the 1960s and 1970s, when the project was actively executed, the land value capture scheme generated substantial benefits for both the private developers and the government. Private construction firms amassed considerable wealth from these projects, while the government not only successfully executed its infrastructure plans but also retained a portion of the developed land for public utility (Jang 2010). 2.5 Land Pooling Land pooling represents another land development strategy, functioning as an adapted approach to transforming arable land, a method that is widely used in many countries.14 Land pooling is usually employed during the initial phases of residential land development when expansive tracts of land are 14. During the development of the Gangnam area in the 1960s, the Land Division and Organization Project Act (1966) specified the concept of land pooling for the first time. The Act was abolished in 2000, so the legal basis for land pooling is now laid out under the Urban Development Act (2000) (Kim 2017b). 16 2. Land and Housing Development in Seoul replotted and re-proportioned. The developer is authorized to redefine the plot boundaries, and upon completion, they reallocate the reconfigured parcels back to the original owners. A specified portion of the land is allocated for public utilities such as roads and parks (Figure 15). Figure 15. Principles of Land Pooling Source: Suzuki et al. 2015. This process requires a delicate balance, as the ratio of private to public land15 distribution needs to be meticulously calculated to avoid discontent and disputes with landowners. When there was a shortage of housing and a high demand for residential land, this method was effective. In Seoul, land pooling projects were most actively implemented during the 1960s and 1970s, following the enactment of the Land Compartmentalization and Rearrangement Projects Act16 in 1966. Landowners benefited from the increased value of their land, which resulted from infrastructure improvements within their neighborhoods. Table 2 presents some examples of land pooling projects in Seoul. In the three districts shown in the table, the government successfully created a large number of public lots17, achieving up to 41.8 percent in one district, which facilitated the efficient provision of public services and the development of infrastructure. Table 2. Examples of Land Reclamation on Public Water in Seoul Area Percentage of Land Reduction Year Site Name Developer Name (km2) Public Lots Rate 1968– Yeongdong 1 12.74 Seoul Metropolitan 41.8% 39.1% 1990 District km2 Government 15. Public land meaning land used for public purposes such as roads, parks, schools, etc. 16. The Land Compartmentalization and Rearrangement Projects Act was abolished in 2000, and it was integrated into the Urban Development Act. 17. Land used for public purposes such as parks, schools, community centers, roads, utilities, etc. 17 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Area Percentage of Land Reduction Year Site Name Developer Name (km2) Public Lots Rate 1971– Yeongdong 2 13.07 Seoul Metropolitan 27.2% 36.8% 1985 District km2 Government 1974– 11.23 Seoul Metropolitan Jamsil District 41.0% 52.9% 1986 km2 Government Source: Seoul Institute 2015. In the Jamsil district, the government undertook a combination of land reclamation on public water and land pooling initiatives. The first image in Figure 16 shows Jamsil Island before the land reclamation project, characterized by its sparse residential areas. The second image shows the transformation of the island into a district featuring a well-planned and expansive residential area. Figure 16. Changes of Development Plan of Jamsil District over time by Land Pooling Jamsil Development Plan in 1969 Jamsil Development Plan in 1974 High-Density Residential area Medium-Density Residential area Low-Density Residential area Source: Kim et al. 2010. Land pooling projects brought positive outcomes and effectively captured land value, but the government had to deal with some risks. The most significant risk was the long process, which could take five to six years or even longer due to the complexities of replotting. The government’s objective to increase the proportion of land designated for public services often conflicted with landowners’ interest in minimizing this rate. This tension frequently resulted in project delays and a decline in the quality of public services. Seoul’s experience tells that while land pooling can be beneficial for cities with limited fiscal resources in the early stages of development, it may not be sustainable in the long term, especially when real estate costs escalate and the financial resources for infrastructure development become constrained. 18 3. New Towns in Seoul Metropolitan Area: Public-Led Development 3. New Towns in Seoul Metropolitan Area: Public-Led Development By the late 1970s, housing provision by the private sector through land pooling and land reclamation of public waters was no longer viable for housing development due to escalating real estate prices in Seoul, complex stakeholder negotiations, and severe conflicts. Additionally, the overdevelopment along the Han River depleted its embankments. There was a need for a large-scale land development strategy to provide ample residential space for a growing population. The government’s efforts to increase housing stock included the establishment of government-built industrial complexes to accommodate the workforce of various industrial sectors (Box 2). This chapter introduces the government’s proactive policy to purchase and develop residential land in the context of new town development around Seoul. Box 2. Establishment of Industrial New Towns18 The location of industrial complexes was strategically selected to be built near the Gyeongbu Expressway, a major thoroughfare connecting the capital to the port city of Busan (Figure 17). This location facilitated the efficient transport of goods to Seoul for domestic distribution or to Busan for export (Korea Land and Housing Research Institute, 2019). Table 3 shows examples of industry-supporting new towns that cover various industries that carried economic development of Korea. The total target population of the five new towns was more than 1 million. Figure 17. National Industrial Complexes and Expressways Built in the 1970s Source: Sonn 2007, using 2005 data from the Ministry of Construction and Transportation and Korean Expressway Corporation. 18. Referring to New Towns that were built to accommodate the families working in newly built industrial parks. 19 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Table 3. Examples of National Industrial Parks and Industry-Supporting New Towns Designated Development of Industry- Site Name Total Area Target Industry Year Supporting New Towns Oil Refinery, Ulsan New Town 1962 Ulsan Industrial Park 46.1 km2 Steel, Fertilizer - Area: 179.66 km2 Plants - Target Population: 150,000 Gumi New Town 1969 Gumi Industrial Park 10.42 km2 Electronics - Area: 3.5 km2 - Target Population: 54,000 Changwon New Town Changwon Industrial 1974 43.35 km2 Machinery - Area: 21 km2 Park - Target Population: 300,000 Yeocheon New Town Yeocheon Industrial 1974 18.92 km2 Petrochemical - Area: 34 km2 Park - Target Population: 300,000 Relocation of Banwol New Town Banwol Industrial Park 1979 57.85 km2 factories based - Area: 41 km2 (Banwol Special Zone) in Seoul - Target Population: 200,000 Source: Rearranged based on the data and explanation from Yoo (1998) and Ministry of Strategy and Finance (2012). Figure 18. Development of Changwon Industrial Park over Time Figure 18.1 Undergoing Figure 18.2 Developed Status in Figure 18.3 Current Status of Construction in the 1976 the 1988 Industrial Park 2016 © Changwon City © Changwon City © National Museum of Korean Contemporary History Note: The agricultural fields in 1976 were developed into an industrial park in Changwon, and it was expanded over time until the current day. The industrial park brought in residents and infrastructure, which improved the living quality of the city. 3.1 Regulatory and Institutional Arrangement for Public-Led Land Development For large-scale residential housing development, the Korean government opted to facilitate land provision or acquisition and provide comprehensive guidelines for urban planning, especially for large- scale projects like new town developments. To enable the public sector to effectively lead and facilitate the provision of housing, a robust legal foundation is necessary. In Korea, updating the regulation framework was a key enabling factor for developing new towns. In 1980, Korea enacted the Housing Site Development Promotion Act, which empowered public 20 3. New Towns in Seoul Metropolitan Area: Public-Led Development organizations to acquire the land necessary for housing development in large volumes at once. This Act effectively helped mitigate the shortage of housing land in urban areas, particularly for the development of first-and second-generation new towns from the 1980s to the 2010s. Over time, Korea recognized the limitations of the laws with singular focuses, such as the development of residential land or industrial complexes. In response, the government enacted the Urban Development Act in 2000 to provide a legal framework for comprehensive and systematic urban development (Lee 2021). Unlike the Housing Site Development Promotion Act, which primarily addressed housing supply, the Urban Development Act introduced a holistic approach to urban planning that included the development of residential zones, green spaces, and industrial complexes. It also emphasized the importance of private sector and resident involvement to ensure effective investment and community development (Table 4). Table 4. Comparison between the Housing Site Development Promotion Act and the Urban Development Act Division Housing Site Development Promotion Act Urban Development Act Address housing land shortage in urban areas Planned and systematic urban development Purpose Support acquisition, development, and supply Pleasant urban environment of housing land Method of Public-led Public-private partnership allowed development Land expropriation Up to two-thirds of the land upon consent when listing of the Not allowed of two-thirds of the landowners area is approved Who in the Less than 200 km2: Head of the competent Head of the competent regional government authority is regional government * Authorization by the MOLIT required for required to list Over 200 km2: MOLIT an area over 1 million m2 Partnership between state/local government, State/local government, a local corporation, local corporation or a third sector, and Developer or a third sector as named by MOLIT landowners, their cooperatives, or eligible private enterprises Limited participation Extensive participation Participation by Hearing on compensation and relocation Through cooperatives on the sites where residents Opinion on the land to which residents will land zoning is performed be moved Housing land development is allowed if a Foreign Not clearly defined, but the provision on complex needs to be built for special purposes, investment private entities’ participation is applicable including industry and tourism Advance payment: Up-front payments made Advance payment by property buyers or developers before the Land redevelopment bond completion of the development project. Government subsidies or loans Funding Land redevelopment bond: Used in the Payment by Beneficiary: A portion of costs development of new cities. Investors that are expected to be covered by those who purchase these bonds, and the funds will benefit directly from the development, generated are utilized for the specified such as property owners or developers. 21 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Division Housing Site Development Promotion Act Urban Development Act land redevelopment projects. Government subsidies or loans: These refer to Urban development special account: financial assistance provided by the national Segregates funds intended for urban or local government to support and promote development, ensuring transparency and specific activities or projects such as financial accountability in managing financial aid or loans Offered by the government to resources allocated for initiatives such as facilitate the growth and infrastructure the creation of new cities. development of the new city. Method of land Full buyout Buyout or replotting acquisition Replotting if necessary Source: Rearranged based on the data and explanation from Korea Land and Housing Research Institute (2019). With the regulation in place, the Korean government embarked on an ambitious initiative to build 2 million houses in the late 1980s, employing a distinctive financing strategy for this public-led housing development project: the pre-sale of land and apartments. These projects involved public organizations purchasing land at an appraised value determined by external experts.19 The land was then readjusted and developed according to a land use plan, which included the construction of infrastructure. Subsequently, the residential and commercial land was sold to private developers at a value higher than the purchase price. A portion of the acquired land was allocated for public use, including the construction of social housing, public facilities, and infrastructure. Some of this land was either reserved or sold at a significantly reduced price. In this scheme, the role of public developers and division of responsibilities were critical in facilitating the finance. At the higher-level, MOLIT20 oversaw the public-led development of land and housing, and the National Housing Fund (NHF)21 facilitated financial support for housing development projects. The NHF generated profits through national housing bonds, housing purchase subscription savings accounts, and interest from loan programs. This revenue was then used to financially assist developers in constructing public and rental housing, as well as to support lower-income individuals in purchasing or renting homes. The role of the Korea Land and Housing Corporation (LH)22 was to collect payments in advance from buyers of housing land, typically construction companies. These private construction companies, in turn, would issue housing bonds and secure advance payments for the houses from individual buyers. To facilitate this process, the construction companies helped individual buyers obtain low-interest loans from commercial banks, which could be repaid over an extended period. Figure 19 describes these exchanges and the responsibilities of public organizations. 19. Lands were comparatively cheaper as most of these designed lands were for agricultural use before being acquired and redeveloped by the public through green belts (development restrictive areas). 20. Its name was Ministry of Construction and Transportation in the 1970s. 21. NHF was created by MOLIT in 1973, it transformed into the National Housing and Urban Fund (NHUF) in 2015.Then the Korea Housing and Urban Guarantee Corporation (HUG) was founded by MOLIT to oversee the management of the NHUF. 22. LH was formed in 2009 by merging the Korea Land Corporation (KLC) and the Korea National Housing Corporation (KNHC). LH has successfully developed around 465 km2 of urban areas and 211 km2 of industrial complexes, in addition to providing 2.9 million units of public housing nationwide. 22 3. New Towns in Seoul Metropolitan Area: Public-Led Development Figure 19. Financing Model for Housing Supply in Public-Led Development Source: Korea Land and Housing Corporation. It is important to understand that the government effectively worked with LH (previously KLC23 and KNHC24, respectively) and NHF to acquire land, develop infrastructure, and sell the land to cover the public housing and new town development. This allowed additional housing supply by public intervention, guided by laws to secure both supply and demand sides. Based on the robust regulations and governance structure, the Korean government moved forward launching the new town development projects in the 1990s. 3.2 New Town Development in the Seoul Metropolitan Area In Korea, the ‘new town’ denotes a public-led initiative aimed at establishing a convenient, and safe community with a new residential area. These projects are typically initiated and managed by the central government and cover areas over 3.3 million m2 (Korea Land and Housing Research Institute 2019). Historically, until the 1990s, new town developments were predominantly located on the outskirts of Seoul. This was due to the complexities associated with building houses within the existing urban fabric, where high land costs, the need for infrastructure expansion, and potential conflicts from relocating residents posed significant challenges. Consequently, the government found it more cost-efficient to develop housing in undeveloped suburban areas, often designated as Green 23. KLC was originally the Korea Land Bank, established in 1975 to purchase non-essential corporate land and to provide loans for land development. In 1979, the Korea Land Bank was transformed into the Korea Land Development Corporation (KLDC), an entity that promotes large-scale land development and resolves to mitigate the intensifying housing shortages. Renamed Korea Land Corporation in 1996, it has been facilitating the development of new towns and industrial complexes across the country. 24. KNHC, founded in 1962, aimed to make housing more accessible for low- and middle-income groups. KNHC was a pioneer in the housing industry, constructing hundreds of thousands of apartments, and introducing a new type of housing model during Korea’s economic boom. As the private sector began to dominate apartment complex construction, KNHC’s role evolved to focus on providing public social housing for the low-income population. 23 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Belt25 zones. These zones were legally protected to prevent urban sprawl, but by releasing the green belt land for development, the government could efficiently provide land and construct the necessary infrastructure for public new town projects.26 The new town projects were developed in three phases: The first-generation new towns were established in the 1990s, the second-generation emerged in the early 2000s, and the third generation began in the 2020s after being announced in 2018. Figure 20 illustrates the locations of new towns by phases. Figure 20. Korea’s New Towns in the Capital Region (first through third generations) * Remaining green belt areas in the capital region Source: National Geographic Information Institute 2019, p. 1988. Note: hh = household. 25. Green belts prevent unplanned expansion of urban areas by banning land development, largely in the suburbs of a city. Once listed, no renovation or reconstruction of architectural structures, installation of works, change of land use, cutting down of trees or plants, division of land, piling up of objects, or urban planning is allowed. The exercise of property rights is strictly limited within a green belt. (Korea Land and Housing Research Institute 2019) 26. New towns developed by LH were mostly self-financed by issuing bonds and in most cases made a profit which was invested into loss-making projects like public housing (Kim 2006). This was possible by enabling Acts to acquire land in mass at affordable prices from the green belt area. 24 3. New Towns in Seoul Metropolitan Area: Public-Led Development The project evolved through three generations and each phase accomplished different outcomes. The first-generation new towns prioritized housing supply and quality public services within the cities. The second-generation served as forward-looking industrial hubs, attracting private investment and generating job opportunities, which targeted economic competitiveness to ensure sustainable development of cities. The third-generation project is under planning as of 2024, and the focus is on affordable housing to meet the increasing needs of single-housing and small family households. The following sections will describe the background, features, and overview of the new town project initiative with example cities. 3.3 A First-Generation New Town: Bundang By the 1980s, the Gangnam district had already evolved into a prosperous area filled with apartments, the housing type most favored by Koreans, and Seoul's infrastructure had developed to a point where it provided a comfortable living environment for residents. In 1985, Korea's GDP per capita had increased to US$2,482.40, a significant rise from the US$158.27 recorded in 1960. Despite these positive developments, as previously discussed, the housing supply was not keeping pace with the needs of the rapidly growing population. Seoul’s population expanded from 4 million to 10 million between 1970 and 1988. This sharp increase in population led to an exponential rise in housing prices starting in the late 1980s, as illustrated in Figure 21. The public's dissatisfaction and the violent protests that ensued were further fueled by the lack of affordable housing, a situation that was particularly tense in the already-developed Gangnam area (Figure 22). To address the public's discontent and the escalating housing crisis, the government announced a plan to build new towns in the capital region with the dual goals of providing more housing and stabilizing the real estate market. Figure 21. Increase in Price of Housing in Gangnam and Yeoui-do Areas, 1971–2002 Source: Lim 2002. 25 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Figure 22. Outrage of the Public Due to Lack of Houses and Rising House Prices Housing price skyrocketed… Dream of owning house becomes unreachable as public outrages No hope for 60% of Tenants Only means to them is long-term rental in small-sized apartment Source: [1] Hankyoreh Daily. 1988; [2] © Seongnam City. Bundang was one of the five first-generation new towns. The city is known as ‘Bundang under heaven’ (Abbott 2023), a testament to its meticulously planned urban layout, which includes strategic road connections to Seoul, particularly to the Gangnam district, a well-thought-out public transportation system, contemporary apartment complexes, and an abundance of green spaces, some of which incorporate previously protected green belt areas.27 Table 5 offers basic information about the city, highlighting its proximity to Seoul, the integration of green spaces, and residential zones equipped with public amenities. The accompanying images vividly illustrate Bundang's transformation from an expansive field encircled by mountains in 1980 to a structured and vibrant new city, complete with parks and a flowing stream. Table 5. Overview of Bundang New Town Development Plan Create a self-reliant town to share some of Gangnam’s Purpose of commercial activity and serve as a business and development commercial center Location 25 km southeast of Gangnam, Seoul Development area 19.64 km2 Planned population 390,500 (368,700 as of 2023) Population density 19,883/km2 (18.784/km2 as of 2023) Households 97,500 units A comprehensive plan for the Bundang Project duration 1989–1996 New Town construction project 27. A development restriction zone to preserve green space was introduced in 1971 after reviewing systems such as the ‘green belt’ of the UK, the suburbs of Japan, and the urbanization-coordination zone. It is intended to preserve the natural environment surrounding the city and act as a buffer against security threats. The legal basis was established by specifying related regulations in the Urban Planning Act (1971) (Seoul Institute 2021). 26 3. New Towns in Seoul Metropolitan Area: Public-Led Development Project Cost About US$ 3.17 billion (4.16 trillion Korean won) Residential: 32.3% Commercial and Business: 8.35% Parks and Green Space: 20% Land use plan Public: 39.2% (including roads, public organization buildings, schools, playgrounds, general health care facilities, streams, and so on) Figure 23. Before and After the Development of Bundang New Town © Seongnam City 1980. © Korea Land and Housing Corporation 2017. © Seongnam City 1980. © Korea Land and Housing Corporation 2014. Similar to Bundang, other first-generation new towns were built in the vicinity of Seoul and offered housing in the form of clean and secure apartment complexes, alongside commercial zones and public services. Nevertheless, questions regarding urban competitiveness persisted, particularly concerning the availability of job opportunities within these cities, as well as economic and innovative factors that contribute to shaping a city's vision and its potential for future growth. 3.4 The Second-Generation New Town: Pangyo Drawing on lessons gained from the first-generation new towns, the second-generation new town initiatives incorporated a stronger focus on economic aspects and integrated the smart city concept into their urban management strategies. By the 2000s, the driving force of Korea’s industrialization had transformed from manufacturing to knowledge-based production (Table 6). This evolution informed the development of the second-generation new towns, which were purposefully situated around high-technology industrial complexes and free economic zones to align with the country's industrial shift. 27 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Table 6. Policy Transformation of Korea’s Industrialization The 2000s Division 1960s 1970s 1980s 1990s and after Ensure nationally Nurture export balanced Expand Build foundations Build foundations Policy industry; build development and locations for for heavy for high-tech Goal foundations for redistribute knowledge-based industries businesses industrialization industry to local industries areas Fully performing Large-scale coastal industrial Diversification of Export-oriented industrial complexes Specialization and location types light industry complexes clustering support Policy One industrial Creation of agro- for transitions to a Focus Easing of complex per Control of industrial industrial knowledge-based regulations on province locations in large complexes economy locations cities Redistribution of industrial locations Seoul Metropolitan Act on Special Cases for Area Planning Act Land Expropriation for (1983) Industrial Location Creation of Industrial Local Industrial Act (1990) Zones (1962) Act on National Development Act SME (Small and Territory Planning (1970) Medium Act on Urban Planning Act (2003) Enterprise) Deregulation of (1963) Promotional Act on Promotion Act Business Activities Regulatory Act on the the Development (1995) (1993) Framework Act on Development Simplification of of Industrial Bases and Creation of Export Permit Procedures (1973) Act on the Growth Act on the Industrial Complexes on Development of of Income in Rural Support of (1973) Industrial Complexes Industrial Location Areas (1983) Industrial and (2008) Act (1977) Technological Framework Act on Industrial Complexes (1998) Homeland Development Act Development (1963) (1986) Introduction of a Renaming of system to encourage industrial High-tech industrial the development of Creation of large- complexes complexes in urban local industry scale industrial areas Creation of Ulsan complexes in the High-tech scientific Industrial Zone Creation of large- Key southwestern areas industrial Creation of free scale industrial Features complexes in local economic zones Creation of export complexes in the Development of areas industrial complexes southeastern areas agro-industrial Regeneration of complexes More availability aging industrial Development of of apartment-type complexes free economic factories zones Source: Korea Industrial Complex Corporation 2014. The Pangyo Techno Valley exemplifies a new kind of industrial complex, specifically designed to support the surge of new information and communication technology (ICT) companies that emerged 28 3. New Towns in Seoul Metropolitan Area: Public-Led Development after the nationwide implementation of fiber optic cables in 2000. This innovative ecosystem, actively encouraged by the government to promote knowledge-based industries, not only altered the country's economic activities but also the character of its cities and housing. The second-generation new towns, including Pangyo, aimed to be economically self-reliant; they were not conceived as commuter towns like the first-generation new towns, where many residents commuted to Seoul for work. Additionally, these new towns featured a diversity in apartment types and designs, moving away from the uniformity of the previous generation's housing. Table 7 provides an overview of the Pangyo development plan, highlighting its extensive public facilities, green spaces, and the thoughtful blend of industrial and residential areas. Table 7. Overview of Pangyo New Town Development Plan Purpose of Prevent urban sprawl and supply land through planned public-led development; link development development with the techno valley as a strategy for a self-reliant economy 20 km from Seoul city center Location 10 km from Gangnam district Development area 8.9 km2 Planned population 87,798 / (96,773 as of 2023) Population density 0.94 people/km2 / (0.98 people/ km2 as of 2023) Households 29,263 units Project duration 2003–2017 Project Cost About US$ 6.64 billion (8.7 trillion Korean won) Residential: 26.6% Commercial and Business: 3.1% Public: 70.3% (Green space: 36.8%) (including roads, Land use plan parks and green spaces, public organization buildings, A comprehensive plan for the Pangyo schools, playgrounds, general health care facilities, New Town construction project streams, and so on) Source: Korea Land and Housing Corporation; MOLIT. Figure 24. Before and After the Development of Pangyo New Town © Korea Land and Housing Corporation 2005. © Korea Land and Housing Corporation 1980. 29 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration © Korea Land and Housing © Seongnam City 2022. © Korea Land and Housing Corporation 2022. Corporation 2020. Note: The images show the transformation of Pangyo from agricultural land to a hub for IT companies in combination with diverse forms of residential areas. In the early 2000s, the development of Pangyo New Town coincided with Korea's rise as an IT powerhouse, evidenced by its more than 10 million high-speed Internet subscribers. This period also saw the emergence of ‘ubiquitous computing’ as a guiding principle for urban development, leading local governments to integrate this concept into their urban strategies (Park 2013). The Korean government enacted the ‘Act on the Construction etc., of Ubiquitous Cities’ in 2008, followed by the ‘Comprehensive Plan for Ubiquitous Cities’ in 2009, which provided a framework for long-term national development. In line with these initiatives, the Korea Land and Housing Corporation extensively applied smart city principles, known at the time as U-City concepts, to new urban developments in the 2000s, such as Dongtan, Paju, and Pangyo. These new towns featured advanced services including smart safety systems, traffic information, and weather information services delivered through electronic boards, local portals, and cable broadcasts. Table 8 presents the main smart services that were integrated into Pangyo New Town. Table 8. Pangyo New Town Smart Service Classification Field Key Service Status ● Local portal Administrative ● U-compliant ● Real-time traffic control ● Traffic information Transportation ● Safety of the transportation vulnerable ● Traffic, speed control ● Control of vehicles in violation of parking ● Public parking lot information Environment ● Environmental weather information ● Remote control of streetlights Facility management ● Water supply management ● Security in public areas Crime prevention ● Disaster prevention management Others ● Media Board Source: Park (2013). 30 3. New Towns in Seoul Metropolitan Area: Public-Led Development Similar to Pangyo, other second-generation new towns such as Gwangyo and Dongtan were also developed around specialized hubs, focusing on semiconductors and IT respectively. This approach to urban planning was instrumental in fostering economic competitiveness as it attracted large companies to these hubs and generated employment opportunities within the new cities. However, the relative remoteness of these towns from Seoul gave rise to a consistent demand for enhanced transportation links and mobility options to the capital city. 3.5 The Third-Generation New Towns: Toward Green and Smart Cities As of 2023, the Korean government continued the development of its third-generation new towns, adhering to its 2018 Housing Provision Plan and the 2019 Plan for the Development of New Residential Land. This initiative’s main objective is to supply additional housing in the vicinity of Seoul, with a focus on affordable housing for the increasing number of single or smaller households in urban areas. The government's announcement included the creation of nine new towns at various locations, all within a 30-minute commute to Seoul, covering an area exceeding 50,000 km² and providing around 316,000 housing units. The new cities are envisioned to embody three main themes: 'cities with happy children', 'cities with ample employment opportunities', and 'cities that flourish as green and smart urban areas'. This ambitious project is set to be achieved through the synergistic collaboration of diverse stakeholders, experts, and local government entities (MOLIT 2022). 31 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities Although Korea achieved remarkable economic development, this growth concentrated around the Seoul metropolitan area and has exacerbated disparities in economic status and opportunities between the capital region and other areas. This phenomenon is common in many countries whereby rapid development in primary cities happen at the cost of slower progress in other regions. Yet, in Korea, this disparity is pronounced despite decades of efforts by the government for balanced territorial development. While the capital region only accounts for 11.8 percent of the total area of Korea, nearly half of the population lives there making it the center of economic, political, and administrative functions. Figure 25, graph (a) depicts the relative increase of population concentration in the capital area and the graph (b) shows how the industrial and public administrative functions were centered in the area. Until the early 2000s, the capital region was home to 83 percent of all public agencies and 91 percent of the headquarters of major corporations, as well as the most competitive universities (Park 2002). Moreover, by the 2000s, 67 percent of all financial transactions were taking place in the capital region (National Balanced-Development Information System 2011), and 71 percent of all tax revenues were concentrated in this area (Korean Statistical Information Service 2000–2009). Figure 25. The gap between the Capital Region and Other Regions a. Changes in population concentration in Seoul and the capital area Seoul& Capital Areas 11.8% of total area of Korea b. The concentration of economic and administrative functions in Seoul and the capital area (2005) Source: KOSIS; Ministry of Construction and Transportation, and Presidential Committee for Balanced Development 2005. 32 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities Recognizing the importance of deeper decentralization and distribution of the population, the government adopted policies aimed at fostering balanced national development, with an emphasis on the economic advancement of nonmetropolitan secondary cities. The government launched two major initiatives:(a) transfer of the administrative capital to a new city and (b) strategic relocation of public organizations to cities across the country. The first initiative involved a government project to relocate the administrative capital from Seoul to Sejong. The main goal of this project was to move 43 central administrative agencies of the Korean government to the Sejong Multifunctional Administrative City. The intention was to spread the administrative functions and offer government officials and residents a high standard of living, which included nearly 50 percent green spaces and top-tier housing and infrastructure, with a target completion date of 2030. The second initiative aimed at relocating public organizations to 10 innovation cities in different provinces to promote regional economic growth. The cities selected for this initiative are Wonju, Jincheon, Gimcheon, Daegu, Wanju, Jeonju, Naju, Jinju, Ulsan, and Seogwipo on Jeju Island (as shown in Figure 26). The shared objective of these two initiatives was to bridge the economic and administrative divides between the capital area and other regions of the country. Figure 26. Overview of Korea’s Balanced Regional Development Source: Korea Land and Housing Corporation. Note: LH = Korea Land and Housing Corporation. To underpin the execution of national projects, foundational legal structures and key administrative entities were put in place. The Administrative City Construction Committee, alongside the Presidential Committee for Balanced Development—which later became the Presidential Committee for 33 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Decentralization and Balanced Development—acted as the highest advisory and policy-making body for the respective initiatives. The legal framework included the Special Act on the Construction of a Multifunctional Administrative City (2005) and the Special Act on the Construction and Support of Innovation City Following Relocation of Public Organizations to Local Cities (2007). These Acts empowered local governments to devise plans for sustainable economies, leveraging their unique environmental assets and resources. Additionally, the policies were designed to alleviate the concentration of the population in the capital region. 4.1 Sejong: A New Administrative Capital Figure 27. A View of Contemporary Sejong © Korea Land and Housing Corporation In December 2003, the Act on Special Measures for the Construction of the New Administrative Capital was enacted establishing a governing body under the president's leadership. This Act facilitated the proposal of the ‘Special Measures for the Construction of a New Administrative Capital’, which was ratified by the National Assembly on December 29, 2003. Subsequently, in April 2004, the ‘New Administrative Capital Construction Promotion Committee’ was formed to initiate the location selection process. Nevertheless, the project soon faced substantial challenges. A constitutional complaint was filed by the Seoul Metropolitan Government and an opposition group. On July 12, 2004, a group of 169 34 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities claimants, including 50 members of the Seoul Metropolitan Assembly, submitted the complaint. The Constitutional Court, with the majority of judges in agreement, upheld the complaint on October 21, on the basis that it violated the right to vote. The court's decision resulted in the annulment of the Special Measures Law, which in turn halted the operations of the New Administrative Capital Construction Supervision Committee and Working Group. In an immediate response to this problem, the government formed a new committee to manage the situation. Later in the year, after a series of modifications, the National Assembly passed the Special Act on the Construction of a Multifunctional Administrative City, in conjunction with the Special Act on the Construction and Support of Innovation Cities. This new legislation was conceptually similar to the previous law but redirected the focus from creating a new capital to developing a multifunctional administrative city. This meant that the primary executive branch, including the presidential office, would stay in Seoul, along with the judiciary and some other government entities, such as the Ministry of Foreign Affairs. In 2005, the National Assembly passed a new act, leading to the decision to establish a new multifunctional administrative city in Chungcheong Province. The province was strategically chosen due to its central location in Korea, effectively connecting the southern and northern, as well as the eastern and western parts of the country. The selection criteria for the site within Chungcheong Province focused on (a) sustainability, (b) the avoidance of environmentally sensitive areas, and (c) the feasibility of development. The ideal location was required to be neither too close nor too far from Seoul, ensuring that it was accessible by car from any major city within a few hours. These requirements ultimately guided the selection of the area now known as Sejong Multifunctional Administrative City (National Agency for Administrative City Construction 2006, 163–164). Following the decision, the government established the Administrative City Construction Promotion Committee, chaired by the prime minister, to serve as the central decision-making body. This committee was structured to efficiently gather a wide range of opinions and facilitate effective decision-making (Figure 28). With this structure in place, the government and research institutes from critical sectors such as the environment, transport, health, and education, collaborated to create the basic development plan for the administrative city. 35 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Figure 28. Organization of the Administrative City Construction Master Plan Establishment System Source: Ministry of Construction and Transportation 2006. To ensure the systematic development of the city, different entities worked collaboratively, with each one concentrating on the execution of a particular segment of the plan, including policy, relocation, landscape, and sectoral strategies. Table 9 details the principal roles and responsibilities assigned to each organization in the planning and development of the multifunctional administrative city. Table 9. Major Roles by Implementing Entities in Administrative City Construction Entity Role ● Deliberation and resolution on major policy matters (Matters concerning the designation Administrative City of planned areas, and so on, and the relocation plan of central administrative agencies, Construction Promotion matters concerning the designation of project implementers and metropolitan city plans, Committee basic plans, development plans, implementation plans, and so on) Council for ● Deliberation on development plans, implementation plans, and type 1 district unit plans, Administrative City and so on, which are delegated by the Promotion Committee ● Designation of planned and surrounding areas, establishment of basic plans and Ministry of Construction metropolitan city plans, preparation of measures to utilize relocation sites, implementation and Transportation of restrictions on development activities and building permits, and so on 36 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities ● Establishment of development plans, approval of implementation plans, approval of National Agency for construction land supply plans, completion inspection, permission for action within the Administrative City planned area, management and operation of special accounts, establishment of support Construction project plans for surrounding areas, support for the affairs of the Committee, and so on Research Teams for ● Collect opinions and prepare plans through basic plans for each specialized research Administrative City institution sector, open seminars, advisory meetings, task force (T/F) meetings, and so on Source: Korea Land and Housing Research Institute 2023; Ministry of Construction and Transportation 2006. The design of Sejong, the multifunctional administrative city, was conceptualized as a ring-type balanced circular structure, which is an urban configuration that ensures equitable access to public services, health care, education, and other amenities by distributing city functions uniformly. The rationale behind adopting a ring-type urban space in the basic development plan included the following: (a) providing equal access to city functions from every residential area, (b) simplifying the development of a primary transportation system along the circular configuration, and (c) creating a central open space, such as a park, within the city for all residents to easily enjoy (Ministry of Construction and Transportation2006). Figure 29 illustrates the layout of the ring-type circular city: (a) six residential zones are situated around the center; (b) the transportation network interlinks all sectors; and (c) the center of the city consists of natural elements like mountains and a river, alongside public parks, which serve as communal spaces for recreation and relaxation. Figure 29. Development Plan of The Ring-type Balanced Circular Structure of The City a. Residential area layout b. Urban transportation system c. Green spaces in the center of the city Source: Sejong Tech Valley, ‘Administrative Center Complex City’, http://www.sejongvalley.com/pages/city/happiness.asp (for living area layout); National Agency for Administrative City Construction2006 (for urban transportation system and green spaces). Note: Features a, b, and c are parts of the development plan for a multifunctional administrative city. Moreover, three main concepts underlined the development plan: an eco-friendly, energy- independent, safe, and convenient city to achieve a smart and green city. Figure 30 describes the main features and numeric goals of each concept. To introduce some key features, the city aims to provide abundant green areas for various life activities, utilize renewable energy in buildings, and offer network-based traffic information and crime prevention systems. 37 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Figure 30. Main Features of Innovative Smart and Green Strategy Eco-friendly City Energy-Independent City Safe & Convenient City Source: National Agency for Administrative City Construction; Sejong City Government. Note: CCTV = closed-circuit television; RSE = roadside equipment; VDS = vehicle detection system. Additionally, as of 2024, the government is undertaking a national pilot smart city project in the city to adopt smart technologies in managing public services, and its target completion year is 2027. Box 3 highlights some of the significant features of the project. Box 3. Sejong National Pilot Smart City Project 5-1: Designing Tomorrow Designed as an artificial intelligence (AI)-based city, the Sejong Pilot Smart City Project 5-1 will provide innovative services to citizens in seven areas: mobility, health care, education and jobs, energy and environment, governance, culture and shopping, and living and safety. The pilot was launched based on the Act on the Promotion of Smart City Development and Industry, which was introduced in 2008 as the Act on the Construction etc., of Ubiquitous Cities. According to the Korean Law Center, revising the Act in 2019 allowed the government to establish a legal basis for the designation of national pilot cities, supported regulations for efficient business execution, and introduced new innovative growth promotion zones to support start-ups and investment in smart city industries. Upon the completion of the project, the city will provide smart public services harnessing the power of AI, blockchain, Internet of Things (IoT) technologies, and data. The key technologies will be applied to 38 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities core city management systems such as transportation and health services. To enhance residents’ mobility within the city, it will connect various means of transportation, including buses, bikes, and shared cars, by providing real-time information. Also, the health service will be improved through online diagnosis, quick response to emergencies, and customized treatment. Figure 31. Main Features of Smart Services Based on AI and Blockchain Technology Smart Services for Convenient Mobility 39 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Personalized Medical Services and Emergency Response Source: MOLIT 2018b. 4.2 Innovation Cities: Strategic Hub Cities Following the enactment of the Act on National Balanced Development in 2004, a coalition of 12 governors, mayors, and labor unions representing public organizations—key stakeholders in the relocation of these entities and the construction of innovation cities—forged an agreement with the central government to facilitate the transfer of public organizations. There were two parts to the agreement: the Master Agreement on Central-Regional Cooperation and the Master Agreement between Labor and Government. These agreements laid the groundwork for collaborative efforts among stakeholders and provided support for the stable resettlement of public organization employees. They set the stage for subsequent decisions regarding the specific organizations to be relocated and their new destinations. In alignment with this agreement, the government formulated and promulgated The Plan for Relocation of Public Organizations to Local Cities, which encompassed the Guidelines on the Selection of Locations for Innovation Cities, articulated the fundamental principles of the innovation city concept, and outlined the developmental trajectory for each designated city. In the selection of innovation cities, the criteria set forth by governors and mayors encompassed three main points of evaluation: (a) the potential for becoming a center of innovation, (b) the suitability for urban development, and (c) the capacity for fostering communal growth. The government proposed two methodologies for city construction: one involved the redevelopment of an existing city, while the other called for the establishment of a new, independent town. As a result, five existing cities, including Busan, were chosen for redevelopment, and others, such as Jeonnam, were developed as new towns. Additionally, the government's plan outlined the concept of a City of Innovation with four visions: to create regional hub cities that embody the central theme of the region, to be environmentally 40 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities sustainable and green, to maintain cultural traditions, and to develop a competitive educational environment (Figure 32). These visions were identified as the key factors for public officials relocating for work as well as for attracting new residents and incentivizing the existing local community. Figure 32. The Basic Concept Behind Innovation Cities Source: Korea Land and Housing Corporation 2017. Drawing from these concepts, the foundational ideas for the cities were established, with each city developing its unique concept based on its environment and distinctive attributes. Figure 33 presents the themes for the 10 innovation cities, which are based on their advanced industries, economic resources, and geographical characteristics. In terms of positive outcomes, about 42,000 officials and staff members working for 112 public organizations moved to 10 innovation cities nationwide, according to their functions. As a result, the average employment rate in the 10 cities increased by 28.6 percent, and the total population grew by 224,019. Also, an additional 1,663 private enterprises were established and settled in the cities (as of 2020). Figure 33. The 10 Innovation Cities and Their Thematic Concentration Source: MOLIT 2020. Note: SMEs = small and medium enterprises. 41 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration 4.3 A Success Story: Gyeongnam Innovation City in Jinju Figure 34. A View of Contemporary Gyeongnam Innovation City in Jinju © Korea Land and Housing Corporation. MOLIT, in collaboration with the Presidential Committee for Balanced National Development (renamed in 2023 to the Presidential Committee for Decentralization and Balanced Development), selected Gyeongsangnam-do, situated in the far south, as the most exemplary among the 10 innovation cities in their 2019 performance report for Balanced National Development in 2019 for landmark achievements reached.28 In the Gyeongnam Innovation City, the relocation of 11 public organizations was finalized between 2013 and 2017, involving a workforce of 4,241 employees. The city was planned for a population of about 38,000. As of June 2022, the registered population reached 33,100, achieving an 86.8 percent fulfillment of the target. This is a significant increase from the population of 9,848 at the end of 2015, indicating an average annual growth rate of 36.3 percent post-completion of the Innovation City (MOLIT 2020). Table 10 outlines the city development plan, highlighting its land use by the river, the creation of widespread green spaces, and a high rate (29.2 percent) of urban facilities designed to enhance the residents’ quality of life. Table 10. Overview of Gyeongnam Innovation City Development Plan Korea Land and Housing Corporation (LH), Developers Gyeong Nam Development Corporation (GNDC) Location In Jinju City, Gyeongsangnam-do Development area 4.09 km2 Planned population 37,767 / 34,011 as of 2023 28. Gyeongsangnam-do was selected as the best innovative city in a performance report by MOLIT and the Presidential Committee for Balanced National Development in 2019. Programs carried out by Jinju City, the Korea Land and Housing Corporation, and Korea Ceramic Technology Institute were selected as the best practices (Pyo 2019). 42 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities Housing Supply 13,902 units Development Plan of Gyeongnam Innovation City Project duration 2007–2015 Number of Relocated 11 Public Organizations Organizations Total cost US$ 76 billion Land for Relocated Public Organizations: 6.1% Land for Cluster: 5.3% Scene of the project site under developing Commercial and Business: 4.6% Land use plan Residential: 25.8% © Korea Land and Housing Green Space: 21.5% Corporation (2013) Supporting Urban Facilities: 29.2% Others: 7.5% Source: Korea Land and Housing Corporation. In terms of the impact of the innovation city on the local industry and economic growth, there is a noticeable effect on the continuous increase in local tax payments since the relocation of public organizations. The total amount of local tax revenue in 2019 was about US$53.6 million, and it increased to about US$76.2 million in 2021. Moreover, in the areas of job creation and income growth, Jinju City, particularly in the Gyeongnam Innovation City, showed significantly higher growth compared to the overall Gyeongnam Province (Figure 35). When it comes to the Gross Regional Domestic Product (GRDP) from 2015 to 2019, while the growth rate of GRDP for Gyeongnam is 2.6 percent, Jinju City recorded a higher growth rate of 14.6 percent (Korean Statistical Information Service 2015-2019). Figure 35. Growing Number of Companies and Employees over time in Gyeongnam Province, Jinju City, and Gyeongnam Innovation City (2015–2019) Number of Companies in Gyeongnam Province Number of Companies in Jinju City Number of Companies in Gyeongnam Innovative City [Unit: 1 Company] 300,000 [Unit: 1 Company] 32,000 1,900 [Unit: 1 Company] Growth Rate: 12.9% Growth Rate: 686% Growth Rate: 9.1% 1,700 31,000 280,000 1,500 30,000 1,300 260,000 1,100 29,000 900 240,000 28,000 700 500 220,000 27,000 300 200,000 26,000 100 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Number of Empolyees in Gyeongnam Province Number of Empolyees in Jinju City Number of Empolyees in Gyeongnam Innovative City [Unit: 1 Person] [Unit: 1 Person] 17,000 1,450,000 145,000 [Unit: 1 Person] Growth Rate: 4.5% Growth Rate: 12.7% 140,000 15,000 Growth Rate: 173% 1,400,000 135,000 13,000 1,350,000 130,000 11,000 1,300,000 125,000 9,000 1,250,000 120,000 7,000 1,200,000 115,000 5,000 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Source: Korea Land and Housing Corporation (2022) Note: Gyeongnam Innovation City is in the eastern part of the Jinju City, which is a part of the Gyeongnam Province. According to the 2022 Satisfaction Survey on Residential Conditions conducted by MOLIT, Gyeongnam Innovation City achieved a satisfaction score of 71.0, placing it third among the ten innovation cities 43 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration across the nation. This ranking is particularly noteworthy as it is the highest among the innovation cities that were not developed within existing metropolitan areas, excluding Ulsan Innovation City (Figure 36). The survey evaluated residential conditions using five criteria: living environment, convenience facilities, transportation environment, education environment, and leisure activity environment. Gyeongnam Innovation City surpassed the average scores in all categories, with its convenience facilities receiving the highest marks (Table 11). Figure 36. Satisfaction on Residential Conditions of Each Innovation City (2022) Source: MOLIT (2022). Table 11. Satisfaction Scores of Residential Conditions of Gyeongnam Innovation City Overall Living Convenience Transportation Education Leisure Activity Satisfaction Environment Facilities Environment Environment Environment Gyeongnam 71.0 72.7 74.0 68.7 67.0 68.0 Innovation City Average Score 69.0 73.5 67.2 62.4 64.8 64.0 Source: MOLIT (2022). The high satisfaction levels among residents can be attributed to the active engagement of public organizations that relocated to the innovation city. These organizations have been instrumental in delivering various regional development projects aimed at fostering mutual growth within the local community. In 2021, the collective investment in regional development projects by the 11 public organizations in Gyeongnam Innovation City was approximately US$714 million. Notably, the Korea Land and Housing Corporation was responsible for a significant portion of this investment, contributing about US$203 million, which represents 28.4 percent of the total investment. These projects were strategically designed to support the robust development of the local community through a range of initiatives, including youth programs, public facilities, housing, support for SMEs, and urban regeneration efforts. 44 4. Promotion of Regional Balance: Multifunctional Administrative City and Innovation Cities Table 12. Main Regional Development Projects conducted by LH in Gyeongnam Region Category Projects ● Urban regeneration project of an abandoned shipyard in Tongyeong Promotion of Regional ● Loan program for shared growth with cooperative local SMEs Industry ● Supporting the Naeil Chaeum Mutual Aid Program29 for youth employees of local SMEs Promotion of Regional ● Supporting the youth start-up program in association with the local university Human Resources ● Providing LH-customized degree program Supporting the Residents ● Improving the living environment by building cultural library complexes, parks, etc. and Local Community ● Building a Virtual Reality experiment room and study room in a local elementary school Cooperation with Related ● Providing a rental housing program to save a small elementary school in Uiryeong-gun, Organizations which is facing the challenges of extinction Preferential Purchase of ● Food ingredients for the cafeteria Regional Goods ● Entrustment management of the office building ● Housing development Real Estate Investment Trusts (REITs) for people returning to rural Others areas ● Supplying Happy Housing program in cooperation with local university Source: Korea Land and Housing Corporation (2022). The development of innovation cities, along with the Sejong Multifunctional Administrative City, represented a significant policy shift aimed at promoting regional balance throughout the country. The initiative, which focused on specific locations and involved the involuntary relocation of public organizations, required the early establishment of consensus among various stakeholders. The combined efforts and contributions of all participants have positively affected the initiative, helping bridge the developmental gap with the capital area by empowering local communities, governments, and economies. Box 4 examines the success factors of this initiative and discusses the ongoing agenda to further encourage a harmonious balance in Korea. 29. Naeil Chaeum Mutual Aid Program is a policy-based asset-building program for youth employees of SMEs operated by the Korea SMEs and Startups Agency. The company and employees make account and jointly save the fund at a certain percentage. After five years, the employees can receive the accumulated fund, which will be about US$15,000 (Korea SMEs and Startups Agency). 45 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Box 4. Lessons Learned from the Innovation Cities Comments from Hong-Sang Lim, general manager of the Balanced Regional Development and Cooperation Department, Korea Land and Housing Corporation a It has been more than 20 years since the grand plan for innovation cities started, and now there are 10 such cities in the country. The most important factor behind the success of this plan was the decision-making on the ‘location of each public’. We could have resorted to having the decision made at the local level. But that would have taken too long. Instead, the government put forward guidelines with criteria that made the decision-making easier. It was also important for public labor unions and the government to reach an agreement because the project required moving many public officials to different locations. Another important aspect was the government’s policy support for public agencies so they could adapt quickly to the new environment. So, for the first year, settlement allowances were provided by the local governments. In addition, the local authorities did their best to expedite processes so that new schools and public facilities could be built promptly. On the other hand, the public organizations also played their part. They carried out, what we call, local development projects. These are sustainable projects—some are carried out even today (2023)—to create a cooperative and mutually beneficial relationship between the local entities and the public organization. For example, an organization may have a special quota to hire local young people or may commit to purchasing needed products from local vendors. This is how one of our original goals—to create public- private-academic cooperation—has been executed. Improving the financial independence of local governments was a key goal. Currently, 112 public institutions in 10 innovation cities pay about US$422 million a year in local taxes. In addition, public institutions conduct local development projects every year and invest in local industries through materials, manpower, and purchases that amount to about US$2 billion. These greatly contribute to advancing the local economy. However, the development of innovation cities has created another set of imbalances. There is a gap between cities where public organizations have relocated and those that were left empty-handed, and between the innovation cities themselves and other cities within the same region. This is a very difficult question. Although innovation cities were created as hubs, solving the imbalance problem within the region remains an important task. Another problem is how to balance efficiency and equity. For instance, at the time when the government and the local governments were negotiating about which organization would go where, there was an effort to relocate the big players to the most lagging cities and to send smaller organizations to the bigger cities. In some regions, however, the links that the government tried to create between the public sector, private sector, academia, or other institutions were never really developed. In other words, there was a kind of mismatch. So, creating a harmonious balance remains an ongoing challenge so far. a. Lim, Hong-sang. 2023. Interview by Sangheon Lee. Daejeon, Republic of Korea. April 26, 2023. 46 5. Inclusive Urban Regeneration for Sustainability and Quality of Life 5. Inclusive Urban Regeneration for Sustainability and Quality of Life Urban regeneration encompasses the processes of urban redevelopment and revitalization, introducing new functions to cities experiencing decline due to various factors, including industrial restructuring, the emergence of new cities, and urban sprawl (Kim 2009). This concept extends beyond mere physical enhancements, aiming for comprehensive city improvement to foster sustainable growth. Effective urban regeneration requires the strengthening of local capabilities, introduction of new functionalities, and use of creativity and local resources (Korea Land and Hosing Research Institute 2023). Moreover, reviving a city facing challenges such as a dwindling population, aging facilities, and a fragile economic base calls for attention to equity, sustainability, and the enhancement of residents' quality of life. Urban regeneration in various countries often involves transforming cities by upgrading or eliminating slum areas and developing new infrastructure. However, in Korea, such projects were predominantly executed during the 1960s and 1970s. The post-1970s urban regeneration in Korea has been characterized by a targeted approach aimed at rejuvenating aging urban districts, enhancing the living standards of residents, and augmenting the economic and other values of specific areas. A key feature of these initiatives is their grassroots nature—they are either initiated by the community or unfold with substantial community engagement. In Korea, urban regeneration is guided by the Special Act on Promotion and Support for Urban Regeneration (2013)30. This Act serves as the foundation for Korea’s urban regeneration policy to be flexible and not biased toward specific projects. The Act outlines a variety of project categories, such as regeneration projects, reorganization promotion projects, urban development projects, station area development projects, industrial complex development projects, port redevelopment projects, commercial district revitalization projects, and market regeneration projects. This chapter presents cases of Korea's diverse urban regeneration efforts to create smart, green, and participatory urban societies. 5.1 Housing Redevelopment: A Circular Housing Redevelopment Project in Seongnam Urban redevelopment often presents the significant challenge of relocating residents during the construction phase. A notable issue is that many residents do not own their homes and may be displaced without alternative accommodations. Further, post-redevelopment, the surge in housing and land costs could preclude residents from returning to their original neighborhoods. To address this challenge, the government introduced the circular redevelopment system. The system’s key factor is the provision of temporary housing facilities, ensuring that residents have a place to reside while their designated residential area undergoes redevelopment (Figure 37). 30. Article 2 of the Act defines urban generation as follows: “Economic, social, physical, and environmental revitalization of a city which is declining due to depopulation, change of industrial structure, urban sprawl, deterioration of the dwelling condition, etc. by strengthening local capacity, introducing and creating new functions, and utilizing local resources.” 47 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Figure 37. Concept of Circular Redevelopment Source: Korea Land and Housing Corporation. Note: While Old District A is being redeveloped, residents from Old District A can stay in the Residence complex during redevelopment for a low price; when the redevelopment is completed, residents can move into Redeveloped District A. The circular redevelopment system, initially introduced in Korea's Urban Redevelopment Act of 1995, was designed to address the displacement issues of residents during redevelopment. The system was further refined in 2006 to include protection for non-property-owning tenants. Despite these legal provisions, the private sector's focus on profit maximization often led to a reluctance to adopt the circular system due to the costs associated with temporary housing facilities (Jung 2010). This required public sector intervention to ensure the system's success and to align redevelopment projects with social responsibility goals. Box 5 offers a detailed account of a redevelopment specialist's experience with the Seongnam project, illustrating the critical role of public sector involvement in such initiatives. Box 5. Insights from a Redevelopment Specialist: Interview with Professor Keong Gu Hong, general architect of Seongnam City and professor at Danguk University a Q: Redevelopment projects often run into resistance/objection due to the issue of relocating residents while development is under way. What is the concept behind the circular redevelopment method and what are its benefits? A: Redevelopment in Korea has a long history. Urbanization began in the 1960s. So, 20 years later, the need and demand to redevelop the old cities became pronounced. Redevelopment of factories or manufacturing facilities as office spaces was easy and successful. However, redeveloping the residential parts of a city is another issue because it involves moving low-income residents. These people cannot afford to move elsewhere; they have no money to relocate, so they have repeatedly been alienated and cast out during 48 5. Inclusive Urban Regeneration for Sustainability and Quality of Life the redevelopment process. In the 1990s, many experts considered the technique of circular redevelopment as a solution to this problem, and the method was first applied in the case of Seongnam City. During the redevelopment process, the city natives and tenants were able to live in public housing designated for them until the completion of the project, when they had the choice of moving into the redeveloped housing. That is why this is called the circular method. Q: Redevelopment projects often run into resistance/objection due to the issue of relocating residents while development is under way. What is the concept behind the circular redevelopment method and what are its benefits? A: It is important to understand that there are many types of regeneration projects according to the Korean law. All kinds of transformation—from city or town improvement to reconstruction, remodeling, or redevelopment—are part of the scheme. Though the goal of transformation is the same, the way that it is done is not. For example, complete demolition, refurbishing, and adding new facilities are very different things. It is up to the residents to decide what their needs are. In most cases, private developers can take on less complicated projects. However, in the case of Seongnam, where both the building density and the population density are high, there is a need for a completely new residential form and a system that can safeguard the right to housing or shelter. This system has to be included as part of the project plan. In such cases, the role of the public sector is extremely important. The circular method of redevelopment can be used only with the participation of the public sector. a. Hong, Keong Gu. 2023. Interviewed by Sangheon Lee. Seongnam, Republic of Korea. April 11, 2023. The Seongnam circular redevelopment project was situated in a residential area that originated from the Gwangju Grand Complex construction in 1969, designed to rehouse individuals from unauthorized settlements in Seoul that were demolished due to urban policy enforcement.31 This older section of Seongnam was designated for redevelopment in three phases, with the Korea Land and Housing Corporation facilitating the circular redevelopment by constructing temporary housing (apartment complexes) nearby to accommodate residents during the redevelopment process. Post-completion, over 50 percent of low-income households either returned to the redeveloped areas or chose to remain in the temporary apartments, which were offered by the public sector at rents significantly below market rates—about 30 percent. The others moved away from the redevelopment site. This retention rate of residents in the post-redevelopment site is unusual, as typically, most relocated residents cannot afford to return due to increased housing costs. In Seongnam, the government's strategy to provide affordable temporary housing options during and after redevelopment was pivotal 31. In the first half of the 1960s, the Seoul Metropolitan Government demolished illegal settlements in the city center and created some migrant settlements. In the late 1960s, as part of urban modernization, the migrant settlement village and Gwangju Grand Complex were created using state-owned land outside Seoul. People who had lived in illegal settlements were relocated to the former and people whose homes were demolished as part of urban planning projects were relocated to the latter (Seoul Institute 2012). 49 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration in maintaining a large portion of the original community. Nevertheless, the government should continue refining inclusive housing redevelopment policies and programs to address the housing needs of the majority of residents effectively. Figure 38. Before and After Redevelopment in Seongnam © Korea Land and Housing Corporation 2021. © Korea Land and Housing Corporation 2023. © Korea Land and Housing Corporation 2023. © Korea Land and Housing Corporation 2013. 5.2 Green Recovery Project: Transforming Solid Waste Landfill to Ecological Park in Sang-am Sang-am is located in the northwestern part of Seoul, 7 km from the city center. Nanjido, a small island in this area, served as Seoul’s garbage landfill from 1978 to 1993. The rapid urbanization of Seoul led to a significant increase in waste from residential and industrial sources, resulting in the accumulation of vast garbage mounds on Nanjido. For 15 years, the island became a dangerously contaminated site, emitting harmful gases and foul odors, which had a detrimental impact on the residents. In 1996, the Seoul Metropolitan Government took action to address environmental pollution by announcing plans to rehabilitate the landfills and to convert Nanjido into an eco-friendly park by 2000, as outlined in Box 6. In addition to the Nanjido transformation, the Sang-am Millennium New Town Basic Plan was developed, aiming to transform the Sang-am district into a new sub-center of Seoul where residential living, transportation systems, high-tech industries, and ecological features could coexist in harmony (K-Developedia).32 32. It was a long-term plan expected to take 50 years, however, Sang-am turned into a model digital media city already in 2013, decades before the targeted completion date. The area is now a media industry cluster, housing three major Korean broadcasters and more than 400 companies in the broadcasting, media, and ICT sectors (Seoul Metropolitan Government 2014). 50 5. Inclusive Urban Regeneration for Sustainability and Quality of Life Box 6. Seoul Metropolitan Government’s Announcement of the Transformation of Nanjido “Piled up with garbage without any hygiene measures, Nanjido became a dangerous eyesore that oozed malodor, harmful gases such as methane as well as effluents. Nanjido destroyed the air and water quality of the Han River and the surrounding ecosystem. Seoul began channeling all-out efforts to transform the trash heap into a large green space, replete with parks, sculptures, trails, and dazzling views of Seoul.” “After thorough planning from 1991 to 1996, a major landfill recovery project took off. Seoul focused on land stabilization first, and the goals of this major initiative were to restore the ecosystems of the once beautiful island of Nanjido. This project focused on four areas of development: topsoil leveling and soil recovery, leachate treatment, extraction and recycling of landfill gas, and slope stabilization. Along with the land stabilization process, Seoul also began shaping this land into a park (see images). In fact, Sang- am-dong where the landfill was located had been chosen as the construction site for one of the stadiums for the 2002 World Cup. The decision brought about the need for the area’s transformation into an eco- park. The goals of the project were clear—Seoul was to show the world that the ill effects of urbanization and industrialization could be reborn as a restored ecological space.” Source: Seoul Metropolitan Government 2015. Figure 39. Before and After Nanjido Transformation Nanjido © Seoul Metropolitan Government. 1989. Source: © Seoul Metropolitan Government. 2000. Nanjido © Seoul World Cup Park 2020 The project to rehabilitate the environment around the Nanjido landfill began with the crucial step of isolating the waste that had accumulated over 15 years. To prevent any further contamination of the soil and surrounding environment, a barrier wall was constructed, and the leachate from the landfill was treated. The methane gas produced by the decomposing waste was captured and processed safely. Gas emissions continue to this day from the old landfill site, but they are now collected through wells 51 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration on the hills of Haneul and Noeul Parks33. This gas is then purified and channeled into a pipeline that leads to the Korea District Heating Corporation, which uses the gas to provide heating for residential homes, apartments, office buildings, and other facilities, including the World Cup Stadium. From 2002 to December 2014, the landfill gas was converted into boiler fuel and supplied to an area covering 43,851,787 m2, serving 16,335 residential units and 40 commercial buildings. This initiative has resulted in a resource utilization effect valued at US$65,300,000, which averages out to US$54,800 per year (Seoul Solution). The use of landfill gas for heating creates a virtuous cycle of renewable energy. After transforming the landfill into parks, Seoul has embarked on a captivating narrative of ecological rediscovery. Seoul Metropolitan Government conducted yearly monitoring and systematic analysis of the ecological changes. The number of species, both plants and animals, jumped from a mere 438 kinds in 2000 to 1,092 in 2013. Figure 40 shows the dramatic increase in the number of plants, wild birds, and terrestrial insects. These numbers echoed a profound transformation, indicating the successful removal of pollutants and the rebirth of the Nanjido area (Seoul Metropolitan Government 2015). Figure 40. Increase in Species of Plants and Animals in Nanjido between 2000 and 2013 Source: Seoul Metropolitan Government 2015. The Nanjido project serves as a key milestone in Seoul's green urban management efforts. It effectively addressed a major environmental hazard and went further to enhance the ecological functions of the island. The project's smart utilization of landfill gas for energy production, the restoration of natural ecosystems, and the creation of a new, iconic landmark for Seoul exemplify a holistic approach to sustainable development and ecological conservation. 5.3 People-Centered Participatory Regeneration in Busan and Gunsan Local governments in Korea are increasingly emphasizing community building and engagement to tackle social challenges prevalent in aging towns and cities. These challenges are often characterized by an aging population and the migration of younger generations, leading to a decline in the local economy. To combat these issues, the government is collaborating with civil society organizations, local businesses, and academic institutions to develop a variety of programs. These initiatives aim to provide youth training that connects individuals to the job market, support for local SMEs, and the organization of community events. The subsequent sections will detail the specific approaches taken by Busan and Gunsan to support their local residents and markets, contributing to the creation of a more harmonious society. 33. Haneul means sky and Noeul means sunset 52 5. Inclusive Urban Regeneration for Sustainability and Quality of Life 5.4 Local Government-Led Initiative: Busan Youth Urban Regeneration Expert Training Program Busan is the second-largest city in Korea and the southernmost. During the Korean War, after northern forces overtook Seoul and pushed southward, many refugees, particularly from the north, made Busan their new home, foreseeing the persistent division of the Korean Peninsula.34 This influx led to Busan harboring an extensive non-native population, making it Korea's most densely populated city for years after the conflict. As of 2021, Busan had a population of 3.3 million (Busan Metropolitan City Government 2021), and its financial budget for 2022 stood at US$1.3 billion (Ministry of Interior and Safety 2022). The city faced the challenge of an aging demographic, with 20.3 percent of its population over the age of 65 (Busan Metropolitan City Government 2021), which has led to its nickname "the old man and the sea." The advent of the fourth industrial revolution saw many younger residents depart from the city's traditional industries, including manufacturing, shipbuilding, and maritime sectors. To address this, the Busan Metropolitan City Government introduced quality youth programs to cultivate diverse communities, job markets, and a lively urban atmosphere. Box 7 outlines the city's youth urban regeneration program, featuring initiatives for job creation, training, and community revitalization in partnership with universities. Box 7. Busan’s Youth Urban Regeneration Expert Training Program: Interview with the Program’s Implementersa Ju-Young Lee (left), officer of the Urban Regeneration Division, Busan Metropolitan City, and Hyeri Cho (right), manager of the Regeneration Business Team, Busan Urban Regeneration Center Q: The Youth Urban Regeneration Expert Training Program is a unique type of urban regeneration program. Please tell us about it and about how it works. A: Busan Metropolitan City is leading this program to revitalize communities by supporting young people who will contribute to the community and help promote harmonious coexistence. The city has a budget allocated for the regeneration of many areas, but most people involved in community revitalization have now aged. The need for new creative energy is high. The city has also focused on creating jobs for young people. So, this program hit the bull’s eye: it revitalizes the community with vibrant new ideas created by young people, who are trained to become urban regeneration experts. The training program is divided into three phases that link students to the job market (Figure 41). Along with the local businesses, this program is creating synergies by involving youths, fostering new talents, creating jobs, and revitalizing the community. At the same time, it also financially supports the businesses that are involved in the projects. 34. This subsection is based on Korea Research Institute for Human Settlements and Korea Urban Regeneration Center Association (2020). 53 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Figure 41. Process for Training Youth Urban Regeneration Experts Source: Based on Busan Urban Regeneration Center 2022. Note: MOU = memorandum of understanding. Figure 42. Busan Youth Urban Regeneration Expert Training Camp © Dong-A University 2022. Q: Can you tell us some positive outcomes of the program? A: The regeneration projects of Busan are quite extensive and diverse. Busan is an old city, and many areas need to be regenerated. The city has designated several businesses as special city project companies in five sectors: city planning, architecture, construction material, social economy, and culture and arts. These companies are offered a financial incentive to hire young people who have been trained through our program. The Ministry of Interior and Safety, for example, accepts applications to provide the salary for newly hired youths. So, the city pays for the training at local universities; the young people receive further training in the Busan Urban Regeneration Center; and finally, they are hired by the designated companies. It is a win-win opportunity. Some 54 5. Inclusive Urban Regeneration for Sustainability and Quality of Life examples include the revitalization of the Gupo marketplace, which is famous for its local food, Gupo noodles. One of the teams set up a media wall in front of the Gupo market to promote the regeneration projects happening in the area, as well as a train schedule for Gupo Station and interesting stories of the Gupo region. Figure 43. Revitalization of the Gupo Marketplace © Busan Urban Regeneration Center a. Lee, Ju-Young. Cho, Hyeri. 2023. Interviewed by Sangheon Lee. Busan, Republic of Korea. April 23, 2023. 5.5 Private Sector–Led Initiative: Local: Rise Gunsan Gunsan, located on the southwestern coast of Korea, was a strategic port for the Japanese during the late 1890s and the colonial period. With abundant rice paddies nearby, the port was used to ship rice to Japan as well as service ships sailing in and out of the city. This historical infrastructure laid the groundwork for Gunsan's emergence as an industrial city in the 1990s, hosting significant shipbuilding and automotive factories. However, the decline of heavy industry in Korea since the mid-2000s led to a gradual downturn in the city's fortunes. In 2018, Gunsan was officially designated as a region facing unemployment and industrial crisis (Nam 2020). In the face of these challenges, the city government, private sector, and citizens have united to drive the city's revitalization and regeneration (Gunsan City Government 2021). Among the various initiatives, the Local: Rise Gunsan urban regeneration project stands out (Box 8). This project focused on supporting young start-up companies, providing assistance to residents, and promoting community vitality through an array of group activities and festivals. Box 8. A History of Local: Rise Gunsan An interview with Seulki Lee, director of the start-up training program Underdogs and project manager of Local: Rise Gunsana Q: What is Local: Rise Gunsan? And how did Underdogs get involved in this project? 55 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration A: It was an initiative undertaken by SK E&S (a green energy company under the Korean conglomerate SK Group) as part of its corporate social responsibility mandate. The corporation has many affiliated companies and subcontractors in the city and their well-being and productivity are important. The company wanted to address its pain points while also improving the city. From the solution providers who made proposals, Underdogs was selected for its specialization in supporting young start- ups. You see, many local governments are bringing in young start-up companies with the hope that their towns will be revived and not go extinct. For us, the key factor was to revitalize the city center by inviting young start-ups that could set up sustainable businesses here. When we started this project in 2019, the term ‘local’ was not commonly used. Even a few years ago, the term ‘local’ sounded too rural, not like something connected to Seoul. Today, we use words such as ‘local creators’ and the like. So, ‘local’ in the context of Local: Rise refers to the cultural resources of a certain city or town or the space where we utilize these resources. As far as I know, the city of Gunsan has tried many projects to revitalize itself but adding the word ‘local’ in this context creates something that draws consumers here. By consumers, I mean young people, who feel they do not need to go to Seoul or the big cities to enjoy interesting things and good times. It is a matter of creating that ‘local’ space, a space they can enjoy. Another important word that goes hand in hand with the term ‘local’ is ‘community’. So, when we planned and designed this project, it was not about creating a town where someone could go alone and set up a business. But rather, it was about doing it with others. Togetherness, sharing information, sharing experience, and working together—and that is perhaps the core of Local: Rise Gunsan. Three concrete things: space, educational support, and annual festivals. Figure 44. Development Strategy of Local: Rise Gunsan Source: Underdogs Local: Rise Gunsan Management Team. 2020. 56 5. Inclusive Urban Regeneration for Sustainability and Quality of Life Local Community Activities by Teams of Local: Rise Gunsan © Local: Rise Gunsan a. Lee, Seulki. 2023. Interviewed by Sangheon Lee. Gunsan, Republic of Korea. April 12, 2023. The entrepreneurship initiative by SK E&S and Underdogs has been instrumental in fostering regional development, selecting a total of 26 teams—24 in 2019 and an additional 2 in 2020—based on their alignment with the vision for regional regeneration and their shared passion and determination. In 2019, through holding Local Rise Week, and so on, it achieved a total of US$900,000 in sales. In 2020, the focus shifted toward enhancing product offerings and broadening sales channels, with the 26 start-up teams launching 245 new products and achieving US$2.1 million in sales via diverse online and broadcasting platforms Progressing into 2021, the initiative saw the opening of over 40 offline stores, which solidified the groundwork for sustainable self-sufficiency by way of increased sales and profit margins. Remarkably, in 2021, sales soared to about US$42 million, nearly doubling each year in comparison to the preceding year, even amidst adversities like the COVID-19 pandemic (Figure 45). In the three years of the official project supported by SK E&S, all 26 teams have participated without a single dropout, contributing to the economic revival of the Gunsan region (SK E&S 2022). Figure 45. Achievements of Local: Rise Project over Three Years Commercialization of 26 start-up teams 2019 - Selection of 24 start-up teams with 60 young social innovation entrepreneurs - Opening Local:RISE week Annual Sales 2020 Annual Sales US$ 4.3 million - Completion of 26 start-up teams - Opening Sub-SOVAC - Enter to external platform US$ 2 million - Winning local innovation awards Annual Sales 2021 US$ 912 thousand Self-reliance - Maintaining 26 start-up teams - Record largest number of participants Product Advancement in Local:RISE week Market Expansion - Expanding cooperation with other regions Settling In - Received a plaque of appreciation from Gunsan City Source: SK E&S 2022. Box 9 presents the story of Kot-ilda Co-op, one of the participating start-up teams of Local: Rise Gunsan. 57 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration Box 9. Thoughts from a Start-up Participating in Local: Rise Gunsan An interview with Miseon Park, director of Kot-ilda (꽃일다) Co-opa Q: Can you introduce us to this beautiful space that you have here? And what kind of activities are you involved in as part of Local: Rise Gunsan? The Kot-ilda Co-op is a cooperative of one-person craft shops created by people like me who love our craft and work. We rely on each other as a group. One of our main goals is to revitalize the old center of the city. Promoting and advertising the old center can be hard if done by one shop, but together we can be more active and do a variety of things, especially events to reach out and connect with people, in particular young people and children. I am not a native of Gunsan, but decided to settle here after college because I liked the city so much. It is not quite like a big city, but at the same time, it is not too rural. Things are a little slow, not as fast as in the big cities. But it is a very attractive city, and many people are choosing to come and live here. There is a nice community of artists that get together to revitalize the city with Local: Rise. At the same time, we also promote the work that we are doing. We can set goals that are more personal rather than being pressured to meet others’ goals. Therefore, we start as local participants, then as local creators, then as local start-up owners, progressing step by step. a. Park, Miseon. 2023. Interviewed by Sangheon Lee. Gunsan, Republic of Korea. April 12, 2023. The regeneration project in Gunsan is a testament to the impact of people-centered and participatory approaches on revitalizing old communities. The local population, especially the younger generation, shifted their perspective of their city from one characterized by unemployment and industrial crisis to one filled with new opportunities and vibrant communities. This positive transformation was made possible through the collaborative efforts of the local government, private companies, and citizens, all contributing to the city's long-term growth. The experiences of Busan and Gunsan highlight that urban regeneration is not solely about the physical redevelopment of urban spaces. Community-based solutions can significantly transform aging cities, and participatory programs that engage with various urban stakeholders are the key to ensuring their long-term growth and vitality. 58 6. Conclusion 6. Conclusion The increasing trend of urbanization across the world presents both opportunities and challenges. The potential benefits of urbanization can be harnessed when the associated challenges are adeptly managed and addressed. Furthermore, the process of addressing these challenges can be transformed into opportunities to fast-track economic development. Korea’s experience illustrates the significant interdependence between urbanization and economic development. By harmonizing its urban planning strategy with economic goals and job opportunities, the government facilitated economic success through integrated interventions in cities. These interventions ensured the provision of basic infrastructure, enhanced transportation connectivity, and access to education and health services, coupled with affordable housing and industrial policies that created homes and jobs for urban residents. The process was enabled by the increasing maturity of the regulatory and institutional environment with a comprehensive set of legal frameworks, improved public services, the government facilitation of public-private partnerships, and increased community engagement, all of which are fundamental components of long-term economic growth. One distinguishing aspect of Korea’s urban development is its integrated approach to multi-sector development instead of a siloed one. For instance, housing was built not on its own but together with public transportation links to jobs and other public amenities. This integrated nature of urban development which started from the early stages of rapid urbanization is one of the key lessons other countries can take. This comprehensive approach to urban planning not only makes newly developed urban areas livable but also economically viable to grow and sustain, which many countries struggle to achieve. However, Korea’s urban journey is also imperfect, and its goal of balanced territorial development and regeneration is still a work in progress. Since the 1960s, the Korean government has undertaken small- and large-scale initiatives, shaping urban policies toward inclusive and sustainable urban development. The government's approach has been to slow down the acceleration of regional imbalances gradually by supporting various stakeholders, rather than wielding strong authority to address the issue outright. Therefore, Seoul and its surrounding capital region remain the primary city, home to half of the country’s population. Nevertheless, the country has accomplished remarkable urban development fueled by economic growth and by addressing urban challenges adaptively, proactively, and interactively. While the full impact of these policy interventions and social programs has yet to be realized, they offer useful insights for developing countries aiming to foster balanced urban growth and cultivate competitive, smart, and green cities. The key factors that led to Korea’s successful urbanization are summarized below. 59 A Story of Urban Transformation in Korea: From Overconcentration toward Balanced Territorial Development and Urban Regeneration A strong government commitment and clear, coordinated leadership are essential for the systematic implementation of large-scale urban development projects. Effective governance and leadership, led by committed national institutions, led by committed national institutions such as MOLIT, are crucial for the systematic execution of large urban development projects in Korea. This leadership, which has consistently prioritized urban issues for over fifty years, enables cross-sector coordination and the delivery of infrastructure and housing projects with uniform standards. The sustained focus on urban development, coupled with the evolution of government entities such as LH to meet new challenges innovatively, demonstrates that a clear, long-term vision and dedication to improving citizens' quality of life can lead to significant change. Establishing a solid legal foundation in the early stages and adapting it to society's evolving demands and needs will help ensure the long-term coherence of urban planning. Many countries carry out urban projects without effective enforcement of a legal framework and they often fail to envision the long-term impact of clear regulations. To allow the public sector and other stakeholders to abide by the guidelines and manage projects accordingly, it is important to establish a legal foundation in the initial phase of the development plan. Moreover, the government needs to continuously upgrade and improve regulations in response to changes in societal demands. Timely and adaptable legal reforms are critical for systematically managing and sustaining urban growth. In Korea, the legal framework such as the Urban Development Act and the Special Act on the Promotion of Urban Renewal was a key factor in the country’s urban success. Strong planning instruments and vehicles for implementation are as important as setting the vision, goal, legal, and institutional frameworks. Korea's urbanization success story demonstrates the importance of a firm commitment to turning plans into action and upholding societal pledges. The realization of large-scale urban development projects was not only driven by heavy government investment but was also engineered through cleverly leveraging market mechanisms, particularly for the mass provision of housing. The goal of supplying 2 million homes in the 1980s, for example, was not met through abundant government funds but through public corporations such as LH which partnered with the government, citizens, and the private sector to procure land, develop infrastructure, and manage its sale for private development before passing it to local governments. Competent urban operators are thus essential in executing infrastructure investments that span multiple sectors, involve different government levels, and utilize various funding sources. New town development can help manage urban sprawl with a long-term vision to create a flourishing economy. Commonly, economic activities are concentrated in the capitals of many countries. Governments can address this problem by enhancing urban competitiveness and attracting private companies when developing new cities. Korea effectively themed new cities as industrial hubs, such as information technology and innovation hubs, and promoted economic activities through initiatives like free economic zones. If new cities generate job opportunities and quality educational and health institutions, a country can achieve long-term balanced development. 60 6. Conclusion Establishing consensus and effectively managing conflicts are critical components of a successful urban regeneration project. Relocation of public organizations out of Seoul incurred significant socioeconomic costs for both the organizations and individual officials due to involuntary resettlement. To address this, the government proactively engaged with stakeholders, including labor unions, to gather opinions in the early stages. Achieving consensus and building agreement are fundamental to executing large-scale urban projects, especially when certain groups must bear the cost. The provision of appropriate compensation packages for the affected population and considering citizens’ and experts’ opinions in project plans help reduce conflicts. Empowering municipal governments can facilitate the development of tailored local strategies. While central government initiatives are the core driving force, sharing authority with and empowering municipal governments are crucial for effective regional planning. This is because local governments possess a deeper understanding of the needs of their residents. In Korea, collaboration between local and central governments was key to developing the concept of innovation cities, which were designed around each region's advanced industries and geographical characteristics. Community engagement and participatory society can create shared values. Historically, Korea has implemented top-down urban projects. While effective in the early stages, there has been a shift toward a bottom-up approach to urban regeneration, particularly by local governments. This change contributed to reducing the disparities within cities among the youth and elderly, large corporations and SMEs, and between low- and high-income groups. To cultivate an inclusive society, the government should actively offer platforms for community harmonization, and organize activities such as local festivals, youth training programs, and support programs for SMEs. Cities can achieve shared social and economic growth when all actors come together as a community. For rapidly urbanizing developing countries, Korea's urban development experience offers a wealth of insights. These nations can look to Korea's strong government commitment, which has been instrumental in the systematic implementation of large-scale urban projects, as a model for driving their urban agendas. 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