ABSTRACT
A Study on the Releasing Income Gap between Urban and Rural Areas through the Balanced Regional Development Strategies:
The Analysis of the Reasons for Income and Development
Gap between Urban and Rural Regions
This is the first year report of the three-year collaborative research entitled 'A study on bridging income gap between urban and rural areas through the balanced regional development strategies', which is led by the Korea Council of Economic and Social Research Institute. The ultimate purpose of the study is to seek an alternative policy to reduce the income gap between rural and urban regions. The main research methods applied include the review of previous policies aimed to improve farm household income and the analysis of successful case examples of regional economic development. In doing so, this first year study focuses on identifying the current situation and problems with income and development gaps between urban and rural regions. This is why the study comes to have the subtitle 'The analysis of the reasons for income and development gap between urban and rural regions'.
In order to find out the income gap between the regions, the income levels of the residents living in urban and rural areas were compared. Since no such statistics is available, this study just compares the size and structure of income and expenditure of urban workers with those of farm households. The ratio of farm household's income to urban worker's income was 113% in 1985. But it decreased from 97.4% in 1990 to 73% in 2002. During the same period, income per family member dropped from 112% to 100% and the national average of income per worker also went down from 38% to 24%. According to the characteristics of regions and the size of farm household, there were income gaps even within rural regions. In 2002, the income of the small farms with less than 0.5ha amounted to 51.3% of large farms with over 2ha. Moreover, looking at the changes in real farm income between 1995 and 2002, large farm households' income increased a little to 106.5%, but that of small farm households slumped to 79%. This study has also found that the income levels differ between those who have the opportunities to get non-agricultural income and those who don't. The income level of farm households in mountainous areas was just 83.3% of the national average, but that of nearby urban areas was 169.5%. In addition, full-time farm households' income was 74.3% of that of part-time farm households. For the incomes by farming type, rice farming households earned 21,441 thousand won, only 80.8% of the average farm household income, while livestock, fruit and specialized crop farming households earned 142%, 125.8% and 111.0% of the national average, respectively. It implies that the choice of farming items is an important variable determining income level.
Because of such income gap, people usually decide to move to the regions where they can get a job easily. This has resulted in socio-economic problems such as overpopulation or depopulation, as well as social conflict between residents. In 2002, the income per farm household was 24,475 thousand won that is not enough to make re-investment, but the debt per farm household has increased to 19,898 thousand won. The Engel's coefficient of farm households increased from 21.9% in 1993 to 25.3% in 2003. This implies that farmers cannot afford to enjoy the same standard of living with their urban counterparts. Thus, people tend to leave rural regions, seriously affecting the sustainability of rural societies.
During the period between 1998 and 2002, the comparison of GRDP between regions reveals that the high growth regions have the higher ratio of the manufacturing industry, while the slow growth regions mainly depend on the agricultural industry. Even though the income gap between urban and rural regions originated from the difference in the type of industries they are engaged in, it has brought about underdevelopment and resulting depopulation in rural regions, and further widened the development gap between them. The depopulation of rural regions has caused manpower shortage and in turn the wage increase, which consequently decreased the competitiveness of the domestic agricultural sector. On the other hand, the overpopulation in urban areas caused problems such as housing, traffic jam and crimes, which fundamentally declined the national competitiveness in the global market.
This study identifies factors, which influence the level of regional development. They include geographical location, regional resources, the quantity and quality of population, living circum- stances, national policies and the will of the local government, employment opportunities and industrial structure, and the pro- ductivity of specialized industries. These factors are closely inter- acting with each other. The analysis of the current situation and the reasons of the disparities imply that
1) the development gaps differ by cases and regions. This is not likely to be solved by the general application of central government policies, but can be addressed by region-specific policies reflecting the development level of a region, locational conditions, local resources and the opinions of local residents.
2) The approach should be a comprehensive one that includes agricultural and non-agricultural sectors as well as traffic system, living environment, education, culture, and welfare system.
3) It needs to be based on local resources and unique characteristics rather than outside enterprises and central policies. It means that the indigenous development approaches should be put into practice.
4) The central government supports should be differentiated by the level of development of individual regions. Especially, the laggard regions should be taken into account for differentiated assistance.
These findings are used to propose the future directions of the rural development policies to reduce the income and development gaps between urban and rural regions.
1)The future development policy should improve the competi- tiveness of agricultural production by way of the specialization of regional agriculture and the reinforcement of the product quality. By doing so, it can establish the regional innovation system and develop human resources.
2) It is important to provide farmers with the opportunities to find jobs in the non-agricultural sector. Furthermore, it is essential not only to start up businesses and bring factories into the rural regions, but also to provide job-training.
3) The future policy should focus on promoting industrial cluster including the region-based major industries.
4) The previous agricultural policy should be expanded into the 'rural policy' encompassing agricultural and non-agricultural sectors and farmers and all residents in rural areas. Moreover, under the ?special regulation on the improvement of living quality of farmers and the rural development planning?, local governments should set up regional development plan and introduce the novel 'comprehensive rural development plans'.
5) The participation of local governments and residents is essential for the implementation of the policies. This study have identified some factors for successful implementation of policies. They include participation of agricultural institutes and residents, the assistance and will of local governments and the groups of expertises, and the flexible budgetary support system.
6) The data on local areas is crucial for setting up regional development plan and conducting various kinds of schemes. Currently, no GRDP data is available at the local level.
7) Finally, it is essential to establish a development strategy based on the lessons learned from various successful case examples of other regions and foreign countries, and try to get useful ideas for regional development from such cases.
Researchers: Dong-Phil Lee, Shi-Hyun Park, Tae-Yeon Kim,
Joo-In Seong and Eun-Jeong Shin, Jeong-Hong Kim,
Chang-Hyun Kim
E-mail address: ldphil@krei.re.kr