Development of a Korean Local Extinction Index (K-LEI) and Tasks for Policy: Focusing on a Virtuous Cycle Mechanism of Regional Economies

The exodus of Korea’s population from the countryside to the capital Seoul and its suburbs, known in Korea as the sudokwon and referred to in this paper as the Seoul Capital Area (SCA), continues unabated to this day, particularly among the youth. The resulting increase in population density in the SCA threatens to undermine the region’s competitiveness, while other regions are left to struggle with a supply-demand mismatch in the job market and stagnating economic growth, all of which accelerate local extinction. Local extinction has also begun to spill out of rural communities over into the suburban and exurban areas outside the SCA, exacerbating the spatial Matthew effect of sorts between the populous SCA and the rest of the country. This reports defines a virtuous cycle mechanism for local (real) economies that can increase population growth as one of innovation, advanced industrialization, the clustering of high-value-added businesses, and local economic growth. And using this definition, the work introduces the Korean Local Extinction Index (K-LEI), which is designed to capture the reality facing local economies in South Korea. Based on a analysis using the K-LEI index, the study proposes a series of policy measures aimed at halting and reversing local extinction. These measures include the following: Incentives for businesses at different stages of local extinction, support for high-value-added industries to help strengthen industrial diversity based on existing (traditional) industrial infrastructure, and support for strengthening local colleges and universities and their functions in slowing local extinction.