Decentralization and Economic Growth in Korea

Abstract

Empirical studies on the impact of decentralization on economice growth have resulted in mixed findings. This study discusses the relationship between decentralization and economic growth focusing on Korean experiences. The process of decentralization in Korean can be categorized into three periods: the Controlled Decentralization Model period (1948-1961), the Deconcentration Model period (1962-1991), and the Controlled Decentralization Model period (1992-present). Conceding that the centralized system in Korea did not necessarily mean that every decision was made exclusively by the central government, this study examines the relationship between the devolution of decision-making power to local entities and economic development in the country. From the view-point of economic development, it can be said that the Korean government's choice of a centralized system that deconcentrated administrative authority in the developing period helped avoid the risks of decentralization and the inefficiency of centralization, which can negatively affect economic development.