Experts share insights on balanced regional development

An international conference hosted by the Korea Institute for Industrial Economics & Trade (KIET) to mark the 20th anniversary of the Center for Balanced Regional Development. [Photo by Lee Chung-woo]

It is crucial to foster industries in regional areas to bridge the gap between the capital and rural regions, according to Shuji Koiso, professor emeritus of Hokkaido University, one of Japan’s leading experts on balanced development.

“There should be a virtual circle that minimizes fund outflow and efforts to raise external revenue by boosting tourism industry or attracting industrial complexes in regional areas to foster self-sustainability,” he said.

The professor’s remarks were made during an international conference hosted by the Korea Institute for Industrial Economics & Trade (KIET) on Tuesday to mark the 20th anniversary of the Center for Balanced Regional Development.

Koiso presented Hokkaido in northern Japan as a model of balanced development. Hokkaido used to be known for its traditional agriculture and renewable energy production, but it is now rapidly transforming into a semiconductor cluster.

Although it was on the verge of extinction due to rapid aging and population outflow due to urbanization, it prepared eight development plans to drive regional growth for over 70 years, and the recent establishment of a large semiconductor industrial complex has brought new vitality to the region.

Koiso advised that Korea should benchmark the successes of Hokkaido, which came up with customized long-term planning goals that take into account the geographical characteristics of the region and identified and implemented strategies and projects that are highly compatible with its goals.

Rapidus Corp., a symbol of Japan’s semiconductor growth, is building a next-generation semiconductor complex near New Chitose Airport in Hokkaido.

Rapidus is a joint venture established last year by eight major Japanese companies, including Toyota Motor Corp., Kioxia Holdings Corp, Sony Group Corp., and SoftBank Group Corp., to localize advanced semiconductors.

The Rapidus semiconductor industrial complex in Hokkaido is expected to be the largest investment in Hokkaido’s manufacturing history, with a total investment of more than $50 billion.

“Until now, Hokkaido’s industry has been centered on food manufacturing but it is expected to diversify local income and expand the scale of its economy by attracting a large-scale advanced semiconductor factory,” Koiso said.

“In order for a region to develop, good companies must invest in the region, and in order to attract investment, the region must create a favorable environment for investment,” said Park Jong-won, a regional economic policy official at the Ministry of Trade, Industry and Energy.

“The government is preparing a master plan for industrial parks led by local governments while promoting 20 regulatory reforms, including on the three major regulations for industrial zones: tenant type, land use, and sale and lease regulations,” Park said.

Ron Boschma, a professor at Utrecht University who specializes in regional innovation, also emphasized that balanced regional development requires customized and differentiated strategies that take into account the characteristics and potential of each region.

Dorothée Allain-Dupré, the head of regional development and multi-level governance division at the Organisation for Economic Co-operation and Development (OECD), urged policymakers to “clarify the responsibilities and powers of local governments when formulating decentralization policies and to provide sufficient support from the central government for those responsibilities and powers.”

She emphasized the need to establish a coordination system among local government units such as the central government, provinces, and cities.