This chapter provides a review of Korea’s policies to achieve a balanced regional development and sustainable urbanisation in a context of population declining and ageing. It highlights the benefits of, and reviews current policies on, compact and connected urban growth in Korea.
Enhancing Compactness, Connectivity and Accessibility in Korea
Abstract
Korea is one of the most urbanised countries in the OECD and the world. Approximately 75% of the population lived in cities in 2023 the highest percentage in the OECD reflecting rapid urbanisation since the 1970s. However, the speed of urbanisation has slowed1 and since 2020, Korea’s population has been shrinking and ageing. The population is expected to halve over the next six decades with people aged 65 or older then accounting for 58% of the total population (OECD, 2024[1]).
Korea’s urbanisation is highly concentrated in the Seoul Metropolitan Area
Korea is one of most dense countries in the OECD, with 515.4 inhabitants per km2 in 2023 (KOSIS, 2024[2]). However, there is a clear difference between Seoul as the municipality with the highest density in the country with 15 506 inhabitants per km2, Busan with 4 252 residents per km2.2 and Gwangju with 2 830 residents per km2.3 While Korea’s population has been steadily concentrating in cities, there is a clear dominance of Seoul, the country’s political and economic capital. The Seoul Metropolitan Area (SMA) is composed of Seoul, Incheon, and Gyeonggi province, comprising 11.8% of the Korean territory and 50.6% of the national population (around 26 million inhabitants). Moreover, while the population of the SMA is expected to remain stable, its share is expected to increase to 52.4% by 2040, as the population in the rest of the country is projected to decrease to 23.9 million by then.4
This high concentration of the population in the SMA highlights a highly unbalanced territorial structure within the country (OECD, 2022[3]), and demographic challenges are magnified when ageing is also considered as regions with rapid depopulation, and low population density, also have high ratios of elderly residents. In mountainous regions (i.e. Bonghwa, Yeongyang, Cheongsong in Gyeongbuk; and Hwacheon, Pyeongchang in Gangwon) the density is less than 30 people per km2 while in places like Bucheon city in the Gyeonggi Province the density is 15 590 people per km2. The rate of population aged 65 and above in mostly rural places with rapid population decline (i.e. Euiseong 40.3%, Goheung 40%, Gunwi, 39.2%, Cheongdo 36.5%, Hapcheon 38.5%) is higher than the national average (21.1%) (KOTI, 2024[4]).There is also a rapid population decline in provincial cities.
OECD research has already shown that in Korea, the population distribution strongly reinforces the trends towards an unbalanced urbanisation pattern (OECD, 2012[5]), with many cities shrinking reflecting low birth rates and out-migration to the SMA, and low levels of international migration. In 2015, the country’s 87 cities and counties with less than 100 000 inhabitants accounted for 59% of the territory and just over 8% of the population while 78% of the population lived in metropolitan areas (Kim, 2024[6]). Within the SMA, Seoul (21.3%) and Gyeonggi-do (20%) have an overwhelming share of the population (OECD, 2021[7]), although other cities in the SMA have also been experiencing population growth. This high concentration in the SMA has increased real estate prices and in response, the government plans to build over 236 000 housing units by 2029 (Yi, 2024[8]). Across the country, unlike medium-sized cities that have gained population, small-sized cities have experienced population loss (see Chapter 2) accentuating the unbalanced urbanisation pattern. In particular, small and medium-sized cities located in non-capital regions have experienced difficulties in maintaining competitiveness and quality of life for residents (Park et al., 2017[9]). These cities typically have weak industrial platforms (e.g. no major industries, limited infrastructure for industry, reduce workforce with technical skills, and lack R&D and innovation centres) as well as financial capacity. In the southeastern region, large and medium sized cities like Busan, Ulsan, Gyeongnam, Daegu Gyeongbuk, and in those in the Honam region are continuing to see population flow out to the SMA (see Chapter 2).5
Economic activity is also highly concentrated in a few cities in Korea. Predominantly urban regions attract the largest share of economic activities with approximately 45% of the national GDP being produced in just two cities Seoul and Gyeonggi-do (both in the Seoul Metropolitan Area) (OECD, 2021[7]). The SMA concentrated 52.7% of the total Gross Regional Domestic Product (GRDP) in 2020.6 Therefore, the level of economic activity and diversity in jobs and other urban opportunities would attract people, normally highly educated, from other parts of the country. However, other cities, despite not having the same level of population like the SMA, show comparable levels of productivity due to their specialised industrial clusters (e.g. Busan’s heavy industry, Gumi’s electronics and semiconductors, and Pohang’s steel industry) with strong supply chains and skilled labour. The presence of research institutes and universities (e.g. Korea Advanced Institute of Science and Technology based in Daejeon, and the Artificial Intelligence and optical tech centres in Gwangju), and government’s efforts to decentralised economic activity with the creation of Innovation Cities may also play a role in high productivity levels in those cities.
Korea’s urbanisation is also characterised by unplanned urban extension, or ‘urban sprawl’
Korea’s urbanisation process has been accompanied by urban expansion. As people moved from rural to urban areas, cities needed to find places to accommodate new arrivals which led to the new town developments. The country’s urban expansion has been characterised by horizontal expansion and significant vertical growth, influenced by its compact geography and targeted economic policies (Mun, Seung Lee and Kim, 2024[10]). More than half of the population of Korea lives in high rise blocks of more than 15 storeys and less than 10% lives in 1 or 2 storeys buildings (Ustun, Ozturk and Cizreli, 2018[11]). Urban sprawl may be defined as “[u]ncontrolled expansion of urban development characterised by low density, segregated land use and insufficient infrastructure provision. Urban sprawl can take the form of “leapfrog development”, whereby development “leaps” over undeveloped land” (OECD, 2012, p. 16[12]). In the Korean context, urban sprawl can be understood as “…unplanned spread of scattered development and the free-riding of public facilities surrounding new towns. This means that people who move into the new developments use the existing infrastructure because public facilities and infrastructure, such as roads, have not yet been provided for these new residential development areas.” (Cho, 2005, p. 204[13]).
Research has shown that small- and medium-sized cities on the fringes of larger metropolitan areas tend to experience greater urban sprawl (Mun, Seung Lee and Kim, 2024[10]). High levels of sprawl are found in urban fringes or newly developed towns, which have been the focus of policy interventions, rather than in old city centres. For example, cities adjacent to Seoul, such as Hwaseong-si, Pyeongtaek-si, and Gimpo-si in Gyeonggi-do, exhibit some of the highest levels of sprawl within a 15 km radius. Similarly, in regions adjacent to Busan, Gangseo-gu, Busan, and Gimhae-si, Gyeongsangnam-do, have been exhibiting high levels of sprawl as of 2020 (Mun, Seung Lee and Kim, 2024[10]). As Seoul and Busan continue to expand, they must accommodate new suburban towns housing between 150 000 and 400 000 people (Mun, Seung Lee and Kim, 2024[10]). As shown in Figure 1.1, one consequence of urban sprawl is that people must travel longer distances from peripheral towns or townships to core urban centres. However, in the Daegu and Daejeon Metropolitan Areas, the average commuting distances decreased between 2016 and 2021.
Kilometres travelled to the metropolitan area.
Source: KOTI (2018[14]) Passenger Travel Status Index Book. How do Korean people travel?; KTDB (2022) National Transport Survey, Nationwide Passenger O/D Data Collection
The result of urban sprawl in Korean cities, as in many other parts of the world, has been an increase in commuting distances and a decline in the vitality of the urban cores. Residents in suburban areas tend to be more satisfied with the natural and living environments but not with public transport (Mun, Seung Lee and Kim, 2024[10]). In suburban areas there is a more limited offer of public transport in terms of frequency and modality, contrary to what happens in central urban areas (OECD, 2024[15]). This has a negative impact on their quality of life. Dealing with urban sprawl thus needs a multi-faceted approach to urban planning that addresses the economic, social, and environmental dimensions of regional disparities. Enhancing public transport systems, fostering compact and walkable communities, and promoting mixed land use are crucial factors for mitigating the negative consequences of urban sprawl.
The rapid urban growth and urban expansion in Korea’s metropolitan areas, particularly in the SMA, has resulted in problems such as higher infrastructure costs (i.e. water, drainage, electricity, roads, train lines, housing), and damages to the natural environment. In fact, the new towns developed in the SMA in the 2000s are larger and of lower density than those built in previous decades with the aim to provide more green areas in new towns. However, more built-up areas have replaced green areas than in the past (OECD, 2014[16]). According to OECD research, despite a falling population, the consumption of land will keep on increasing (OECD, 2014[16]). This makes the conservation of land resources a priority.
Korea’s population is shrinking and ageing
Korea is currently experiencing notable demographic shifts characterised by a shrinking and ageing population. Its population peaked in 2020 and transitioned to decline, eight years earlier than expected. According to Statistics Korea (KOSTAT), Korea's total population was 51.7 million in 2022. The average yearly population growth rate was 3% in 1960, gradually decreasing to 0.7% by 2000, before experiencing negative growth in 2021 and 2022. In the future, Korea’s population is forecast to decrease from 52 million in 2020 to 37 million in 2070, when the world’s population is expected to reach 10.3 billion (Figure 1.2).
Source: Statistics Korea (KOSTAT), accessed at: https://kostat.go.kr/menu.es?mid=a20208010000
Korea’s population is also ageing. The median age of Korea’s population will rise from 45 years in 2022 to 62 years in 2070, while the world average age will increase from 30 to 38.8 years (KOTI, 2024[17]). In the same period, the share of the working age population (between 15 to 64 years old) is forecast to decrease from 71% to 46.1%. According to OECD data, Korea will have the largest cohort of people aged over 65 in 2060. One factor that may partially explain this demographic trend is the difficulties to access to affordable housing (homeownership or rental) experienced by Korean households of all levels of income (OECD, 2018[18]), and its impact on birth rates, despite efforts to support newlyweds with programmes such as ‘Happy Housing’. Moreover, one-person households have accelerated pressures on housing. In 2022, one -person households represented 34.% of all households, and almost 20% of those were less than 30 years old, and 18.6% were over 70 years of age (Statistics Korea, 2023[19]). Addressing declining birth rates has been a top policy priority for Korean authorities for the last two decades. Policies have ranged from childcare support and easing work life balance to reduce housing and education costs (Box 1.1).
Since the mid-2000s, Korea has implemented a variety of comprehensive policy initiatives to address the decline in birth rates. The Presidential Committee on Low Fertility and Aging Society has adopted four consecutive plans to revert declining birth rates.
The Basic Plan on Low Fertility and Aging Society 2006-2010 aimed to harmonise work and family life. It included measures such as financial support for childcare for low-income families; the reinforcement of employees' rights concerning maternity and parental leave; and financial assistance for infertility treatment and medical support for pregnant women.
The Basic Plan on Low Fertility and Aging Society 2011-2015 introduced free childcare services accessible to all families, irrespective of their income levels.
The Basic Plan on Low Fertility and Aging Society 2016-2020 included measures to reduce housing and education costs; a child allowance for most children up to 5 years of age; labour market integration support; and the establishment of an after-school programme.
The Basic Plan on Low Fertility and Aging Society 2021-2025 enhances quality of life and fosters a more inclusive society that advocates for gender equality in childcare, work-life balance, labour market reform, educational system renewal, and gender equality within the workforce.
Source: OECD (2019[20]), Rejuvenating Korea: Policies for a Changing Society, OECD Publishing, Paris, DOI: 10.1787/c5eed747-en
Private motor vehicles remain the main transport mode for commuting
Traditionally, urban development efforts in Korea have primarily focused on facilitating mobility through private car use. For example, Bucheon city, located between Seoul and Incheon, is a cultural and industrial hub, and the second most densely populated satellite city in the SMA, home to approximately 900 000 people. Since the 1970’s, Bucheon has experimented with a car-oriented development approach, expanding existing roads and creating new arterial roads and overpasses (Ch’ng, 2018[21]). Even the stream that once meandered through the old town was covered with concrete to make space for cars. Narrow sidewalks made walking difficult, especially for children, the elderly and people with reduced mobility.
The rising number of registered cars in Korea highlights the country’s growing dependence on private vehicles for mobility. Although the growth rate has slightly decreased since 2015, the number of registered cars has grown steadily over the past decade from 17.9 million in 2010 to 25.5 million in 2022.7 In 2024, 68.5% of Koreans owned a car.8
Public investment in road infrastructure has also incentivised the use of cars to access central areas. In most areas within the SMA, it takes less time to reach more opportunities by car compared to other transport modes. This is partly due to the extensive road network around the capital area. In the SMA, public transport, cycling and walking only allow a comparable level of access to urban opportunities as car where destinations are more concentrated such as the urban centre and some sub-centres (ITF, 2023[22]). This could partly explain the level of dependency on mobility by private car, particularly in the suburbs of large cities or regional hub cities.
As Korean cities continue to sprawl, the travel patterns become more complex, making it more difficult for transport systems to serve. Generally speaking, the connection among suburban new towns is not as efficient as the connection between new towns and their urban core. As Figure 1.3 suggests, metropolitan areas continue being the place of work or studies for many residents who must commute to these areas from neighbouring towns and townships. It is worth pointing out that in the SMA and Daegu Metropolitan Areas, the commuting rate has declined over the past decade, possibly due to increased access to jobs and services within residents’ local areas. However, in Gwangju and Daejeon Metropolitan Areas, the commuting rate has continued raising.
Source: KOTI (2018[14]) Passenger Travel Status Index Book. How do Korean people travel?; KTDB (2022) National Transport Survey, Nationwide Passenger O/D Data Collection
Across the different metropolitan areas in Korea, the private car is the most used mode of transport to access urban opportunities followed by walking and buses (Figure 1.4). There are different explanations to this, first could be the number of urban opportunities that could be reached by private car than by other transport modes in less time. Land use measures supporting job-worker balance in suburban areas as well as the state of regional public transport connections between towns and new towns and emerging employment centres need to be improved to reduce commuting times and distances or to provide new modes of commuting that make car use less advantageous. In the SMA, these land-use and transport factors have influenced access to work, where absolute accessibility by car significantly outperforms all other modes. For example, according to the ITF, during the morning peak (8 AM), the average driver in the SMA can reach at least twice as many jobs using a car as can the average user of public transport (ITF, 2023[22]).
Distribution of the different modes of transport used in the metropolitan areas.
Source: KTDB (2022) National Transport Survey, Nationwide Passenger O/D Data Collection.
Passenger cars and walking are the most used modes of travel used by old-age people (Figure 1.5). For the elderly in suburban areas that are not very well connected to public transport, they may not be able to commute easily, including to places where they can get access to essential services.
The level of income is also a factor in the number of urban opportunities that can be reached by car. High-income households in the SMA are, in general, more likely to drive than walk, even in residential neighbourhoods with high densities (Seong, Lee and Choi, 2021[23]). The high level of car usage leads to traffic congestion and in consequence public authorities prioritise the investment in public transport. However, according to Figure 1.6, despite congestion and public transport priority measures, in the SMA car users can reach six times more jobs than public transport users in 60 minutes (ITF, 2023[22]).
Distribution of the most used travel mode by people over 65 years of age, 2021
Source: Data provided by KTDB to the OECD.
Average number of jobs accessible to working population within 60 minutes.
Source: ITF (2023[22]) Accessibility in the Seoul Metropolitan Area: Does Transport Serve All Equally?, International Transport Forum Policy Papers No. 117.
The lack of affordable housing in central areas leads to long commutes to access jobs and services
As a result of the historic evolution of land use and housing, demand for and costs of housing in Seoul are high (OECD, 2018[18]). House prices in Seoul have resulted in people moving to neighbouring areas where prices are more affordable. On average, house prices in Seoul are double those in Gyeonggi and more than double those in Incheon (Jung, 2022[24]). In 2021, over 400 000 people left Seoul: nearly 90% moved to Gyeonggi, and the remainder to Incheon (ITF, 2023[22]). As demand for housing in these neighbouring cities increases, housing prices, housing rents and rent deposit rates in these cities are also likely to increase.9 As a result, low-income households who cannot afford living in central areas face a trade-off between high housing costs and high transport expenses. With rising rental demand driving up costs even in the outskirts, some renters bear the double burden of both expensive housing and transport (ITF, 2023[22]).
Korea has made significant progress in improving access to quality housing due, in part, to the introduction of minimum standards (e.g. number of rooms and floor space differentiated by size and composition of households) and the direct government support for housing construction. Moreover, the Korea Land and Housing Corporation (LH), for example, has been implementing programmes on housing supply revitalisation in old-low rise residential areas, as part of urban regeneration projects. However, the country still faces a critical affordable housing problem mostly in urban areas. There is a strong demand for housing that no longer originates only from low-income groups, a rigid supply of land due to the large number of government regulations, and low interest rates are issues behind the increased speculation (OECD, 2018[18]). In 2021, the housing price to income ratio (PIR) in Seoul - an indicator to measure housing affordability in Korea - rose to 14.1 in 2021 from 12.5 in 2020.10 In 2021, the rent to income ratio (RIR) stood at 15.7%, down 0.9% from 2020.11 In 2025, Korea is expected to become a super ageing society as the population aged over 65 will pass 10 million inhabitants (Woo-hyun, 2024[25]). According to research, in Korea, ageing lowers housing demand and effects on house prices are twice as large as income effects as a 1.0% increase in the dependency ratio causes a 0.7% decrease in house prices, while a 1.0% increase in income causes a 0.3% increase in house prices on the average (Park et al., 2017[26]).
The development of new towns in suburban areas of large cities have been seen as an option to stabilise house prices and provide affordable housing options to low-income households and certain groups of the population such as students newlyweds and the elderly. The problem has been that these developments contribute to urban expansion making it more expensive to provide public services including transport. The location of housing in the city outskirts of large cities and away from jobs and services leads people to long commutes. In 2023 Korean workers spent on average 72.6 minutes a day to commute, taking 34.7 minutes to get to work and 37.9 minutes going back home, travelling an average of 18.4 kilometres total per day.12
Longer commutes highlight the need to shift from car to transit-oriented development
In general, connections between New Towns and employment areas are made by car as public transport often requires transfers and longer trips. Given the limited transport options, residents that live outside of core areas must travel by car to access urban opportunities (ITF, 2023[22]). Moreover, as new employment opportunities are available in sub-centres, they tend to attract workers from different areas, which do not always have public transport connections as they do not only employ local people.
Without local access to work, education and other urban opportunities, commuting distances increase, making walking and cycling less viable. In the SMA, for example, the shortest average commuting distance is in Seoul (8 km), followed by Gyeonggi (23 km) and Incheon (31 km). It is also reflected in the regional commuting mode shares: in the City of Seoul, cars account for just over 20% of commuting trips, whereas in Gyeonggi and Incheon, they account for 61% and 54% of trips, respectively (ITF, 2023[22]). In comparison, across the OECD’s largest cities, on average, 83% of the population can access a bus stop and 31% can access a metro or tram stop within a 10-minute walk (OECD, 2022[27]).
Recent national and subnational government efforts focus on promoting sustainable urban development by expanding public transport. Three key initiatives stand out:
expanding metropolitan transport networks in the SMA and major urban regions, including the development of transfer centres to improve accessibility;
strengthening bus-centred transport through bus rapid transit (BRT) systems and promoting active mobility (walking and cycling) to enhance multi-modal connectivity; and
leveraging digital technologies to improve accessibility, particularly through Mobility as a Service (MaaS). which integrates various transport modes and provides real-time traffic information to commuters.
Depopulation is leading to a decrease in transport demand and quality of service
Depopulation is having a negative impact in public transport demand. The number of trips is forecasted to decrease after 2025. Commuting by public transport to work (-15.4%) or go to school (-15.2%) and made by bus (-14.7%) or train (-14.8%) are forecasted to decrease by 2050 (Table 1.1). This creates a lack of economic feasibility for transport infrastructure investment projects. For areas outside the SMA, preliminary feasibility studies for investment projects include regional balanced development as part of the evaluation criteria. However, several large-scale transport investment projects had to be exempted from the feasibility studies to be implemented due to the lack of economic feasibility.
Source: KOTI (2024[17]) Transportation infrastructure, service and policy in response to demographic changes.
Another consequence of depopulation in the transport sector is the disparity in the level of transport services between the SMA and provincial cities. Public transport is less convenient in rural areas and in small and medium-sized cities. The distance to bus stops in counties (Gun) is 3.48 times greater than in metropolitan areas, and the daily operational frequency of buses is about one-fifth in provincial cities compared to SMA. A decrease in demand of public transport, difficulty in recruiting transport workers, and increase in operational costs have worsen the operating conditions for buses and diminished services (KOTI, 2024[17]). These conditions have created a crisis in the Korean bus industry. The prolonged impact of COVID-19 has led to less demand and increased costs due to inflation, and the recovery has been slower in small and medium-sized cities even after the cessation of COVID-19 prevention measures. The increase in fuel prices due to the impact of the Russian aggression against Ukraine, the stronger dollar, and higher labour costs have made it necessary to increase fares (KOTI, 2024[17]). This crisis has forced the closing of bus businesses and for an increase demand in financial support for the industry in provincial cities as the closing of bus routes is limiting the mobility of residents. Cities and bus operators need to improve unprofitable-inefficient bus routes that have not adapted to changes in the regional population structure, demand and transport patterns. Possible options include keeping bus routes planning under regular review using not only demand and supply data from bus operators, but include overall transport plans and projections, land use plans, and traffic demand and economic forecasts. It would be necessary to redesign the bus routes considering routes frequency and walking distances to the bus stops; and in small towns the use of the ‘hub-and-spoke system’13 may be more appropriate. Other options include streamlining schedules, simplifying bus routes by breaking longer routes down and reducing bus stops, and increasing bus speed.
Transport planning for an ageing society needs to be recalibrated
As already highlighted, Korea is experiencing a rapid ageing of its population. While increased life expectancy is a significant achievement, it also presents policy challenges. Housing, public transport, infrastructure, and services must be adapted to this new demographic context to ensure a high quality of life in older age. However, policy makers' awareness of the diverse transport needs of older people appears limited. The mobility needs of the elderly vary and are influenced by several factors, including lifestyle (e.g. whether individuals are working or retired, and their housing arrangements) and socio-demographic characteristics (such as age, gender, income, possession of a driving licence, and household size and structure) (Lin and Cui, 2021[28]). Patterns of land use and housing arrangements play a significant role in shaping the daily lives of older adults. Those living in suburban communities are particularly vulnerable to transport deficiencies.
Korea’s ageing population challenge is closely linked to relocation trends around retirement age. Notably, over 80% of people aged 65 to 77, and 79% of baby boomers aged 55 to 59 in Seoul in 2010, were originally from regions outside the city (Kim and Han, 2014[29]). Where older people choose to live, and how they move about, has implications for resource allocation, balanced regional development, and local economic growth. Contrary to expectations of migration towards less dense areas, research shows that retirement migration in Korea more commonly leads to higher-density areas (Kim and Han, 2014[29]). Although there is indeed a migration to rural areas for retirement, the number of elderly people who chose not to move and moved to areas of higher density increased even more rapidly during the 2000s (Kim and Han, 2014[29]). Although some older individuals do move to rural areas for retirement, a growing number either remain in place or relocate to denser urban areas. Those ageing in place in cities like Seoul require transport systems that are available, accessible, affordable, and safe.
Improving transport availability is crucial to maintaining mobility in older age. As shown in Figure 1.4, walking is the primary mode of transport for older Koreans, followed by private car use. Inadequate walking infrastructure, such as the absence of pavements, safe pedestrian crossings, and proper lighting, can severely limit mobility, especially if urban planning continues to prioritise car travel. Regarding driving, while the Korean government has recommended that older individuals stop driving to enhance road safety, there is no mandatory retirement age for drivers. In suburban areas with poor public transport connections, driving often remains the most convenient option. However, ceasing to drive can lead to a significant reduction in mobility. Research indicates that older adults living in areas served by metro systems are more likely to give up driving (Moon and Park, 2020[30]). Therefore, residential areas with highly accessible and affordable public transport, combined with safe walking infrastructure, can greatly enhance older people's independence and quality of life.
Transport planning in an ageing society such as Korea must also recognise that public transport is not always convenient for older users. Barriers include poor access to bus stops, long walking distances, a lack of basic facilities (e.g. shelters and seating), overcrowding on buses and trains, and challenges related to interchanging between services (e.g. obtaining information, carrying luggage, and navigating complex networks). These issues can deter older people from using public transport and must be addressed through inclusive, age-friendly urban and transport design.
Developing new towns to alleviate over-concentration in the Seoul Metropolitan Area
To deal with over-concentration of population and economic activity in the Seoul Metropolitan Area, the government has pursued a new town development policy for over five decades (Box 1.2). These new towns have played a critical role in offering housing alternatives for a growing population, stabilising housing prices, and preventing the emergence of slums around the capital. However, they have also led to unintended consequences, including long commutes to jobs and essential services (e.g. education, healthcare, leisure), unnecessary infrastructure costs, and environmental problems such as air pollution. One major contributing factor is the strict green belt regulations, which required many new towns to be located further from existing urban areas. As a result, these towns, situated on the outskirts of Seoul, often lack nearby industrial facilities, suburban employment centres, and efficient transport connections to Seoul and its satellite cities (Vongpraseuth et al., 2020[31]). Since 2018, the Ministry of Land, Infrastructure and Transport (MOLIT) has announced the development of six new towns around Seoul. A key feature of these projects is their planned integration with public transport networks (Box 1.2). It is important to note that the housing supply strategy of the current administration places more emphasis on housing reconstruction than on the creation of new units, unlike previous governments. Between 2022 and 2027, the government plans to deliver 2.7 million dwellings, with 1.3 million expected to come from the private sector. In Seoul, around 500 000 housing units will be built or fully reconstructed by 2027.14
Despite government efforts to create quality jobs in these new towns—such as through smart city initiatives—many residents continue to commute to central areas of larger cities rather than work locally. Furthermore, the underdevelopment of commercial areas has led to these new towns functioning primarily as residential satellite communities, forcing residents to travel long distances to access services (Lee and Ahn, 2005[32]). The proliferation of new towns has also exacerbated regional disparities due to the uneven distribution of essential public infrastructure and limited access to affordable housing. This, in turn, contributes to environmental degradation (Mun, Seung Lee and Kim, 2024[10]). Access to employment opportunities, essential services, and social support is often more restricted in new towns compared to central urban areas, leading to heightened inequality. While some new towns prioritise environmental preservation and dedicate substantial land to green areas, any environmental benefits are often undermined by increased emissions caused by reliance on private vehicles.
Since the 1960s, the Korean government has implemented New Town Development policies to address urban challenges in major cities, particularly the over-concentration in the Seoul Metropolitan Area (SMA), and to promote balanced national territorial development. As part of the Korea Industrialisation Master Plan and the First Economic Development Plan, the government prioritised the southeastern region by establishing two industrial new towns: Ulsan (1962) and Pohang (1968). During this period, several key legislative frameworks were introduced to support these developments, including the Urban Planning Act (1962), Land Acquisition Act (1966), Land Readjustment Act (1970), and Local Industry Development Act (1970).
In the 1970s, the government constructed additional industrial towns such as Gumi (1973), Changwon (1977), and Yeocheon (1977) to foster higher value-added industries in response to changes in security and economic conditions. Concurrently, Seoul faced a rapid population increase. To address the rising urban density, the government developed Yeoido (1967) and Gangnam (1968) as new sub-centres of the city. In 1968, it launched a large-scale residential project in Gyeonggi Province—Sungnam—to resettle one million residents from unregistered shantytowns in Seoul. Additional towns like Banwol (1977) and Gwacheon (1979) were developed to disperse manufacturing facilities and administrative functions, respectively.
In the 1980s, soaring housing prices caused by high population concentration in the SMA led the government to establish five first-generation new towns—Pyoungchon, Bundang, Ilsan, Sanbon, and Jungdong—between 1989 and 1996. Designed to relieve pressure on the housing market, these towns provided approximately 292 000 residential units for 1.17 million people. Though intended to be self-contained with significant commercial and business zones, these areas faced underdevelopment due to simultaneous construction.
In the early 2000s, ten additional new towns were developed around the capital region, including Seongnam Pangyo, Hwasung Dongtan, and Gwanggyo. Two more were established in regional areas—Asan and Doan. Pangyo, Dongtan, and Wirye were planned to help accommodate housing demand from Seoul’s Gangnam district, while towns like Gimpo, Paju, and Geomdan aimed to serve as housing and economic hubs for the Gangseo and Gangbuk areas. These new towns were designed with integrated transport networks to ensure connectivity with Seoul and neighbouring regions, and to promote high-quality, self-sufficient living environments.
From 2005, the focus of New Town Development shifted towards “Special Purpose” New Towns, moving beyond residential objectives. These included the administrative capital Sejong City, enterprise cities, and innovation cities. Sejong City was established to decentralise government functions from Seoul and support balanced national development by relocating 36 government ministries and agencies to a new administrative centre in the heart of the country.
Since 2018, the Ministry of Land, Infrastructure and Transport (MOLIT) has announced plans for six new towns around the SMA. These towns aim to help curb rising housing prices while ensuring access to public transport, allowing residents to reach central Seoul within 20 minutes.15
Source: Keon et al (2015[33]) Korea's Pursuit for Sustainable Cities through New Town Development: Implications for LAC, IDB Discussion Paper 390. Lee and Ahn (2005[32]) Five new towns in the Seoul metropolitan area and their attractions in non-working trips: implications on self-containments of new towns, Habitat International, Vol 29 Issue 4.
Facilitating region-specific development, inter-regional connectivity and co-operation through the Regional Balanced Development Policy (RBDP)
Between 1962 and 2000, Korea underwent rapid urbanisation and economic growth, which was accompanied by excessive spatial centralisation and disproportionate regional development. One of the contributing factors was the priority given to the reconstruction of Seoul following the Korean War. However, this process led to a significant concentration of population and economic activity in a single metropolitan area, resulting in unbalanced regional development. These imbalances are now undermining the country’s national competitiveness, sustainable growth, and social cohesion. In an effort to recover from the effects of the Asian Financial Crisis in the 1990s, the central government implemented policies aimed at enhancing regional competitiveness, promoting venture businesses, and advancing informatization. However, these policies further intensified the concentration of population and economic activities in the Seoul Metropolitan Area (SMA). Today, these challenges are compounded by low birth rates, population decline, and an ageing society. Demographic pressures are particularly pronounced in rural areas near small and medium-sized cities, where elderly dependency ratios (33%) are higher than in rural areas with access to metropolitan regions (24%) (OECD, 2022[3]). Depopulation may undermine the delivery of public services, as observed in other OECD countries such as Spain, where declining populations have negatively affected the range and quality of services like healthcare and education (Sánchez García and Rodon, 2024[34]).
Since 2003, the central government has prioritised balanced regional development through the enactment of the Special Act on Balanced National Development and the Regional Balanced Development Policy (RBDP) (Box 1.3). The Special Act aims to support region-specific development, improve inter-regional connectivity and cooperation, and facilitate improved living conditions, including through the relocation of institutions. The RBDP pursues three key values: i) decentralisation, led by regions looking to develop the self-sufficiency region-specific problem-solving skills; ii) innovation, to nurture innovative capabilities and the development of regional economies and industries; and iii) inclusiveness to achieve social unity through balanced development across and within the regions.
Key initiatives under the RBDP include the creation of regional development hubs, promotion of inter-regional cooperation, and expansion of transport and logistics networks. These initiatives led to the establishment of the multifunctional administrative city (Sejong), Innovation Cities, Enterprise Cities, Free Economic Zones, and the enhancement of regional infrastructure such as roads and railways to strengthen regional connectivity. The government has also designated certain ‘growth promotion areas’—regions identified based on income levels, population size, and fiscal capacity—that require targeted support from national and local governments. This support includes investment in infrastructure such as roads and water supply systems to stimulate economic and social development and improve residents' living conditions.
To implement the Special Act, the government established the Presidential Committee for Decentralisation and Balanced Development, which advises on policies to promote balanced development and coordinates efforts between central and local governments. In addition, Provincial Regional Innovation Councils have been set up to lead balanced development efforts in each region. These councils are responsible for overseeing interregional collaboration projects and addressing issues related to population decline and financial strain at the local level.
Period 2003 – 2005 – Roh Moo-Hyun Administration
Vision: “A new beginning as a nation through dynamic, balanced national development driven by regional innovation and autonomous regionalisation”
The central government implemented a national development policy as a top priority through:
A 5-year balanced national development plan, 5-year regional innovative development plans established and implemented by cities and provinces.
The enactment of the Special Act on Balanced National Development; the Special Accounts for Balanced National Development.
The establishments of the Balanced National Development Committee and City/Do regional innovation councils.
Period 2008 – 2013 – Lee Myung-Bak Administration
Vision: “Strengthen global competitiveness of regional economies, create regional economies that guarantee quality of life”
The central government reformed the regional development policy system. To create competitiveness across all regions, the government:
Established the Committee for Balanced National Development; reformed the Committee for Regional Development; and established the First 5-Year Regional Development Plan.
Designated seven Mega-regional Development Zones; and established the Comprehensive Development Plan.
Designated and supported under-developed Areas including Growth Promotion Areas and Special Support-Needed Areas.
Period 2013 – 2017 – Park Geun-Hye Administration
Vision: “HOPE Project: Pleasant living spaces, workplaces where there are dreams, fun places to rest”
The government focused on the expansion of community infrastructure and promoted regional economies to increase quality of life. Some of the key initiatives were:
The establishment of the second 5-Year Regional Development Plan.
The establishment of city and provincial life zone development committees.
The strengthening of the Regional Happy Living Zones; and the adoption of initiatives for development and investment promotion for leading industries in regions.
Period 2017 - 2022 – Moon Jae-In Administration
Vision: “A nation with strong regions. A well-balanced Republic of Korea: Developing the foundations for autonomous growth of regions”
Establishment of the Fourth 5-Year Balanced National Development Plan; and development of Comprehensive Balanced Development Index and graded support.
Establishment of regional innovation systems.
Source: Nabis Global, History of Balanced National Development Initiatives, at: https://nabis.go.kr/contentsGlobalDetailView.do?menucd=346
Relocating public institutions for regional balanced development
The high concentration of population and economic activity in the Seoul Metropolitan Area (SMA) has led to unbalanced regional development, with many cities experiencing population decline and the loss of socio-economic functions. In response, the national government has, for over two decades, implemented a series of measures aimed at reducing this concentration and promoting balanced development. Two key initiatives have been central to this agenda: the establishment of a multifunctional administrative city, and the creation of ‘Innovation Cities’ to relocate hundreds of public institutions (e.g. ministries and agencies) and to incentivise the relocation of private sector companies. These initiatives are part of the broader national decentralisation strategy.
The establishment of a multifunctional administrative city, Sejong
To decentralise government functions historically concentrated in the capital region, one of the government’s flagship initiatives has been the creation of a Multifunctional Administrative City, Sejong City, which serves as the new administrative capital. Located within the Sejong Special Self-Governing City, it straddles the Chungcheongnam-do and Chungcheongbuk-do provinces, approximately 130 km southeast of Seoul. Originally envisioned as a new capital encompassing all legislative, administrative, and judicial institutions, the plan was scaled back following a 2004 constitutional ruling. Consequently, from 2012, only 32 central administrative agencies, excluding those related to diplomacy, defence, and national security, were relocated to Sejong City.
The goal was to develop Sejong City into a self-sustaining city of 500 000 inhabitants by 2030. As of 2020, the city had a population of approximately 360 000, hosting 44 state government facilities, 16 state-run research institutes, and over 18 000 companies.16 According to estimates, by 2047 the city’s working-age population is projected to grow by 86.1% (an increase of 160 000 people), while the youth population is expected to rise by 50.8% compared to 2017 (OECD, 2022[3]). Sejong City has thus become a cornerstone of Korea’s balanced national development policy, serving not only as the new hub for central government administration but also as a major urban project drawing hundreds of thousands of people away from the Seoul Metropolitan Area into central Korea.
However, one major challenge is that Sejong City is the only special self-governing city in Korea without a high-speed rail connection. This significantly undermines its competitiveness, as a central station in Sejong could considerably reduce commuting time for government officials travelling to and from Seoul. Currently, the bus ride to Osong, the nearest high-speed train station, almost doubles the overall journey time between the administrative and political capitals. Introducing a high-speed rail station in Sejong may risk reducing Osong’s ridership and the economic benefits associated with transit traffic in Chungcheongbuk-do. Nevertheless, high-speed rail connectivity is vital for the development of high-value service sectors and for enhancing the province’s ability to attract and retain young talent. As such, improving Sejong’s transport connections is essential to supporting its long-term development (OECD, 2021[35]).
The creation of ‘Innovation Cities’ to revitalise lagging regions
In the early 2000s, the Ministry of Land, Infrastructure and Transport (MOLIT) introduced the ‘Innovation Cities’ (ICs) policy to address the concentration of population and administrative functions in the SMA. As of 2023, over half of Korea’s total population resided in the SMA. Innovation Cities are designated regional urban areas developed for the relocation of public institutions from the SMA (Figure 1.7). These cities aim to revitalise underperforming regions and promote the decentralisation of government functions to local areas. In addition to relocating central agencies, the initiative also seeks to spur local economic development, foster innovation, and create sustainable communities outside the capital region.
Source: Ahn, Seo and Kwon (2021[36]), Impact of Innovation City Projects on National Balanced Development in South Korea: Identifying Regional Network and Centrality, International Journal of Geo-Information, Vol 10 Issue 3. https://doi.org/10.3390/ijgi10030169
The process of relocating public institutions began in 2006, following consultations with local governments and the signing of basic agreements between metropolitan areas and provinces. The plan entailed relocating 112 of the 153 government agency headquarters to designated Innovation Cities. The remaining 41 units were relocated individually to Sejong City and other cities, such as Osong and Cheongju, which were officially designated as Innovation Cities in March 2020. From the central government’s perspective, the relocation was intended to strengthen national competitiveness and curb the excessive centralisation of population and resources in the Seoul Metropolitan Area (SMA). For the recipient regions, hosting public institutions brought more residents, job opportunities, and increased local tax revenues. As many young professionals were expected to move, the relocation was also seen as an opportunity to expand the skilled labour pool.
However, a key drawback of the Innovation City policy is that its implementation prioritised government directives over regional demand and characteristics (Ahn, Seo and Kwon, 2021[36]). Because relocating institutions takes less time than broader urban development, many Innovation Cities developed without sufficient integration with existing urban centres or pre-existing town districts. This was exacerbated by the lack of a comprehensive strategy to promote compact and connected urban growth before relocation occurred. Furthermore, many Innovation City districts were established in peripheral areas lacking essential infrastructure, such as educational institutions, healthcare services, and cultural facilities. This has limited their interaction with surrounding areas and existing cities (Ahn, Seo and Kwon, 2021[36]). Even existing commercial areas in old towns began a process of decline due to the distance to the residential areas and the new IC commercial centres (Kim and Kim, n.d.[37]). Relocation efforts also extended to private enterprises and universities, incentivised through government policy rather than driven by direct interest. When organisations moved from the SMA to provincial areas, they received financial and administrative support, such as tax breaks, land grants, and subsidies. The government also funded regional universities and research institutions to foster innovation and attract faculty and students.
Research suggests that Innovation Cities in regions that have developed into larger urban centres—such as those near Busan, Daegu, and Ulsan—could further strengthen their roles in education, healthcare, and culture, enhancing their self-sufficiency (Ahn, Seo and Kwon, 2021[36]). Revitalising these cities requires future-oriented planning, intensified land use, and improved urban mobility to increase access to services and strengthen resident interaction (Kim et al., 2017[38]).
Small and medium-sized cities in Korea are also experiencing expansion in their daily commuting zones. However, existing urban policies often fail to align with demographic trends (Park et al., 2017[9]). For example, Ireland has included in its ‘Project Ireland 2040’ the elements of an ageing population and smaller family sizes to guide public investments and plan for new demands of housing, transport, healthcare and education services (Government of Ireland, n.d.[39]). In contrast, many Korean cities continue pursuing suburban development and relocating public services to new areas despite shrinking populations and an ageing demographic profile. Previous efforts to reinvigorate small and medium-sized cities, such as the Happy Living Zone initiative promoting inter-city cooperation, have yielded limited results due to their small-scale and voluntary nature (Park et al., 2017[9]).
The relocation of public institutions and private companies could yield better policy complementarities if supported by appropriate transport infrastructure. Cities could specialise by industry, for example electronics in Daegu, logistics and tourism in Busan, and IT services in Gyeonggi and Jeju, while improved intercity transport would facilitate economic integration. Connections between cities and their surrounding areas would also help strengthen industrial supply chains and labour mobility.
One of the main shortcomings of the Regional Balanced Development Policy (RBDP) has been the insufficient attention paid to spatial development. Innovation Cities were often established without consideration of how they would evolve post-relocation, resulting in urban sprawl, limited mobility, and weak linkages between old and new urban centres. Many of these cities were the product of political decisions rather than organic socio-economic growth. As a result, some lacked the functional interconnections with neighbouring towns and villages necessary to drive regionalisation and human capital redistribution. A fundamental question is how to harness urban growth to support development in regions with historically weak economic, cultural and mobility ties to urban hubs like Seoul, Busan, and Sejong. Overemphasis on industrial zones with standardised development projects has often ignored regional characteristics and stifled local economic growth (Kim and Lim, 2016[40]). In addition, high land prices and unaffordable housing in city centres have pushed populations into suburban areas, contributing to urban sprawl even amid declining population levels. As seen in past new town developments, indiscriminate real estate expansion does not guarantee population growth.
Emerging patterns of urbanisation and population distribution suggest a need for better understanding of migration and commuting flows. While some young civil servants have settled in Sejong with their families, others continue to commute to Seoul on weekends, indicating persistent personal and professional ties to the capital. This highlights the importance of considering temporary and multiple forms of mobility in policy, such as second-home use, business and leisure tourism, seasonal labour, and multi-local living, which are often excluded from regional planning discussions. A more nuanced view of regional cities as both sources and destinations of diverse mobilities could enhance socio-economic and cultural integration across broader territorial areas.
Promoting regional-led balanced territorial development
Despite the national government’s long-standing commitment to balanced development, Korea continues to experience extreme spatial concentration, particularly in the SMA. To address this, the Presidential Committee for Decentralisation and Balanced Development introduced the Decentralisation and Balanced Development Master Plan (DBDMP) 17 in 2023, developed in collaboration with central administrative agencies and informed by feedback from local governments (Korean Government, 2023[41]).
The DBDMP represents a comprehensive strategy that combines decentralisation and balanced regional development to tackle demographic decline, ageing, and spatial imbalance. It emphasises a place-based approach, increased autonomy, and greater resource allocation for local governments. Its ultimate goal is to enable region-led development and foster responsible local autonomy. The DBDMP may be seminal to foster compact and connected development due to five features that differentiate it from previous policies:
A unified vision: The plan aspires to make all regions in Korea desirable places to live. It outlines five key strategies: innovative growth, specialised regional development, education reform, customised living welfare, and decentralisation.
Integrated planning: It merges two previously separate frameworks—the Five-Year Comprehensive Action Plan for Decentralisation and the Five-Year Plan for National Balanced Development. The Decentralisation and Balanced Development Master Plan also includes: regional decentralisation and balanced development plans, the sectoral plans of central administrative agencies.
Compact and connected development: The strategy involves developing urban growth hubs through public and private investment, enhancing settlement conditions (e.g. education, healthcare, childcare, housing, culture), and expanding digital and transport infrastructure to improve accessibility to urban and regional centres.
Inter-regional cooperation: For the first time, the plan includes an inter-regional development strategy to coordinate infrastructure and economic initiatives across regions. This includes leveraging local industries, boosting employment, promoting tourism and culture, and strengthening accessibility through coordinated transport development. The plan is based on the characteristics and potential of each area. The central government supports inter-regional development cooperation projects through financing, administrative organisation, laws and institutions.
Metropolitan Economic Clusters and transport expansion: The DBDMP introduces the concept of 4+3 Metropolitan Economic Clusters aimed at fostering globally competitive industrial bases outside the SMA. It promotes a national network of 1-hour living zones within each cluster and 2-hour zones across the country, supported by transport infrastructure such as new roads, railways, and airports.
Tackling spatial centralisation and unbalanced regional development through megacity initiatives
Some local governments in Korea are promoting megacity region initiatives by leveraging regional rail networks to enhance spatial concentration on a more localized level. These efforts are part of a broader strategy to develop metropolitan economic zones, functionally connected to a core metropolis. A megacity region18 is defined as a city-connected area with a population of over 10 million, comprising administratively separate but functionally integrated areas. These regions share social infrastructure, such as public transport and logistics, and maintain strong economic and industrial linkages.19
In a megacity region, the integration of the core city and its suburban hinterlands allows for the low-cost redistribution of labour and capital, supporting a daily life structure centred on robust social and transport infrastructure. These initiatives aim to promote cooperation among cities and generate synergy rather than competition. This approach responds to demographic decline outside the Seoul Metropolitan Area (SMA) and seeks to boost competitiveness by connecting regional hubs and their surrounding areas through expanded transport infrastructure.
As part of these efforts, the Comprehensive National Territorial Plan outlines spatial development centred on transport networks. For example, in 2022, MOLIT proposed the “One-Hour Living Zone Completion Strategy” for the Busan–Ulsan–Gyeongnam (Bu-Ul-Kyung) region. This strategy includes expanding inland and metropolitan railways and constructing expressways to support its evolution into a global megacity.
Since 2018, Busan, Ulsan, and Gyeongsangnam-do have signed cooperation agreements covering areas such as transport, water, economy, and safety. These collaborations led to the Bu-Ul-Kyung Megacity proposal—a special local government formed by these three cities, encompassing over 10 million people. The goals of this megacity include: becoming a competitive economic, industrial, and cultural hub; attracting businesses and promoting startups to drive job creation; and expanding public transport in both urban and rural areas to create a network of spheres of influence. This initiative seeks to overcome the dominance of the SMA by connecting large, mid-sized, and small cities, as well as rural and fishing communities, into a flexible metropolitan system. The Bu-Ul-Kyung megacity strategy focuses on three key areas:
Metropolitan Transport System: Building a regional transport network to establish a one-hour living zone;
Knowledge Competitiveness: Fostering local talent and new industries across the southeast; and
Industrial Innovation Ecosystem: Linking Gyeongnam’s manufacturing sector with Busan and Ulsan’s R&D capacities and promoting hydrogen-based industries.
While previous attempts to create the Bu-Ul-Kyung megacity focused on consultative cooperation among local governments, current efforts aim to establish a special local government with a legal basis through amendments to the Local Autonomy Act. Public opinion has also been actively sought—unlike in earlier initiatives. However, political instability and a lack of local consensus have so far prevented its full realization.20
A second megacity initiative involves merging Daegu with North Gyeongsang Province to address the demographic and fiscal challenges faced by both areas. The aim is to increase population and economic scale; reduce project duplication; and improve efficiency in public spending through strategic prioritization. Unlike the Bu-Ul-Kyung initiative, this merger enjoys strong political support from both regions. The central government has committed to supporting the integration with direct and indirect funding, as well as special administrative and financial measures (Da-hyun, 2024[42]). The newly proposed Daegu-Gyeongbuk Special City is expected to function similarly to the Seoul Metropolitan Government, with authority over economic development, balanced territorial development, and metropolitan administration. Finalization of this consolidation is planned for 2026.
Megacity regions can maximize infrastructure investments and build regional synergies in the face of depopulation and constrained budgets. However, these initiatives must be grounded in clear functional zoning, for example, regional/metropolitan hubs to lead economic development; small and mid-sized cities to offer services to rural areas; and rural areas to provide residential functions and basic infrastructure. To encourage compact development, socio-economic functions should be concentrated around transport hubs, and the regional rail and bus networks expanded to reduce travel time and connect hubs with surrounding communities.
Creating high-density and mixed-use developments leveraging transport – downtown cohesion zones
Four special zones to support regional-led balanced development
The Decentralisation and Balanced Development Master Plan (DBDMP) contemplates the creation of four special zones to incentivise regional-led balanced development and decentralisation (Figure 1.8).21 These special zones are planned and operated as decentralised local-led zones. The aim is to create an ecosystem where locally nurture talent is employed, settles in the region and contributes to the local economy. The Opportunity Development Zones are designed to attract large-scale corporate investments through regulatory exemptions, tax incentives (e.g., deferred capital gains, income/corporate tax exemptions), and financial support. The Education Development Zones aim to improve public education and foster local talent by coordinating efforts between local governments, educational authorities, universities, and industry. The Downtown Cohesion Zones focus on developing high-density, mixed-use areas in city centres by leveraging public transport and cultural infrastructure to encourage compact urban growth. The Cultural Driven Cities seek to utilise local cultural assets to enhance regional creativity and cultural vitality (Korean Government, 2023[41]).
Source: Based on Korean Government (2023[41]) Decentralisation and Balanced Development Master Plan.
One of the key lessons learnt from relocation initiatives is that providing jobs and housing alone is insufficient to encourage young people and businesses to move to provincial cities. Leisure, cultural, and commercial opportunities must also be available to improve quality of life and make these areas more attractive. As such, the development of commercial and cultural facilities should complement other measures aimed at enhancing living conditions. In this context, Downtown Cohesion Zones (DCZs) are expected to play a pivotal role by promoting mixed land use and upgrading transport infrastructure. These zones aim to revitalise local city centres by concentrating government-wide resources and capacities in these areas. DCZs require a reorganisation of urban space by integrating industrial, residential, and cultural developments tailored to regional characteristics. In addition, they offer support to attract private investment and businesses. Unlike previous urban development strategies, which often led to low-density sprawl on city outskirts without adequate infrastructure for human settlement, DCZs promote high-density development in central urban areas to provide the necessary conditions for both business operations and liveability. The national government has selected leading projects from five metropolitan cities to serve as pilot DCZs (Table 1.2).
There are, however, two issues that need to be highlighted regarding DCZs. The first one is the city-wide planning approach. Although DCZs are geographically focused on specific parts of a city, their development should adopt a whole-of-city perspective. This ensures that the wider implications, such as increased demand for housing, public transport, education, and healthcare, are carefully planned and managed. Without such a holistic approach, the benefits of the DCZ could be undermined by pressures on existing urban systems and infrastructure. The second one is on connectivity and integration. DCZs typically involve the redevelopment of brownfield sites or the revitalisation of central urban areas, which aligns well with compact development strategies. However, it is essential to fully consider and strengthen connectivity within and beyond these zones. This includes integrating Bus Rapid Transit (BRT), Light Rail Transit (LRT), and other sustainable transport options to ensure accessibility and support cohesive urban mobility networks.
Enhancing territorial transport connectivity may help attract and retain population and reduce inequality
Improving transport connectivity across territories can play a crucial role in attracting and retaining population while addressing regional disparities. Korea's efforts to mitigate the effects of overconcentration in the Seoul Metropolitan Area (SMA) have included the development of new towns around regional hub cities. While these initiatives have redistributed population to some extent, they have also introduced urban transport challenges such as car dependency, traffic congestion, pollution, and safety concerns, particularly for older residents, along with low transport efficiency. A key barrier to building more cohesive and liveable regions is the lack of robust public transport connections between regional hubs and their surrounding areas. As a result, developing eco-friendly and cost-efficient transport systems that support intra-regional connectivity has become a priority in Korea’s transport policy agenda.
Historically, Korean cities have relied on buses and subways for public transport. However, alternative modes are being explored to better serve both urban and regional areas. Cities such as Sejong have introduced Bus Rapid Transit (BRT) systems, while Busan-Gimhae operates a Light Rail Transit (LRT) service. In addition, research has highlighted the potential benefits of implementing Bimodal Tram (BT) systems—particularly in small and medium-sized cities—given their environmental advantages and positive impact on urban image (Lee, 2018[44]; Eom et al., 2009[45]). Transport policy should reflect the characteristics of individual towns.
A significant issue in the development of new towns, common to many OECD countries, has been the provision of housing without ensuring adequate public transport access, especially for low-income residents (Lee and Park, 2009[46]). Although public transport has been incorporated into new town plans since 2018, inequities in accessibility persist. Studies have shown that low-income households are often pushed to areas with poor accessibility where land prices are low, while higher-income groups are more likely to reside in well-connected neighbourhoods (Jang and Lee, 2020[47]). In the SMA, accessibility gaps by income level are relatively minor in Seoul, which benefits from an extensive public transport network. However, in Incheon and Gyeonggi Province, high-income areas tend to have far superior connectivity compared to those inhabited by low-income groups (Jang and Yi, 2021[48]). To support affordable and equitable urban development, policies should promote compact urban forms alongside investment in affordable housing in well-connected areas. This can be achieved through fiscal incentives, enhancements to the rental housing market, and strengthening institutional capacity and policy coordination (Box 1.4).
Designing fiscal incentives to foster compact and inclusive cities by:
Redesigning property taxes to incentivise more efficient land use through higher-density housing development.
Discouraging low-density housing construction at the periphery by adopting a development tax or impact fees that internalise the real cost of sprawl for property developers.
Unlocking the potential of the rental market by:
Establishing clear and balanced tenant–landlord regulations to enhance transparency and ensure that both parties have equal access to information and legal recourse.
Developing measures to support social rental housing and ensure adequate tenure protection without hampering residential mobility.
Strengthening institutional capacity and build coherent policy frameworks by:
Crafting national urban policies that align different ministries and levels of government behind a shared vision for cities, and design policy frameworks that enable subnational governments to promote denser, mixed-use development.
Introducing mechanisms for better inter-municipal collaboration for both demand-side and supply side housing policies.
Increasing local capacity to collect property taxes by reviewing tax exemptions and strengthening national systems to identify taxable properties and assess property values.
Source: Moreno Monroy, et al ( (2020[49]) Housing policies for sustainable and inclusive cities: How national governments can deliver affordable housing and compact urban development
To tackle housing inequality and stabilise living conditions for ordinary citizens and low-income groups, the Korean government introduced the ‘Happy Housing’ programme—a low-cost public rental housing scheme targeted at university students, newlyweds, and recent graduates (OECD, 2018[18]). A key feature of this housing type is that it is built without parking facilities, thereby making public transport the primary commuting option for its residents. This makes proximity to public transport infrastructure essential for the success of such schemes.
However, location decisions for Happy Housing are often driven by economic considerations, such as land availability and land value, rather than accessibility (Kim and Jang, 2017[50]). Korea should consider shifting housing policies towards ensuring that affordable housing is located near employment centres and well-served by public transport, thereby improving commuting conditions for low-income groups. At present, these households frequently face a trade-off between affordability and accessibility (Jang and Yi, 2021[48]).
While building affordable housing close to metro stations is challenging, previous studies have shown that the impact of proximity to metro stations on housing prices in Seoul is not as significant as factors such as unit size, school district quality, or even proximity to the Han River (Chang-Hee, Jun and Park, 2003[51]).
Korea has already encouraged high-density developments around metro interchange stations, aimed at boosting public transport use and encouraging people to live near central business districts (Lee and Park, 2009[46]). Public rental housing schemes for newly-married couples and single-person households have supported this strategy in large cities with existing subway systems. For smaller cities, however, there is a need to develop transit-oriented strategies based on bus and light rail systems. Research shows that a gradual increase in population density towards metro stations is feasible in Korea (Lee and Park, 2009[46]). However, the target population should be young single-residents and newlyweds as they often prefer housing near a subway station while elderly single-resident households favour medium density neighbourhoods.
To respond to these differing needs, Korean urban policy must adopt an accessibility-based approach that integrates mobility and land use. This would enable more compact land-use patterns, bringing origins and destinations closer together. As Korean cities continue to grow spatially despite population decline, transport funding constraints call for cost-effective, resident-focused mobility strategies.
Supporting compact and connected development through transit-oriented developments in regional hub cities
Korea stands at a turning point in terms of regional connectivity and balanced territorial development. Despite a shrinking population, commuting zones are expanding, and small and medium-sized cities continue to relocate institutions and infrastructure to suburban areas, often to the detriment of central urban districts. The development of Downtown Cohesion Zones (DCZs) aims to revitalise central areas, though current projects are limited to five metropolitan cities. To be effective, DCZ initiatives must be underpinned by mobility strategies that connect core cities with surrounding low-density areas.
Korea has an extensive regulatory framework to guide public transport and land use planning to support DCZs projects. The 4th Basic Plan for Public Transportation (2022-2026)22 and the 9th National Traffic Safety Master Plan (2022-2026)23 contain measures for enhancing accessibility and mobility in both metropolitan areas and regional cities. In particular, the Basic Plan for Public Transportation (2022-2026) aims to promote the use of public transport and facilitate mobility between and within regions by establishing an efficient public transport system through appropriate use of public transport means. This Basic Plan pursues four basic goals:
1. Guarantee mobility rights by reorganising regional, customised semi-public bus operations and expanding the metropolitan railway and national bus networks;
2. Improve public transport safety by deploying advanced safety systems and infectious disease response infrastructure;
3. Boost public transport competitiveness via high-speed rail, expanded BRT and exclusive lanes, express metropolitan buses, the introduction of BTX systems, and fare innovations;
4. Drive carbon neutrality by supporting the adoption of eco-friendly vehicles.
Despite its strengths, the Basic Plan for Public Transportation lacks explicit provisions for the coordination of transport planning with land use planning. Experience from OECD countries suggests that to make the most of initiatives like DCZs, it is essential to integrate land use and transport policies to create compact cities, improve accessibility for people of all ages, reduce car dependency, and support sustainable development. This requires a focus on increasing density in already built-up areas, especially those with strong existing transport infrastructure and options for walking and cycling. Land use policies should also promote urban revitalisation, green space access, heritage protection, and affordability, preserving the quality of life for current residents (ITF, 2023[22]).
In the SMA, increased residential density has been shown to raise weekend and weekday ridership by 75% and 66%, respectively. In contrast, areas around rail stations with only commercial or business uses see minimal increases in commuters (Sung and Oh, 2011[52]). This suggests that residential presence is key to generating consistent ridership across the week. Rail station areas with a high mix of residential, commercial, leisure, and business functions experience a significant and sustained increase in ridership. These findings reinforce OECD recommendations urging Korea to better integrate land use and transport planning in pursuit of transit-oriented development (TOD) (Box 1.5).
Develop well-defined policy packages. This requires the elaboration of an appropriate type of TOD model reflecting the context of Korean cities as well as comprehensive policy packages. TOD planning should cover different scales from small land development to a large enough scale to provide a sufficient number of public transit customers. The TOD strategies could integrate broader regional goals such as addressing traffic congestion, improving the local economy and enhancing public health. Government could develop clear guidelines or standards for planning, implementation and evaluation of long-term plans at the national and local level.
Promote mixed land use and integrate land-use policy with transport policy through TOD strategies. Preparing and inclusive but clear definition of mixed land use would enhance the appeal of Korean cities. A TOD model should reflect the context of individual cities which could help co-ordinate land use and transport. TOD planning should be adapted to diverse scales.
Combine TOD with strong traffic demand management (TDM) strategies. Develop several policy initiatives to reduce the use of private cars such as car-sharing options. Expand congestion fees to tax the use of roads to discourage private car use, and use the revenues generated by the charge to improve public transport networks. Adopt scientifically rigorous parking policies using an analysis of supply and demand for parking space in the market.
Provide accessible public transport. Develop a public transport network to enhance accessibility including by taking decisions about the appropriate scale of the road network and seeking balanced transport investment between transport modes.
Provide affordable housing near transit corridors. This includes identifying and utilising opportunities for TOD; providing incentives for mixed-income market response; removing regulatory barriers to higher density and transport plans and investments; and improving local capacity and partnership.
Source: OECD (2014[16]) Compact City Policies: Korea: Towards Sustainable and Inclusive Growth, OECD Green Growth Studies.
Transit-oriented development (TOD) planning factors—including residential, commercial, business, leisure uses and street design—can play a key role in promoting transit-centred urban growth, particularly around railway stations in Korean cities. When effectively implemented, these factors can help enhance accessibility and improve quality of life. To realise these benefits, Korean cities must carefully balance land use, transport cost-efficiency, commuting times, and individual preferences in the design and implementation of TOD projects. Land use is a critical determinant of TOD success: any changes in land use patterns directly affect transport demand, while alterations in transport service provision can, in turn, influence land value and usage. A notable example of transit-oriented, compact development in Korea is Songdo City (Box 1.6). Songdo was developed with the aim of reducing car dependency and promoting eco-friendly, high-density, mixed-use neighbourhoods. Residential, commercial, and business areas are located within proximity to transit stations, enabling short-distance travel and fostering commuting self-sufficiency. The Songdo case illustrates the importance of aligning new town construction with concurrent improvements in public transport infrastructure.
New towns, such as Songdo, offer the opportunity to pursue urban growth from the outset using a compact and connected urban model. They can help alleviate congestion in existing cities, support planned development, and bring residents closer to jobs, thus reducing commuting burdens. However, the continued construction of new towns across the country is neither practical nor financially sustainable. Furthermore, many new towns, especially those surrounding Seoul, remain highly dependent on their parent cities (Sung and Eom, 2024[53]). This reality underscores the growing importance of urban regeneration and revitalisation in existing cities. Many Korean towns and cities face social, economic, and environmental challenges that necessitate comprehensive regeneration strategies. These include the re-use of brownfield land and gradual land-use change, aligned with broader social policy goals. Where existing infrastructure (e.g. transport networks) is in place, there are significant opportunities to pursue clustered, high-accessibility development.
The Ministry of Land, Infrastructure and Transport (MOLIT), in collaboration with the Korea Land & Housing Corporation (LH), could play a pivotal role by prioritising urban revitalisation and regeneration efforts guided by TOD principles. Projects such as Urban Cohesion Zones (UCZs) can be instrumental, especially when focused on areas around major transport hubs. In 2023, MOLIT introduced the Regional Revitalisation Town (RRT) initiative, designed to provide an integrated package of housing, infrastructure (e.g. roads, parks, gyms, community centres), and living services (e.g. elderly employment, emergency support). These projects are to be carried out through multi-ministerial cooperation to promote migration and long-term settlement in regional areas. MOLIT has identified 17 RRT projects to be jointly supported by eight government ministries, each contributing via specific programmes. In 2024, ten locations were selected for implementation: Yeongwol, Yeongju, Sangju, Geumsan, Boeun, Gimje, Buan, Gokseong, Gurye, and Sacheon (LH, 2024[54]). Despite their potential, a key shortcoming of the RRT projects is the lack of a transport component. Without a focus on connectivity and mobility, the ability of these revitalisation efforts to deliver inclusive, accessible, and sustainable outcomes remains limited.
Songdo City, located south of Incheon, is one of Korea’s new urban development districts. Construction began in 2001 and was planned to be completed by 2015, but as of today it is still under construction. The Songdo International Business District (Songdo IBD) is considered a smart city as it has a sophisticated network of sensors and data analytics for energy usage and waste management to public safety. The aim is to run the city more efficiently and in an environmentally friendly manner.
The city has been following a compact and connected approach. Public transit has been a key aspect to attract people to live and companies to invest in the city. Songdo residents need to be able to commute within the city, to the Incheon International Airport, and Seoul. The city has been planned to minimise car usage through a network of pedestrian-friendly streets, dedicated bike lanes, and the operation of a Bus Rapid Transit (BRT) system. The city uses ‘complete streets’ which separate space for cars, bikes, and pedestrians making it safer for all to traverse the city. Moreover, Songdo City exemplifies a mixed used development as it integrates residential, commercial, and leisure spaces within proximity, as well as access to green areas and educational and cultural facilities. Buildings are located at most a 12-minte walk from a bus stop or metro station, and 40% of the land is reserved for green spaces.
Government expects that the efficient infrastructure connecting it to the surrounding region as well as the Songdo IBD’s high quality of life should attract more people and companies to settle in.
Source: World Economic Forum at: https://www.weforum.org/agenda/2017/11/south-korea-is-building-a-35-billion-city-designed-to-eliminate-the-need-for-cars/; Medium at: https://medium.com/@EljayM/transportation-in-songdo-a-smart-city-5c4ea511f877;and We Build digital magazine at https://www.webuildvalue.com/en/megatrends/the-songdo-ibd-wants-to-say-goodbye-to-cars.html;
Two national level committees to contribute to better accessibility in Korean cities and regions
Improved accessibility in cities and regions requires coordinated efforts among stakeholders at both national and subnational levels. In Korea, the Ministry of Land, Infrastructure and Transport (MOLIT) serves as the central authority responsible for land use and management, infrastructure planning (e.g. cities, roads, and housing), and the organisation of land, air, and rail transport. MOLIT oversees three critical policy domains (e.g. land, infrastructure, and transport) that are vital for managing accessibility across Korean regions.
Operating under MOLIT is the Metropolitan Transport Commission (MTC), which is tasked with ensuring the provision of adequate transport networks and services to support liveability and enhance quality of life in metropolitan areas.24 The MTC promotes seamless, convenient, and affordable transport services across administrative boundaries, overseeing intercity and urban rail construction, the deployment of Super BRT (S-BRT), and the expansion of Bus Rapid Transit (BRT) networks. The MTC operates through five regional branches, covering the Seoul-Incheon-Gyeonggi area as well as the metropolitan areas of Busan, Daegu, Daejeon, and Gwangju. These regions face common challenges such as congestion, traffic accidents, environmental pollution, and long commuting times between city centres and peripheral zones. The rise in new town developments has further increased transport demand, often worsening traffic problems due to a lack of timely and coordinated intercity transport solutions. The creation of the MTC was, in part, a response to delays in decision-making caused by disagreements among local governments on transport planning and financing.
The Presidential Committee for Decentralisation and Balanced Development under the direct control of the President was established in 2023. The Committee aims to usher in a new Era of Decentralisation. Its mission is to empower local governments, support balanced regional development, and coordinate the formulation and implementation of inter-metropolitan development plans and decentralisation policies.
A key problem is that these two committees, despite their complementary nature of their activities and their incidence in promoting better decentralisation and regional development, are not in close co-ordination. Improved transport connectivity is essential to support the goals of balanced regional development, including the expansion of Opportunity Development Zones and Innovation Growth Hubs. An efficient transport system can accelerate mobility and access to services, enabling more equitable regional growth.
A bottom-up, place-based approach to regional development
Korea’s latest regional development strategy, the Decentralisation and Balanced Development Master Plan (DBDMP), reflects a paradigm shift in the pursuit of balanced growth. This new plan marks a transition from a top-down to a bottom-up model, prioritising local agency, place-based strategies, and context-sensitive development. Key features include:
Empowerment of Local Governments: Unlike previous centralised approaches, the DBDMP supports locally-led initiatives, integrating decentralisation and regional development. It seeks to build the foundation for autonomous governance, strengthen local fiscal capacity, and encourage tailored policy solutions. A notable example is the merger of Daegu and North Gyeongsang Province, a locally-driven initiative backed by the central government.
Place-Based Strategies to Address Population Decline: The plan acknowledges that demographic change requires differentiated responses. For example, cities with fewer school-age children may reduce primary school capacity, while others may struggle to find qualified workers (Syssner, 2023[55]). Tailoring policies to local needs is central to tackling the uneven impacts of population ageing and decline.
Human Capital and Industry Alignment: The DBDMP highlights education and industry as pivotal to balanced development. By aligning vocational training with the skills demanded by local industries, and encouraging cooperation between local schools and employers, the plan fosters job creation and innovative growth, particularly in digital sectors and start-ups.
Culture as a Catalyst for Regional Growth: The plan recognises the role of culture, science, and tourism in regional development. Investing in cultural assets can enhance local identity, foster community cohesion, and attract both residents and visitors.
Promotion of ‘Megacity Regions’: By integrating core cities with their suburban hinterlands, megacity regions can facilitate the redistribution of labour, shared use of infrastructure, and cost-sharing in the face of declining populations. This model addresses the financial challenges associated with maintaining infrastructure for a shrinking user base by pooling resources across jurisdictions.
Support for Inter-Regional Development Plans: The DBDMP enables local governments to pursue cooperative projects across metropolitan boundaries, fostering joint economic strategies and policy innovation. This aligns with OECD recommendations for place-based policy approaches that emphasise the spatial dimensions of development and governance. Moreover, inter-regional collaboration may promote greater public participation in regional policymaking and reduce territorial disparities.
Case studies: Daegu and Gumi
Revitalisation of central areas through downtown cohesion zones – the case of Daegu
Daegu Metropolitan City (DMC) is an example of a downtown cohesion zone (DCZ). With a population of approximately 2.1 million in 2024, a 0.05% decline from 2023, DMC is Korea’s third most populous city. 25 Like many others, Daegu faces challenges such as deindustrialisation, economic stagnation (Figure 1.9), population ageing, and urban decline in its central districts. Although Daegu has a strong industrial base, 85% of its businesses are small-scale, employing fewer than four people. 26 Despite hosting several prestigious universities, Daegu is experiencing a brain drain. A lack of high-quality employment opportunities has driven university graduates to relocate to the Seoul Metropolitan Area (SMA) or to other industrial hubs. This trend underscores the urgent need to revitalise the city centre and foster a more sustainable local economy, potentially through initiatives such as Downtown Cohesion Zones (DCZs), which aim to reconnect the urban fabric and enhance the liveability of inner-city areas.
Economic growth rate in metropolitan and provincial cities at chained 2015 year prices, 2022
Source: Statistics Korea (2023[56]).
Despite stagnant economic and population growth, Daegu's physical expansion has continued. During the 2000s, its urbanized area nearly doubled compared to the previous decade (Joo and Seo, 2018[57]). The 1990s saw a focus on suburbanisation in urban planning, resulting in the development of four subcentres and a new centre in the city's outskirts. Since 1995, populations in Daegu’s three central districts (Jung-gu, Nam-gu, and Seo-gu) has decreased whereas that of the surrounding outer districts that hosts most of the new housing developments (e.g. Suseong-gu, Dalseo-gu, Buk-gu,) have declined, while outer districts such as Suseong-gu, Dalseo-gu, and Buk-gu—home to most new housing developments—have seen slight increases or remained stable.27 Following the Balanced Regional Development Plan, ten public corporations relocated from the Seoul Metropolitan Area to Daegu’s Sinseo Innovation City, which also houses a medical zone. These projects, located outside the city centre, contributed to Daegu's continued expansion in the 2010s. However, megaprojects like Easiapolis and Daegu Technopolis have failed to deliver the expected economic growth or attract real estate interest (Joo and Seo, 2018[57]). Nonetheless, the city approved new developments such as Suseong Alpha City in 2014 to foster knowledge-based industries. City authorities may need to pursue a more compact and connected approach that includes urban regeneration projects considering Daegu's shrinking inner-city centre. In response to these challenges, Daegu is shifting toward a more compact, connected urban model, emphasizing inner-city regeneration. Participatory urban regeneration efforts, initially led by grassroots NGOs, began revitalising Jung-gu, Daegu historic centre, and have since gained government backing.
To stimulate growth and address demographic decline, Daegu is positioning itself as a Downtown Cohesion Zone (DCZ) (Table 1.2). In 2020, the National Balanced Development Committee designated the site of the former Gyeongbuk Provincial Office - Samsung Creative Campus - Kyungpook National University as the Daegu Urban Convergence Special Zone with pans to replicate the success of Pangyo Techno Valley – an industrial complex in the city of Pangyo. Through this initiative, local authorities expect to attract and retain young talent to the region. With the goal of creating 10 000 jobs by 2033, at the site of the Gyeongbuk Provincial Office, the government plans to build an innovation-leading space for corporate support organisations and research institutes, a corporate space for anchor and innovative companies, and a cultural convergence space. In October 2023, the National Assembly passed the Special Act for the Daegu Urban Convergence Special Zone, expecting to attract USD 1.2 billion in investment. Currently, Daegu hosts 37 industry and knowledge centres, 23 of which are public-private partnerships, and offers tax incentives and subsidies to attract firms.
A critical element of Daegu’s DCZ strategy is improving interurban and regional rail connectivity. The city operates three metro lines and plans to expand them using existing infrastructure for cost efficiency. The aim is to connect the new industrial areas such as Shinseo Innovation City, the West Daegu Industrial Complex and the Seongseo Industrial Complex to the city centre. The city works on an urban rail plan that includes three new lines to be completed by 2025 with central government approval expected in 2026. Additionally, a metropolitan railway line under construction will connect Daegu with Gumi and surrounding municipalities, co-funded by national (70%) and local (30%) governments. Given high infrastructure costs, investment should prioritise compact, connected development in the DCZ.
Daegu is also advocating for the construction of a new airport. So far, 98% of the export travel via the Seoul-Incheon international airport. To attract companies and create jobs, the city administration considers that the current nearby local airport is insufficient to boost the economy. Moreover, since the urban area of Daegu has expanded the current airport is now close to the city centre is not considered ideal to ensure quality of life due to noise damage. The new ‘Daegu-Gyeongbuk Integrated Airport’ will be a medium sized civil and military facility. It is planned to be a short- and medium-distance flights airport that will be able to manage cargo from the nearby Gumi National Industrial Complex, with 10 million annual passengers, 100 000 tons of annual cargo transport, and operate between 80 000 to 90 000 annual flights.28 Daegu Metropolitan City and Gyeongsangbuk-do plan the construction of a road and railway transport network connected to the airport.
In 2024, Daegu was designated as an opportunity development zone (ODZ), a downtown cohesion zone (DCZ), and a cultural driven city (CDC). As such, companies settling in the city and that have signed an investment agreement with the local government to promote large-scale investment in the area are entitled to receive a package of tax breaks and regulatory special treatment. As part of this application, Daegu is focusing on Suseong Alpha City specialised in digital technologies and Kumho Waterpolis for advanced manufacturing to increase the region's digital competitiveness.
To transform Daegu into a compact and connected city, there are four general points local authorities may consider:
Integrating suburban hubs: Several development areas were built without transport links. Now the plan is to connect them by rail lines. Although this understandable in the light of facilitating accessibility, it will be a very expensive policy to implement considering the limited budget. Local authorities may wish to concentrate their efforts and investment in the creation of a DCZ and assess its evolution through time.
Strategic land-use planning: The creation of a DCZ and the construction of a new airport are expected to create new jobs and attract new inhabitants, then the city needs to plan how in the long-term it will meet the demands of housing and transport of the population as it was done in the city of Cork (Ireland) (see Chapter 3). This long-term planning exercise should consider how land use, transport and social policy are interaction in the city to develop a picture of how people and goods move around and within the city, the efficiency of that movement and the direct and indirect associated costs as it was done in the Metro Vancouver region (Canada) (see Chapter 3).
Expanding planning beyond city boundaries: Daegu requires refocusing urban planning taking into account the developments beyond the urban core, for example those in the nearby city of Gumi to plan for the greater functional urban area, as it was done in the case of Copenhagen (Denmark) (see Chapter 3).
Multimodal and cost-effective transport: If Daegu wishes to continue expanding the transport connectivity with the suburban areas, it may wish to use existing infrastructure to reduce costs and build a multimodal transport system based on a TOD approach as done in Toyama city (Japan) (see Chapter 3).
Tackling population decline in a regional hub city – the case of Gumi
The city of Gumi is situated approximately 33 kilometres north of Daegu, in the southeastern region of South Korea. The city has an estimated population of 420 000 residents, comprising around 180,000 households. The majority of Gumi’s land area is forested (55%), followed by arable land (21%), industrial sites (3%), and various other uses. Since 1970s, national and local authorities have implemented different plans to transform Gumi into an industrial hub.29 In 2010, the Ministry of Knowledge Economy approved the Industrial Complex Structure Advancement Plan, further boosting the city’s industrial development.30 Today, Gumi hosts five national industrial complexes and two agro-industrial complexes, accommodating over 3 380 companies and employing more than 95 000 workers. These include major corporations such as Samsung, LG, and SK Siltron. Two of the national complexes, one of which includes a foreign investment zone (Complex 4), specialise in electronics, semiconductors, and textiles.
Although the number of companies has grown, most remain small in size, which makes it challenging to generate high-quality, well-paid employment opportunities. As in nearby Daegu, a pressing issue is the ageing workforce, with younger generations leaving the city shortly after completing their education. To address these challenges, local authorities have proposed that Gumi be designated as an Opportunity Development Zone (ODZ). This designation would enable the provision of fiscal incentives to attract businesses and skilled professionals. The city has already been designated as an Education Development Zone (EDZ), allowing it to implement customised educational innovation plans that respond to local needs. This is expected to strengthen the city’s R&D capabilities such as those found in Geumo Techno Valley and the Gumi Electronics and Information Technology Research Institute, and enhance its appeal to younger residents, and build a more skilled industrial workforce.
Gumi has also been expanding its smart safety infrastructure. Initiatives include the adoption of an Intelligent Transport System (ITS), a digital-based safety management system for ageing and hazardous facilities, and the introduction of ‘smart rest areas’ at bus stops. To support a transition to a carbon-neutral economy, the city has launched a digital-based eco recycling model complex and operates the Gumi Carbon Zero Education Centre.
Public transport is a one of the weakest development areas in Gumi. Despite being a planned city, Gumi has a relatively limited public transport network, leading many residents to rely on private vehicles. The city operates 170 buses and more than 1 760 taxis. Industrial activity is concentrated in the central area, while Gumi Station serves as the core of the western part of the city. In contrast, the eastern districts, such as In-dong, remain disconnected from the urban core. Smaller neighbourhoods, including Hyeonggok-dong, Doryang-dong, Bongok-dong, and Sandong, are scattered and lack proper connectivity to both the city centre and the industrial areas. This fragmented urban layout makes it difficult to evenly distribute bus services. Most routes operate between Gumi Station and the industrial complexes, and service frequency in outlying areas can range from 30 minutes to over an hour. Additionally, passengers often need to transfer multiple times to reach their destinations. Gumi Station itself is heavily congested, as it serves as a hub for most bus routes. 31 Introducing a Bus Rapid Transit (BRT) lane between Gumi and Daegu could significantly improve regional connectivity, particularly since intercity buses already make several intermediate stops.
To address depopulation, Gumi plans to invest in the development of its rural areas and leverage its historical and cultural assets to enhance liveability. Currently, railway connections to neighbouring cities, including Daegu, are limited, hindering residents' mobility within the region. In 2025, the city expects to be connected to Daegu Metropolitan City through the Kyeongsan-Daegu-Gumi train line. The construction of the new Daegu–Gyeongbuk International Airport, located just 15 minutes from Gumi, presents a major opportunity to connect the city’s industrial base with foreign investors. The airport is expected to significantly improve connectivity and accessibility through expanded railway and highway infrastructure and generate new employment opportunities in sectors such as education, healthcare, and culture. In this context, the city plans to construct a new station, East Gumi Station, on the Daegu–Gyeongbuk line and aims to connect to the central inland high-speed rail network once the KTX-IEUM high-speed train begins operations at Gumi Station. Many of these investments will require support from the national government, as only 27.6% of Gumi’s revenues are derived from its own income sources.
The case of Gumi illustrates three key considerations for promoting compact and connected cities in Korea:
Enhancing Intercity Connectivity through a Transit-Oriented Development (TOD) Approach: Gumi must improve its intercity transport links, particularly in coordination with Daegu Metropolitan City. Research indicates that intercity connectivity not only enhances urban scaling by attracting a skilled and educated workforce but also fosters innovation through population mobility and knowledge exchange. Cities with strong intercity connectivity tend to produce more patents than those without (Liang et al., 2024[58]). Effective collaboration between Gumi and Daegu on strategic planning and joint investment will be essential, and the Metropolitan Transport Commission could offer the necessary technical and project management support.
Reorganising the Public Transport Network: Gumi needs to redesign its public transport system to better connect its industrial sites while anticipating future demands for housing, employment, and mobility. This reorganisation should support a more compact urban model. The experience of Toyama City (Japan), which successfully integrated land use and transport planning, may serve as a useful reference (see Chapter 3).
Integrating Public Spaces into TOD Zones: As part of its strategy to become an Opportunity Development Zone (ODZ), Gumi should consider incorporating leisure areas around TOD sites, such as the main train station, to promote social cohesion and boost the local economy. International examples include the integration of leisure zones in New South Wales (Australia), and the inclusion of green spaces in TOD developments in the Île-de-France region (France) (see Chapter 3).
Improving accessibility within and among cities of all sizes will be key to transform them into powerful engines for economic development and social progress. While the construction of new towns may have had a positive effect of stabilising housing prices, it may also have unintentionally exacerbated several metropolitan challenges including traffic congestion, unnecessary infrastructure costs, and air pollution. However, there are opportunities to strengthen regional development strategies through a decentralisation and local autonomy approach.
While decentralisation holds potential to support more balanced regional development, especially in the context of population decline, Korean authorities should be mindful of at least three key risks:
Limited capacity of local governments: A significant challenge lies in the varying capacities of local governments, particularly small-sized cities, to undertake complex urban development projects such as transit-oriented development (TOD) or to qualify for designations like Downtown Cohesion Zones. Effective decentralisation requires local governments to possess sufficient economic, administrative, and political capacities (OECD, 2019[59]). However, not all municipalities have these capacities, or possess them to the same degree. This discrepancy could worsen inequalities between cities and undermine collaborative projects.
Risk of increased regional disparities: Without efforts to build the capacities of less developed local governments, decentralisation may disproportionately benefit already strong regions, thus increasing regional disparities. Not all local governments are adequately equipped to navigate the complexity of conducting TODs projects for example, nor have the funds to deliver the level of investment required.
Coordination challenges for public investment: A lack of coordination for public investment without effective vertical and horizontal co-ordination mechanisms (OECD, 2019[59]). While the creation of megacities might help address coordination challenges, local governments should not be required to merge into larger entities simply to access improved investment planning. Strong coordination should be possible regardless of municipal size or status.
The focus on new towns development, although understandable given the need to disperse population and control rising house prices, is creating unintended side effects. These include a decline in social cohesion, increased inequality, longer commutes—often reliant on private vehicles—and reduced access to services and public transport. This, in turn, limits opportunities for social interaction. Although Innovation Cities have contributed to rising commuter flows, they have had only a limited demographic or spatial impact on large cities, and have tended instead to promote further urban sprawl (Ahn, Seo and Kwon, 2021[36]).
The creation of megacity regions holds the promise of pooling resources and sharing the costs of investing in infrastructure and public services. However, Korean authorities may wish to consider carefully to what extent these mergers such as the Daegu - North Gyeongsang Province can be effective. Certainly, administrative fragmentation is a barrier to productivity in a metropolitan area and a merger is recommended (OECD, 2015[60]), but there is the risk that if administrative districts become too large, they may become inefficient (Da-hyun, 2024[42]). Efficiency gains may be made without necessarily merging municipalities (OECD, 2017[61]). Moreover, it is unclear if these mergers in Korean regions will lead to the creation of metropolitan governments – metropolitan in terms of functionality not the administrative characterisation – which may be necessary to coordinate investment in infrastructure and planning. Korean authorities may wish to pursue with municipal mergers, but the main incentive should be the expected efficiency improvement and better quality of services, not the financial support from the central government.
The current plans to build megacity regions assume that merely having industrial complexes or administrative agencies guarantees attracting and retaining a talented workforce, particularly the young population. As the experience of OECD cities suggests (see Chapter 3), it is essential to have a robust commercial, leisure and cultural infrastructure in place for attracting and retaining population. Public transport and logistics are critical factors in achieving the goals of the megacity regions. For a megacity region to be successful in promoting a balanced regional development, it is necessary that urban areas of all sizes are interconnected to form a cohesive region, generating a unified urban space capable of producing synergies among all of them. Plans for developing the transport network and logistics are not that clear so far, but they need to be given priority.
In a highly urbanised country like Korea with slow economic and population growth, the approach of developing new towns to stimulate the local economy and attract new residents no longer seems to provide the desired results. All those megaprojects have taken more than ten years to complete and seem to be experiencing great financial difficulties at times (Joo and Seo, 2018[57]). New towns require jobs, housing, services, and utilities to avoid becoming into a dormitory, workshop or a recreation area. These are not always being provided Corporations alone are not able to build complete towns as they lack the staff, experience, and even financial resources. Moreover, the lack of fiscal autonomy and high dependence from the national government budget disincentivises local governments from officially acknowledging that they are tackling depopulation. The reason is that once a city rescales its annual budget according to its actual population size and plans accordingly, it becomes very difficult to request and secure increased funding from the national government (Joo and Seo, 2018[57]). Therefore, cities such as Daegu have an interest planning for an increasing population and increasing budget, despite the reality saying otherwise.
The four special zones have the potential to support more balanced regional development and enhance local capacity. However, their implementation is currently carried out in isolation, which risks creating a fragmented and overly bureaucratic process. This piecemeal approach may limit the potential benefits of a more integrated and comprehensive strategy. Cities must apply separately for designation in each of the four special zones. This creates a dilemma: by applying, for example, to become a Downtown Cohesion Zone (DCZ), a city might forgo the opportunity to leverage its educational and cultural assets or to offer financial incentives to attract businesses through other zone designations. While it is technically possible for a city to hold multiple designations, as is the case with Daegu, which is a Downton Cohesion Zone, an Opportunity Development Zone (ODZ), and a Culture-Driven City (CDC), such examples remain limited. The potential for a more holistic implementation of the four special zones does exist, but realising it will require a strengthened multilevel governance framework. This includes: i) enhancing horizontal coordination among the ministries responsible for each zone, ideally under the leadership of the Presidential Committee for Decentralisation and Balanced Development; ii) ensuring vertical coordination with subnational governments to align local and national objectives; and iii) promoting inter-municipal cooperation among neighbouring cities designated as special zones, to ensure synergies in development planning and avoid duplication of efforts.
Downtown Cohesion Zones (DCZs) have been designated in five metropolitan cities with the aim of creating more cohesive and vibrant city centres. These zones promote mixed land use, higher population densities, improved public transport, and increased housing provision. In essence, DCZs are urban revitalisation initiatives intended to breathe new life into older urban areas by introducing new functions to existing buildings and spaces, often through the attraction of regionally specialised industries. However, to be truly effective, DCZ projects must go beyond economic development and place stronger emphasis on urban liveability, quality of life, and environmental sustainability. An overemphasis on industrial specialisation risks overlooking critical elements that contribute to residents’ well-being such as access to green spaces, environmental preservation, and adaptation to climate change. For example, current DCZ frameworks do not include provisions to address or mitigate urban heat island effects, which are becoming increasingly significant in the context of global warming and disproportionately affect vulnerable populations, particularly the elderly. A project like the DCZ in Daegu may succeed in attracting specialised industries, such as IT, but without parallel investments in liveability, it risks falling short of its ultimate goals.
With Korean population forecasted to continue decreasing and age, the need to focus on compact-connected development is unlikely to ease. Korean authorities are considering that TOD projects can be a valuable tool in this regard. However, this is not the first time that Korea embarks in this type of infill development projects (OECD, 2014[16]). The fact that car-usage remains the primary transit mode for Korean people partially proves that previous strategies of building more compact cities such as in Daejeon and Hwaseong (OECD, 2014[16]) have not produced the desired results so far, and that achieving urban densification in suburban areas is not a simple task. This might be due to various barriers. First, households’ preferences for suburban areas and resistance to increased density due to perceived increase in traffic, declining property prices or a perception that public transport is already overcrowded; this begs the question to what extent people desire to live in high-density areas. Second, it could be a problem of feasibility as not all sites have the adequate service infrastructure and upgrade it or build it could be very costly, the question is who and how will pay. A final aspect may be related to the prevalence of transport planning over land use planning focusing more on the transport function and not on how to integrate it to land use activity.
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← 1. See: Urbanization and living space at: http://nationalatlas.ngii.go.kr/pages/page_595.php
← 2. For further information see: https://www.statista.com/statistics/1112322/south-korea-population-density-by-province/ and KOSIS, Population density by Population Census at: https://kosis.kr/statHtml/statHtml.do?orgId=101&tblId=DT_1B08024&vw_cd=MT_ETITLE&list_id=A1_13&scrId=&language=en&seqNo=&lang_mode=en&obj_var_id=&itm_id=&conn_path=MT_ETITLE&path=%252Feng%252FstatisticsList%252FstatisticsListIndex.do
← 3. For further information see: https://datacommons.org/place/country/KOR
← 4. For further information see: Statistics Korea, at: https://kosis.kr/statHtml/statHtml.do?orgId=101&tblId=DT_1BPB001&conn_path=I3
← 5. Juchul Jung, Real Estate Policy and Regional Balanced Development Discussion. Real estate policy reflecting balanced development must be established. Pusan National University. PPT presentation.
← 6. For further information see: Statistics Korea, at: , https://kosis.kr/statHtml/statHtml.do?orgId=101&tblId=DT_1C81&conn_path=I3, and https://kosis.kr/statHtml/statHtml.do?orgId=101&tblId=DT_1C91&conn_path=I3)
← 7. For further information see: https://www.statista.com/statistics/1095105/south-korea-number-of-vehicles-registered/#:~:text=There%20were%20approximately%2025.5%20million,over%20the%20past%2010%20years.
← 8. For further information see: https://www.statista.com/statistics/1027704/south-korea-car-ownership/#:~:text=According%20to%20a%20survey%20conducted,car%20as%20of%20January%202024 and https://www.statista.com/statistics/644525/south-korea-car-ownership-rate/
← 9. For the typical jeonse system, a rental system by which the tenants pay a deposit of over 60% of the property which in turn in invested by the landlord, and then return to the tenant at the expiration of the tenancy (OECD, 2018[18])
← 10. See: https://www.kedglobal.com/real-estate/newsView/ked202212210018
← 11. See: http:kostat.go.kr
← 12. See: https://www.koreaherald.com/view.php?ud=20231221000657
← 13. A hub-and-spoke system’ refers to a transport network represented by a set of links and a set of nodes. For further information see: https://www.ppiaf.org/sites/ppiaf.org/files/documents/toolkits/UrbanBusToolkit/assets/1/1d/1d4.html
← 14. See: https://koreajoongangdaily.joins.com/2022/08/16/business/economy/MOLIT-Housing-supply-Won-Heeryong/20220816182008300.html?detailWord=housing
← 15. See: https://koreajoongangdaily.joins.com/2021/02/24/business/economy/New-Town-GwangmyeongSiheung-Housing-supply/20210224173000518.html
← 16. For further information see: https://www.sejong.go.kr/eng/sub01_0205.do
← 17. Documentation consulted for this report and provided by different stakeholders in Korea called it the Comprehensive Plan for the Local Era, but the Presidential Committee for Decentralisation and Balanced Development adopted the official English terminology as Decentralisation and Balanced Development Master Plan.
← 18. Other similar concept is megalopolis, used in countries like Mexico, to define a city connected area that is administratively separated but functionally connected, for the example the Valle de México (Mexico City) with the metropolitan Zone of the Valle de Mexico connected to other cities or metropolitan areas such as Puebla-Tlaxcala, Toluca and Pachuca.
← 19. Juchul Jung, Real Estate Policy and Regional Balanced Development Discussion. Real estate policy reflecting balanced development must be established. Pusan National University. PPT presentation.
← 20. For further information see: Busan-Ulsan-Gyeongnam Special Association https://en.namu.wiki/w/%EB%B6%80%EC%82%B0%EC%9A%B8%EC%82%B0%EA%B2%BD%EB%82%A8%ED%8A%B9%EB%B3%84%EC%97%B0%ED%95%A9 (Accessed on 22 August 2024).
← 21. Different sources provide different English translations to the development zones. Downtown Cohesion Zone could be found as Urban Convergence Zone, and the Cultural Driven City could be translated as Culture Special Zone. This reports uses the official terminology in English adopted by the Presidential Committee doe Decentralisation and Balanced Development in 2024.
← 27. See: KOSIS, Households by Districts and Population: http://kosis.daegu.go.kr/statHtml/statHtml.do?pub=1&orgId=203&tblId=DT_B40001
← 28. For further information see: Daegu-Gyeongbuk Integrated New Airport https://en.namu.wiki/w/%EB%8C%80%EA%B5%AC%EA%B2%BD%EB%B6%81%ED%86%B5%ED%95%A9%EC%8B%A0%EA%B3%B5%ED%95%AD
← 29. In 1973 the city was designated as a local industrial development zone; in 1977 developed as an industrial land development area; in 1988 the plan for the 4th industrial complex was approved. In 2008 the Ministry of Land, Infrastructure and Transport (MOLIT) announced the Gumi National Industrial Complex Expansion and Development plan; and in 2009 MOLIT announced the Gumi High-tech Valley Industrial Complex Plan.
← 30. For further information see: https://www.gumi.go.kr/en/contents.do?mid=0407000000
← 31. For further information see: https://en.namu.wiki/w/%EA%B5%AC%EB%AF%B8%EC%8B%9C/%EA%B5%90%ED%86%B5#s-4.3