An analysis has shown that despite the government constructing Sejong City and innovation cities and pushing for the relocation of public institutions from 2012 to 2019, the spillover effects remain limited as population and economic power continue to concentrate in the greater Seoul metropolitan area.

According to a report titled "Spillover Effects of Regional Relocation of Public Institutions and Direction for Innovation City Hub Strategies" released by the Korea Institute for Industrial Economics and Trade (KIET) on August 9, there was a significant net population influx from the metropolitan area to innovation cities during 2014–2017 when public institutions relocated in earnest. However, this influx plummeted afterward, and a net outflow has persisted since 2023.

The population influx heading toward innovation cities from within the same region also turned into a net outflow starting in 2025.

Looking at the net population influx into non-metropolitan innovation cities, it exceeded 30,000 in 2015, but has dropped into negative territory since 2023.

On the other hand, the trend of population concentration in the metropolitan area slowed somewhat during the period of public institutions' regional relocation, but has been increasing again afterward, the report explained.

In the case of the metropolitan area, its population share rose from 46.3% in 2000 to 50.8% in 2024. Notably, the proportion of young adults (aged 19–34) living in the metropolitan area surged from 48% to around 56% over the same period.

The report also pointed out that the scope of industrial and spatial spillover effects from the relocation of public institutions has been limited.

Analyzing data from 2010 to 2024, employment and wage growth in innovation cities were larger than those in the metropolitan area, but employment growth in non-tradable sectors consisting of services accounted for the vast majority.

Manufacturing employment began to increase gradually about 6 to 7 years after the relocation of public institutions, but the scale was relatively small.

The report cited the dispersion of resources and the lack of sustained growth engines as the reasons for these limitations.

Because public institutions were dispersed across 10 innovation cities, the spillover effects were fragmented, and infrastructure investment and the relocation of public institutions failed to lead to increased productivity and the securing of growth engines for the innovation cities.

Consequently, the report suggested that the relocation of public institutions should be linked to the creation of nationwide hub cities.

It explained that a method of creating hub cities by intensively relocating public institutions to areas with good accessibility to large city infrastructure—coupled with a sort of "economies of scale" where larger relocation scales yield greater per-capita spillover effects—is effective in dispersing the population from the metropolitan area.

It also emphasized that effective industrial policies linked to the strengths of innovation cities should be implemented to boost productivity, and governance systems must be established to encourage cooperation between government ministries as well as central and local governments.

Baek Seung-min, an associate research fellow at the Korea Institute for Industrial Economics and Trade, said, "We need a mid-to-long-term strategy to create hub cities that can substantially disperse the metropolitan population by intensively relocating public institutions to areas with good accessibility to large city infrastructure, while simultaneously connecting the physical and human resources possessed by innovation cities into agglomeration economies."

(Photo: Yonhap News)