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For many cities in OECD countries, globalisation has opened access to new markets, skilled human resources and advanced technology, while accelerating international competition and industrial restructuring. Seoul – a city of 10.3 million people at the core of a capital region of 22.5 million people, one of the world’s most populous metropolitan regions – is striving to upgrade its position from that of a national mega-capital to become a “world city” and a leading business hub in Northeast Asia.
This quest for international competitiveness fits within a complex national agenda that gives priority to balanced development across the country, notably via the central government’s project to relocate administrative functions outside Seoul.
If Seoul is to realise its ambitions, the Korean authorities need to take action in a number of areas, notably to reduce congestion, encourage innovation, open up to foreign investment and improve collaboration with other major Korean cities.
Congestion is a particularly difficult challenge for Seoul since almost half of Korea’s population lives in the capital region and 6.5 million people commute daily, creating unacceptable levels of transport congestion and air pollution. Seoul has already started remarkable urban renewal projects, but more needs to be done.
On the innovation front, Seoul has identified five promising industrial clusters – fashion and clothing, financial services, business services, information and communications technologies, and digital content industries. It has a large, well-educated workforce to support research and development (R&D). However, the city needs to improve the diffusion of innovation by facilitating knowledge flows.
The region also needs to do more to attract foreign investment. Foreign direct investment in Seoul has dropped by about 20% since 2000, reportedly due to restrictive regulations and corporate governance problems. Korea’s strict immigration rules also result in extremely low numbers of foreign residents (0.5% of total population).
Finally, Seoul could collaborate more closely with other major Korean cities, enabling its strength to have positive spill-over effects in other regions and thus to reinforce the country’s international competitiveness.
This Policy Brief looks at some of these challenges and at the possible solutions put forward in a new OECD Territorial Review of Seoul.