Political Economy of Capital City Relocation in Korea

The political decision to relocate the capital city or construct a new administrative city in Korea seems to have been guided mainly by the politicians' consideration for winning elections. This paper presents a theoretical model of voting to capture important features of the political decision-making on the capital city relocation or new administrative city construction. A model of probabilistic voting shows that more powerful are groups including a larger number of swing voters who are mobile across parties. To win the elections, parties direct economic benefits toward these non-ideological voters. The paper also suggests institutional arrangements to prevent or mitigate efficiency losses resulting from electoral competitions: decentralization, generality constraints, project evaluation, referendum, qualified majority, judicial review, and so on. The campaign promise of capital city relocation must have been raised by very clever political entrepreneurs. Now, however, a political entrepreneurship might emerge to repeal the project of new administrative city construction, given that the project seems to involve vast waste of national resources and needless inconveniences to many people. And we hope that a greater political entrepreneurship shows itself to establish institutional arrangements for preventing rotational exploitations and resulting inefficiencies.