The second phase of public institution relocation, aimed at alleviating congestion in the capital region and promoting balanced national development, is becoming more visible. However, the first phase has been criticized for falling short in terms of employee and family settlement, attracting related businesses, and fostering an industrial-academic-research ecosystem. Experts argue that the second phase requires measures that go beyond mere office relocations to facilitate genuine regional settlement.
According to relevant authorities, the government initiated the public institution relocation project in 2003 with a basic plan and designated institutions for relocation in 2005, targeting the alleviation of overcrowding in the capital region and promoting balanced national development. The first phase began in earnest in 2012 with the relocation of the Korea Transport Institute to Jeju Innovation City and concluded in 2019 with the move of the Korea Institute of Science and Technology Evaluation and Planning to Chungbuk Innovation City.
A total of 153 institutions and approximately 52,000 personnel relocated to ten innovation cities across the country, including Sejong City. The National Assembly Budget Office separately analyzed 105 public institutions under the Public Institutions Management Act.
The analysis revealed that the relocation of public institutions contributed to population growth in innovation cities and an increase in local tax revenue. As of the end of 2025, the population in innovation cities nationwide reached 234,684, and the public institutions that relocated paid a total of 25.072 trillion won in local taxes from 2016 to 2024. The introduction of a mandatory local talent recruitment system also expanded employment opportunities for local university graduates.
However, the evaluation indicates that actual settlement remains incomplete. The family relocation rate, including single and unmarried individuals, was 71% as of 2025, falling short of the government’s target of 75%. Satisfaction with living conditions in 2024 was rated at only 69.4 out of 100. Although the occupancy rate of the industrial-academic-research cluster in innovation cities was 81.8% based on planned sales, the actual occupancy rate was only 56.6% based on the area sold.
Connections to the capital region have not been severed. Among the 104 institutions that submitted data, 60 operated shuttle buses to the capital region, with a total budget of 198.99 billion won allocated from 2010 to 2025. Additionally, 47 institutions were found to have separate personnel or facilities in the capital region with approval from the Local Era Committee. This raises concerns about the continued presence of employees' families in the capital and the issue of 'weekend hollowing out' in innovation cities.
Delays in relocation schedules and increased project costs have also posed challenges. The average relocation schedule for the surveyed institutions was delayed by 28.6 months compared to initial plans, and the total relocation costs increased by 645.62 billion won from the original estimates.
The approach of establishing new innovation cities on the outskirts has also been criticized. The National Assembly Future Research Institute noted that some new city-type innovation cities have exacerbated the hollowing out and decline of existing urban centers by absorbing surrounding populations.
The effectiveness of dispersing the capital region's population to rural areas has also been limited. An analysis of domestic population movement statistics from 2005 to 2024 by the National Assembly Future Research Institute found that most of the population influx to innovation cities came from nearby cities and provinces rather than the capital region.
For instance, in 2024, Daegu Innovation City saw an influx of 3,310 people from the capital region, while 9,014 people moved from nearby areas such as Gyeongbuk, Gyeongnam, Busan, and Ulsan. Similarly, Busan Innovation City recorded 6,983 new residents from the capital region, compared to 13,504 from neighboring cities and provinces. This suggests that the relocation has primarily involved redistributing populations within non-capital regions rather than dispersing the capital region's population.
Some areas have even experienced net outflows of population after the relocations were completed. According to the National Assembly Future Research Institute, regions where new city-type innovation cities were established, such as Gyeongbuk and Jeonbuk Innovation Cities, have seen outflows surpassing inflows, with Ulsan Jung-gu and Jinju in Gyeongnam also experiencing net outflows.
Concerns have also been raised that the benefits of expanding local talent recruitment have been concentrated in a few universities. An analysis of local talent recruitment trends at major relocating institutions from 2018 to 2024 revealed that 71.2% to 81.0% of local hires at institutions like the Korea Asset Management Corporation and the Korea Land and Housing Corporation came from the top two regional universities in terms of recruitment volume.
To avoid repeating the limitations of the first phase, experts suggest that the second phase should focus on enhancing the foundations for settlement, including education, healthcare, childcare, culture, and transportation, as well as encouraging the concurrent relocation of related businesses and research and development personnel.
Min Bo-kyung, a researcher at the National Assembly Future Research Institute, stated, "If the first phase represented a paradigm of 'equal distribution' during a time of overall population growth and the expansion of large cities, the policy environment must fundamentally change in the era of significant population decline. The government should establish a strategy to strengthen hubs through selective concentration in line with its spatial policy of five poles and three specialties."
* This article has been translated by AI.
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