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III. National Policies and Strategies for Infrastructure Development
Rapid growth of the Korean economy necessitated continuous investment in infrastructure facilities. To develop a nation’s competitiveness and to ensure balanced regional development, building transportation infrastructure such as road, railway, harbor, and airport and providing foundational facilities like water supply, industrial complexes, and product facilities are critical. Korean Government increased its expenditure for infrastructure and regional development and encouraged private participation in order to overcome lack of infrastructure investment. In particular, special account for transportation infrastructure was established in 1994 in order to secure fund for transport and regional development.
Since 1990s, Korea’s transport system has been augmented due to continuous investment. For example, four-lane roads have increased 4 times, double-track railroads have increased 1.6 times, the number of harbors has increased 2.3 times, and airport control system has improved 1.6 times compared to those of 1990s.
With continued investment in infrastructure development, the level of infrastructure in Korea is now above average compared to other OECD member countries. Korea is ranked the 15th among 28 countries for the number of roads per land area, 13th among 21 countries for the railway. These numbers are ranked higher than what is expected for a country which is ranked the 27th for GDP among OECD member countries.
Since 2000, Private Participation in Infrastructure has been reinvigorated and thus the size of private funding has increased. Private investment, compared to public investment in infrastructure, has continuously been increasing from 3.9% in 1998, 6.6% in 2000 to 14.2% in 2005. This trend shows the importance of public-private partnerships in the development of transportation system in Korea.
<Table III-1> Public Investment vs. PPI Investment in SOC Sector. (Unit : trillion KRW)
| '00 | '01 | '02 | '03 | '04 | '05 | '06 | |
| Total SOC Investment | 16.2 | 16.6 | 17.2 | 19.6 | 19.1 | 20.9 | 21.6 |
| - Public Investment | 15.2 | 16.0 | 16.0 | 18.4 | 17.4 | 18.3 | 18.4 |
| - PPI Investment | 1.0 | 0.6 | 1.2 | 1.2 | 1.7 | 2.6 | 3.2 |
Note: "SOC Investment" includes transportation (road, railway, port, airport), water resources and regional development investment.
In the area of industrial infrastructure such as energy and IT, the Government focuses on establishing policies that would create attractive environment for competition among private sector participants. Korean Government’s role is to facilitate innovative competition in the private sector by helping to manage risks that may arise when developing new technology.
As the technology available is more pluralized, market competition is more reinvigorated. Government’s role in provision of IT has been decreasing as they become more and more complicated. Thus, the private sector takes the lead in most information-infrastructure development projects, while the Government focuses on making the environment more suitable
to bring in private investment by revising past market failure cases.
