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Decentralization in Korea: Institutions, Regional Development, and Governance Open Access

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Abstract of DissertationThis dissertation consists of three free standing papers centered around the common theme of decentralization in Korea: in particular, the relationship between institutions, regional development, and governance, and successful decentralization.The first paper examines the role of social capital, informal institutions and policy objectives on the introduction of decentralization in Korea and attempts to broaden the understanding of the motivation for decentralization beyond the traditional economic rationale of traditional federalism theory, namely to improve the efficiency of government. In particular, this study examines how informal institutions, such as civil society organizations (CSOs), became credible partners to the Kim and Roh administrations (1998-2008) for the successful inception of decentralization. Close collaboration between government and CSOs in advancing decentralization as a reform priority was distinctive in the sense that it took place as a partnership between government and non-state actors, along with local governments' engagement. Further, CSOs were able to mobilize their informal institutions and networks to advance formal institutions such as legislation, rules, and regulations, by bringing political actors on board for democracy and to support the inception of decentralization. Their ability to facilitate this process came from their reputation for representing and pursuing the public interest and shared values, their knowledge of the issues, and their organizational skills acquired over Korea's long history of democracy movements. In the absence during the pre-democracy years of a credible government that represented the views of the majority of the population, CSOs had emerged as an honest and trustworthy agent for change. They were also able to provide the public with a platform for collective action for the country's future that included decentralization as one element. CSOs became a forceful partner for the successful inception of decentralization in Korea, although decentralization in Korea is still "a work in progress" with emerging challenges.The second paper examines the relationship between decentralization and regional disparity in Korea. In particular, the paper examines whether Korea has managed to successfully decentralize and narrow regional disparities and if not, why disparities continue to exist despite the intentions of the decentralization efforts in 1995. The findings suggest that since its inception, decentralization in Korea has neither succeeded in expanding fiscal decentralization nor in reducing regional disparity. Instead, differences in per capita gross regional domestic product (GRDP) between regions have widened. The degree of fiscal decentralization has remained low since 1990 with slight fluctuations during the intervening years, but has decreased slightly since 1995. Further, local governments' fiscal independence has been steadily declining--falling by 13% from 1990 and 11.5% from 1995--which indicates that local governments have become increasingly dependent on intergovernmental transfers to meet their expenditure needs. This is partly explained by local governments being given increasing responsibilities in providing social welfare programs since the inception of decentralization. This increasing dependence of local governments on intergovernmental transfers to meet centrally imposed mandates has indirectly weakened local governments' fiscal capacity to invest in productive sectors. The resulting negative relation between fiscal independence and regional disparity is more significant than the relation between decentralization and regional disparity. The above findings indicate that decentralization per se is less important for regional development than local governments' capacity to adequately fund their activities, including social welfare programs, as well as the ability of local governments to invest in development programs. The third paper investigates the effect of decentralization on the quality of governance in Korea. The introduction of decentralization in 1995 by establishing local assemblies was intended to expand the authority of local governments through the election of local officials by popular vote, to delegate administrative tasks from central to subnational governments, and to increase the share of local expenditures in total public expenditure. The aim of this policy was to render the government more accountable and responsive to the needs and preferences of citizens. However, progress has been mixed. In this context, the paper examines the impact of decentralization on two dimensions of governance measured at the country level from 1996 to 2013: voice and accountability and control of corruption, as measured by the Worldwide Governance Indicators. The findings of this study suggest that an increase in decentralization, fiscal independence, and GDP per capita tend to improve local governance in terms of increased participation in local elections. Based on the trend of voter turnout, participation in local elections when the liberal party is in power tends to be lower than when the conservative party is in power. This may seem counter-intuitive at first, but the long period of dictatorship and its historical association with the conservative party may explain this phenomenon, possibly unique to Korea. Perhaps people are less concerned about the country's political conditions when the liberal party is in power as there is perceived to be less danger of losing freedom of speech or freedom to vote. It seems that expansion of fiscal decentralization and local revenue mobilization encourage participation in local elections, as residents then have more stake in their local affairs. Moreover, the study's findings suggest that political decentralization can play a key role in instituting a vital platform of contestability of public policies with potentially positive effects for people's welfare at both the local and national levels.

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