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State restructuring and pathways to local democracy: idea and politics of decentralization in Japan and Korea

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STATE RESTRUCTURING AND PATHWAYS TO LOCAL DEMOCRACY: THE
POLITICS OF DECENTRALIZATION IN JAPAN AND KOREA

by

Yooil Bae

A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(POLITICAL SCIENCE)

December 2007

Copyright 2007 Yooil Bae

ii
Acknowledgements

First of all, I would like to glorify the Lord for letting me go through such a
long journey to complete doctoral coursework and dissertation. I would like to take
this opportunity to express my deepest gratitude to my teachers, colleagues, friends,
and family who supported my graduate study at Korea University and University of
Southern California.
My dissertation, a comparative study of decentralization in Japan and Korea,
drew heavily on the steady guidance of my two principal advisors at USC. The
origin of this dissertation goes back to the class proposal for Professor Jefferey
Sellers’ comparative politics class. He first convinced me that this work could be
done and has served as the academic advisor and dissertation chair since 2002.
While working closely with him as a research assistant and a co-author, his
academic performance and attitude as a prominent scholar in this field truly set a
high standard for my future career. Professor Apichai Shipper, who has served in my
dissertation committee, played an indispensable role in pursuing this dissertation.
His passionate support, advice, and attention to my work encouraged me to aim high,
and this warm friendship and selfless mentorship remind me of the role model of
scholarship. I would like to thank these two mentors.
Many other scholars and friends helped me conceive this research project at
USC, and they include Professor S. Yan Tang, Ann Crigler, and Sheldon
Kamieniecki. Professor Tang kindly agreed to serve as the third reader of this
dissertation, and Professor Crigler and Professor Kamieniecki generously
contributed their time to reading a number of earlier versions of the proposal. In
addition, Yong Wook Lee, who is a professor at Oklahoma University, always gave
iii
great insight and advice during the process of writing and rewriting. I also would
like to thank “Club 794” members, Jeany Choi, Sunyoung Kwak, Furumura
Haruhiko who generously shared their opinions on the earliest version of my
research. I also thank Linda Choi Hasunuma at University of California Los Angeles
for editorial assistance.
During my tenure as a doctoral candidate at USC, numerous funding
resources from various organizations have helped to conduct field research. Final
year dissertation fellowship from the College of Letters, Arts and Sciences and ACE
Nikkaido Japan Studies Fellowship from East Asian Studies Center at USC were
particularly helpful. I also would like to thank Yenching East Asian Library at
Harvard University for providing generous research travel grant for Korean Studies.
Without supports and assistances from various people, this dissertation
would not exist. A number of people offered me a great opportunity to interview
bureaucrats in central ministries and city governments, politicians in both national
and local assembly, and civic activists in Korea. Professor Sung-sig Yoon, the
former chairman of the Presidential Committee for Government Innovation and
Decentralization, contributed his time to be interviewed. I also thank Professor
Sung-soo Kim at Hanyang University, Min Bae at the Board of Audit and Inspection
of Korea, Chan-Hoon Park at the City of Incheon, Sung-Hoon Kim and Jong-Don
Lee at the Ministry of Government Administration and Home Affairs for arranging
interviews with various groups and providing valuable internal circulations. In
addition, my mentors, Professors Chong-min Park and Sunhyuk Kim at Korea
University earned my deepest gratitude for encouraging me to complete graduate
study.

iv
Members of my church and Rev. Jong-Yong Lee have shown me incessant
of support, prayer, understanding and comfort in the name of Jesus Christ. I would
like to thank my parents and parents-in-law, Chung Young Bae, Okche Kim, Dae-ik
Kim, and Suk Young Kim for providing long-distance support of all kinds from
Korea. My brother, Hong-il Bae always prayed for me. Finally, I regret not having
been able to spend much time with my two precious children, Grace and Nathan
while writing this dissertation. I would like to express my deepest gratitude to my
wife, Sally Heesun Kim, for utmost patience, sacrifice, and editorial work.

August, 2007
Los Angeles, California
Yooil Bae

v
Table of Contents

Acknowledgements ...................................................................................................... ii

Table of Contents ......................................................................................................... v

List of Tables .............................................................................................................. vii

List of Figures ........................................................................................................... viii

Abstract ....................................................................................................................... ix

CHAPTER 1 INTRODUCTION ................................................................................. 1
1.1. Japan and Korea Headed Toward Decentralization .......................................... 1
An Overview ........................................................................................................ 1
The Puzzle: Pathways to Local Democracy ........................................................ 7
1.2. Explanations on Varieties of Decentralization................................................ 16
Modernization, Democratization and Globalization: Modernization Theory ... 16
An Ideational Approach: Two-level Explanation .............................................. 21
Alternative Explanation ..................................................................................... 25
1.3. Research Strategy and Roadmap of the Study ................................................ 29

CHAPTER 2 THE ORIGIN OF VARIETIES OF DECENTRALIZATION: AN
IDEATIONAL FRAMEWORK ................................................................................. 33
2.1. Overview: An Ideational Framework ............................................................. 33
2.2. Engendering Decentralization ........................................................................ 39
The Crisis of Central-led Economic Model ....................................................... 41
Changes in Domestic Political Surroundings .................................................... 59
2.3. Changes in Global Environment ..................................................................... 75
Globalizing Economy and National Competitiveness ....................................... 77
The Flow of Ideas and Organizational Structure in Politics .............................. 81

CHAPTER 3 DECENTRALIZATION PROPOSALS: THE SOURCES OF
POLITICAL DEBATES ............................................................................................ 90
3.1. The Decentralization Trend ............................................................................ 90
Japan: Phases of Decentralization Reform ........................................................ 91
Korea: Phases of Decentralization Reform ....................................................... 97
vi
3.2. Before and After the 1990s: Decentralization Proposal s .............................. 102
The Decentralization Proposal in Japan: Process and Achievement ............... 102
Decentralization Roadmap in Korea: The Process and Achievement ............. 114
3.3. Limited Nature of Decentralization Refor m ................................................. 121
Unfinished Reform in Japan: Limitations ....................................................... 121
Limited Reform, Unresolved Issues in Korean Proposal ................................ 126
3.4. Conclusion .................................................................................................... 133

CHAPTER 4 THE POLITICS OF DECENTRALIZATION AT THE CENTER:
POLITICAL GRIDLOCK AND REFORMISTS .................................................... 137
4.1. The Emergence of Decentralists in Decentralists in Governmental
Organizations: Political Leadership and Idea Bearers ......................................... 139
The Case of Japan: Prime Ministers and Reformist Politicians ...................... 139
The Case of Korea: Top Political Leaders and Reformists ............................. 155
4.2. Reluctant Mobilization: Sectoral Interests and Central Bureaucrats ........... 170
The Case of Japan: Zoku Politics .................................................................... 171
The Case of Korea: Internal Resistance and Marginalized Politicians ........... 177
4.3. Conclusion .................................................................................................... 185

CHAPTER 5 THE POLITICS OF DECENTRALIZATION FROM BELOW: THE
GROWTH AND IMPACT OF LOCAL AND CIVIL SOCIETY ........................... 187
5.1. Decentralization Committees: Dissemination of Idea .................................. 189
The Case of Japan: The Committee for the Promotion of Decentralization ... 189
The Case of Korea: Presidential Committee for Government Innovation and
Decentralization ............................................................................................... 197
5.2. The Rise of Decentralization Movements from Below: Local Governments
Associations, Civil Society, and Business ........................................................... 203
Overview .......................................................................................................... 204
Local Government Associations ...................................................................... 207
Civil Society and Business .............................................................................. 216
5.3. Conclusion .................................................................................................... 228

CHAPTER 6 CONCLUSION: DECENTRALIZATION, STATE
RESTRUCTURING, AND IDEAS .......................................................................... 232

BIBLIOGRAPHY .................................................................................................... 249

vii
List of Tables

Table 1.1: Decentralization Reforms around the World 2
Table 1.2: Highlights of Decentralization Reforms in Japan and Korea 12
Table 2.1: Structure of Local Governance in Japan and Korea 40
Table 2.2: Indicators of Regional Disparity in Korea (2000) 56
Table 3.1: Phases of Decentralization Reform in Japan 93
Table 3.2: Phases of Decentralization Reform in Korea 99
Table 3.3: Major Decentralization Legislations since the 1990s 105
Table 3.4: The Decentralization Roadmap 116
Table 3.5: Delayed Major Issues in Decentralization Project 129
Table 3.6: Distribution of National Affairs (1994, 2002) 130
Table 3.7: Fiscal Independence Ratio by the Size of Local Governments 132
Table 4.1: The Major Tasks of MOGAHA in Decentralization Projects 165
Table 4.2: Major Special Administrative Agencies (SAAs) 168
Table 4.3: Ministerial Responses to the Abolishment of ADF 174
Table 5.1: Outlines of Interim Reports and Recommendations by the CPD 195
Table 5.2: Background of the CGID members (2006) 199
Table 6.1: Summary of Decentralization Politics 244
viii
List of Figures

Figure 2.1: An Ideational Framework 36
Figure 2.2: Major Economic Indices of Japan, 1960-2001 48
Figure 2.3: The Pattern of Regional Distribution of Population and GDP 50
Figure 2.4: Trade to GDP Ratios 52
Figure 2.5: The Concentration of Population in the SMA (%) 55
Figure 2.6: The rate of Trust in Government in Japan and Korea 70
Figure 3.1: Changes in the Classification of Local Duties 107
Figure 3.2: Various Surveys on Decentralization Reform in Japan 123
Figure 5.1: The Organizational Structure of the CPD 191

ix
Abstract

The objective of this dissertation is to provide a holistic explanation for
recent response to globalizing economy through decentralization in Japan and Korea.
The research question suggested in this dissertation is why Japan and Korea
suddenly passed the decentralization laws that contain massive migration of central
authorities and fiscal resources to subnational governments in the late 1990s and the
early 2000s. What caused various modes and degrees of decentralization, despite
similar backgrounds of two countries? Prior to the 1990s, the structure of central-
local relations in postwar Japan and Korea remained vertically structured so that
central ministries gave orders and commands to related bodies in local governments.
Those highly centralized models delivered tangible signs of success such as fast
growth of economy and improvement of quality of life in a very short period, yet
those models have been under strain, since the economic recession of the 1990s. My
original claim is that the cause of recent decentralization reform in Japan and Korea
lies in the diffusion of neoliberal idea that intertwined with top political leadership,
the placement of decentralists in governmental organizations, and the growth of civil
and local society under the great uncertainty of globalizing economy. Internationally
developed and adopted idea affect institutional change by virtue of the fact that key
policymakers embrace new reform agendas and issues, transport them into
policymaking arenas, and carry them out in ways that change institutions. In doing
so, neoliberal reform and decentralization become an attractive strategy to cure
many policy problems. Although both countries did not faithfully follow the logic of
neoliberal reform that proliferated in western democracies, the neoliberal idea and
decentralization strategy provided a visible direction of policies for decision makers
x
at the center, materialized specific path of strategies through reform institutions, and
framed the discursive background of decentralization reform. I demonstrated how
the diffusion of neoliberal idea throughout a country contributed to the construction
of new central-local relationship in the formerly statist countries like Japan and
Korea.
Throughout the analysis, I offer an ideational framework, which incorporate
materialistic and ideological influence of globalization on decentralization politics,
in order to identify the causal relationship between idea and domestic policy choice,
decentralization.

1

CHAPTER 1
INTRODUCTION

1.1. JAPAN AND KOREA HEADED TOWARD DECENTRALIZATION

An Overview
Since 1970, there were profound transformations in central-local government
relations or intergovernmental relations (IGR) in western democracies such as
France, Italy, and the United States. These changes include territorial reorganization,
functional rearrangements, and financial redistribution across levels of government.
1

Following these advanced countries, a wholesale decentralization of government is
now in flux. Countries in Europe, North America, Latin America, and Africa have
experienced some forms of the process of decentralization. From France to Bolivia
to the Philippines, countries of varying sizes, economic levels, and political systems
are moving government down this path with occasional exceptions, as seen in the
Table 1.1. Before the 1990s, most countries in East Asia were highly centralized, yet
subnational bodies of government in those countries occupy a crucial position for
the region’s development today.
2
Dillinger even reported that about 85% of
developing countries with populations of over five million have carried out
decentralization reforms in recent decades, and supranational organizations such as
the World Bank are actively supporting decentralization programs with the goal of
promoting socio-economic development, efficiency, and transparency.
3

1
See Sharpe (1988). Various reports published in international organizations such as the World
Bank and OECD, and numerous studies on decentralization (central-local relations) were published.
In addition to studies on federalism, see Gourevitch (1980); Jun and Wright (1996); Levy (1999);
Loughlin (2001); Page and Goldsmith (1987); Pickvance and Preteceille (1991); Tarrow (1977).
2
The World Bank (2005). East Asian Decentralizes.
3
Dillinger (1994).
2
Table 1.1: Decentralization Reforms around the World
4

Region Countries Major Decentralization Reform
Europe
and
North America
France
1982: The Decentralization plan gave full independence to the regions and
départements in various policy areas.
Finland
1994: Transfer of power from central government to newly joined regional
authorities controlled by municipalities in areas such as regional planning and
development, and environmental policy.
Italy
1970: Transfer from the State to the regions of manpower training, health care,
agriculture, transport, etc. 1990: major reorganization of provinces and
municipalities.
Greece
1994: Responsibilities transferred to new level of regional administration in areas
such as land-use planning, public land disposal, licensing of new industrial
development, etc.
Canada
The federal government delegated to the provinces activities such as the
administration of the Criminal Code and regulatory authority of inter-provincial
activities. Municipalities have transferred responsibility for health, social services
and education.
Mexico
1983: The Constitution gave municipalities more regulatory power over the real
estate tax. 1989-1994: Municipal power was enlarged (urban planning and energy
management related functions).
Latin America

Bolivia
1994: Popular Participation Law prescribes the decentralization of power to local
governments and the direct election of local leaders. 1994: Administrative
Decentralization Law increased transfers to regional governments.
Colombia
1983: Fourteen units increased fiscal resources available to local governments.
1986: Popular election of mayors. 1991: The Constitution was revised in a more
local-oriented way.
Peru
1980: The Constitution was revised allowing for the popular election of mayors.
1989: Direct election of governors allowed. 1993: Fiscal transfers to local
governments (Decree Law 776).
Venezuela
1989: Ley Orgánica de Régimen Municipal (LORM) allowed popular election.
1990: LOD (Ley Orgánica de Decentralizción) allowed devolution of functions
and fiscal transfers.
Asia
China
1994: Comprehensive Fiscal Reform and Tax Sharing System. 1995: Budget Law.
These laws clarified the fiscal responsibilities of different levels of government.
Vietnam
1995: Decentralization was an important part of the Public Administration Reform
program. Budget Law in 1996 and 1998 formalized fiscal arrangements among
levels and assigned budgeting responsibilities to subnational governments.
Thailand
1997: The Constitution specifies principles of local autonomy including elected
representation. 1997: Local Fiscal Master Plan defines the framework for the
Decentralization Act of 1999.
Philippines
1987: The Constitution provides for local government autonomy. 1991: Local
Government Code provides substantial devolution of services.
Source: Falleti (2005); OECD (1997), Managing across Levels of Government; Levy (1999); O’Niell
(2003); The World Bank (2005), East Asian Decentralizes.

As the cases of countries undergoing the transformation in central-local
relations in Table 1.1 shows, the concept of ‘decentralization’ is most frequently

4
In addition to the countries in the table, many countries such as Denmark, Iceland, Ireland,
Portugal, Spain, Sweden, Switzerland, Turkey, and Indonesia, among others, are experiencing
transformations in central-local relations.
3
nactment
es.
7

9
For
d

employed to describe the changing intergovernmental relationship across continents.
Within the literature, there is a consensus that the concept or definition of
decentralization is understood to be when a country transfers the authority to carry
out certain types of public services from the central government to subnational
bodies.
5

In concurrence with this basic definition, there is a broader and multifaceted
social scientific meaning that has developed over time. For example, Falleti and Jun
and Wright suggest three types of decentralization: administrative, political, and
fiscal decentralization. Administrative reform means the general transfer of public
services and administrative functions such as education, social services, and
healthcare from the central government to subnational bodies. The process of
administrative reform usually – but not necessarily – includes the devolution of
decisional authority and de-concentration.
6
Political decentralization is an e
of a new constitutional or legal design for subnational political actors that include
the direct election of mayors and governors, and the creation of local assembli
Finally, fiscal decentralization is designed to increase the fiscal autonomy of
subnational governments. This includes a transfer of tax authority from the center or
the creation of new taxes.
8
Turner and Rondinelli extend these three types of
decentralization by drawing on several standards such as territory and function.
example, Mark Turner suggests six forms of decentralization. For him, ‘territorial
decentralization’ means the placement of authority at a lower level in the territorial
hierarchy (subnational bodies), and this includes devolution, de-concentration, an

5
Dillinger, ibid; Manor (1999); Oates (1972); Turner (1999).
6
Falleti (2005), p.329; Jun and Wright (1996), p.4-6.
7
Falleti, ibid.
8
ibid.
9
Rondinelli (1990); Turner, ibid.
4

privatization.
10
‘Functional decentralization’ reflects the transfer of authority to
functionally specialized agencies like interest groups and interest group
representation. The establishment of QUANGOs (quasi-non-governmental
organizations) and the privatization of national functions are classified into this
category. The bottom line is that the countries that appear in Table 1.1 are
experiencing these various kinds of decentralization as well as the one at the most
basic level of one, with occasional exceptions.
Although Japan and Korea are characterized to be traditional “strong states,”
where there is a superiority of state power over markets and central control over
local government, they are not exceptions to this wave of decentralization. In the era
of industrialization and modernization, the state possessed the policy tools and
capacity to reshape the politics and the economy without much consideration of the
preference of societal groups.
11
However, economic problems that were intertwined
with domestic issues posed political challenges, and the two countries embarked on
radical political-economic experiments in the wake of the globalizing economy in
the late twentieth century. Whether they really preferred the liberal market model or
not, the governmental officials, political leaders, and businesses advocated the U.S.
model of structural reform programs, and “decentralization” was at the center of one
of those programs, as it was in many other countries.

10
Turner, ibid, p.4-5.
11
For a number of reasons, Japan and Korea have been portrayed as having ‘developmental states’
or as being ‘strong states.’ First, both countries boasted talented, highly-educated, and professional
civil servants recruited from among the best and brightest on the basis of a rigorous and competitive
exam system. Second, through a well-trained bureaucratic system, those governments acquired
control over a variety of affairs presumed to be critical to the economic successes. The governments
could extract capital, generate and implement national economic plans, and manipulate private access
to scarce resources. See Amsden (1989); Johnson (1982); Pempel (1999); Wade (1990); Woo-
Cumings (1999).
5

Though there are variations across countries in the types of decentralization,
there are some commonalities or common dynamics.
12
The logic of much of the
political science and economics literatures suggest that the changes in central-local
relations – i.e., decentralization – has been spurred on by processes associated with
democratization, socio-economic development, or globalization. All things being
equal, it is implied that one should expect democratic nations with a certain level of
wealth and economic power to have more autonomous local governments.
13
By
emphasizing socio-economic factors, a group of scholars has often associated a
higher level of economic development and wealth with more advanced central-local
relations.
14
A number of international factors, such as the advice of international
financial organizations like the International Monetary Fund (IMF), the influence
from foreign investors, etc. might be responsible for the diffusion of this
decentralization movement around the world. In addition, one might believe that
national and local elites’ incentives would foster the promotion of decentralization
as an electoral strategy or reflect the interests of political parties.
15

Regardless of the numerous studies on decentralization, however, little
attention has been paid to the causes for the varieties of central-local relationships
around the world. In particular, those theories provide only partial answers to the
question of why “strong states” like Japan and Korea suddenly chose
decentralization reforms to overcome their difficulties, and why the two countries
have different consequences for their reforms despite sharing a similar process,
structure, and strategy. This is not to say that the aforementioned explanations are

12
Gerber and Kollman (2004); White and Smoke (2005).
13
For example, Diamond and Tsalik (1999) and Dillinger (1994) argue that decentralization has
contributed to democratic consolidation by empowering local governments.
14
Diamond (1999); Sharpe (1988); Stein (1998).
15
For example, O’Neill (2003).
6

wrong, but that they have limitations when applied to the Japanese and Korean cases.
While the democratization movement contributed to the progress of decentralization
in Korea,
16
Japan experienced a distinctive development of local political arena
from those of national level since the postwar period. Although the two countries
accomplished a considerable level of socio-economic development in terms of the
scale of their economies, their amount of international trade, the rate of urbanization,
etc., the discussion of decentralization in the 1990-2000s was due to their economic
crises. Consequently, despite a somewhat uniform nature of current wave of
decentralization movement across countries, it seems that Japan and Korea differ in
the actual process, their motivations, and the degree of their decentralization reform.
To fully grasp these similarities and differences, it is necessary to develop a
comprehensive framework that captures the conditions under which stakeholders
face the policy choice to promote decentralization.
The missing piece in the scholarship, which is based on theories of
democratization, modernization, and globalization for explaining the recent trend of
decentralization around the world are, I argue, ‘idea’ and ‘political struggles among
domestic actors.’ In this dissertation, I present an ideational explanation for the
pattern of decentralization in Japan and Korea as well as across countries. Contrary
to the explanations of decentralization in the literature as a product of
democratization, modernization, or globalization, this model emphasizes the central
role of the domestic political-economic situation and the flow of ideas from the
international community in promoting decentralization in Japan and Korea. To fully
understand the development of the decentralization drive of the 1990-2000s, I
emphasize the role of ideas in shaping new relationships between central and local

16
Kim (2006); Park (2006).
7
governments by highlighting the fact that international pressure for reform and
economic slumps pushed stakeholders to reassess their interests in balancing
national competitiveness in global market, and their status in the changing domestic
political situation. Therefore, the purpose of this dissertation is to demonstrate that
domestic decision makers and stakeholders interacting with international pressure
and global circumstance have played a crucial role in explaining decentralization
and the variation in the form, degree, and success of decentralization in Japan and
Korea as well as around the world.
This chapter presents the central puzzle of the dissertation and argues that a
new model for understanding the causes and varieties of decentralization is
necessary. The chapter then outlines competing explanations for understanding the
development of decentralization and shows why standard democratization,
modernization, and globalization theories fall short. Then, I will present a brief
discussion of my ideational framework and how it can supplement or enrich the
explanation for Japan and Korea’s limited development of decentralization. The
keys to understanding decentralization in these two countries are the globalizing
economy and neoliberal ideas associated with a changing domestic power
relationship because they were the main driving forces behind the sudden emergence
of decentralization in both countries. The chapter ends with a brief discussion of my
research strategy and methodology.

The Puzzle: Pathways to Local Democracy
Prior to the 1990s, the structure of central-local relations in postwar Japan
and Korea remained vertical so that central ministries considered as ‘fortresses,’
could control and command local governments. Those highly centralized models
8

delivered tangible signs of success such as the rapid growth of the national economy
and improvements in the quality of life in a very short span of time. In Japan, the
distribution of power between governments flowed vertically from the center to
local governments to maximize the mobilization of scarce resources in the state-led
industrialization process. The effective guidance of central government, as Scheiner
(2006) noted, had preoccupied the preference of local governments and controlled
autonomous decision-making in localities with various tools.
17
Under the control of
a single dominant party and strong national bureaucrats, local governments
exercised functions delegated to them by ministries, had limited autonomy in
managing their organizations and staffs, and possessed little discretion over local
taxation and borrowing.
18
Central politicians in the Diet, instead of local politicians,
had played a role as representatives of local interests in the deliberation of national
policies,
19
and central ministries had controlled local governments by sending
retiring bureaucrats to local governments.
20
Therefore, Japanese localities depended
financially and politically upon the central government, while they experienced a
gradual increase of their autonomy over time since 1970s.
21
The Korean experience
is not different from that of Japan. Although the first Constitution (1948) mandated
local autonomy, an authoritarian regime (1961-1987) abolished it and introduced a
‘command and control’ system of intergovernmental relations.
22
Through various
institutions such as the Ministry of Home Affairs (up until mid-1990s), local

17
Scheiner (2006).
18
These are well-known central controls: agency-delegated functions, regulations on local
organizations (hitchikisei), and regulation on local finance. CLAIR (2004); Hill and Fujita (2000).
19
Muramatsu (1997).
20
This is what is called ‘amakudari’ (descending from heaven). According to Johnson (1995: 221),
over half of Japan’s 47 governors were former bureaucrats in central ministries.
21
Akizuki (2001); OECD (2005).
22
Seong (2000), p.130-1.
9

subdivisions of central ministries, and appointed mayors and governors, the central
government effectively mobilized scarce resources to rehabilitate the national
economy after the Korean war, and controlled democratic development at the local
level. The financial and administrative activities of local government were
completely under the supervision of central ministries. Therefore, as Gregory
Henderson mentioned, postwar Korea was the most highly centralized country that
we could imagine.
23
In sum, Japan and Korea have been traditionally regarded as
highly centralized societies, because their basic structure of local governance
originating from the strong statist model of French and Prussian central-local
relations was deeply rooted in everyday local life.
However, those centralized models have been under strain, and have become
more decentralized since the economic crisis of the 1990s. Throughout much of the
late 1980s and 1990s, amidst the dual shock of domestic political-economic change
and the globalizing economy, East Asian countries, including Japan and Korea,
pursued far-reaching decentralization reforms as a cure-all strategy for economic,
political, social and international challenges. The 1990s witnessed Japan’s first
major political realignment in central-local relations which had lasted for forty years.
Since the Japan New Party led by Morihiro Hosokawa won four seats in the Diet’s
House of Councilors (upper house) election, the series of political events related to
decentralization reform have emerged. After all, the new coalition government,
headed by Hosokawa, placed decentralization reform on the top of its political
agenda, when the long dominance of Liberal Democratic Party (LDP) ended in
1993,
24
and both houses of the Diet passed unprecedented and almost identical

23
Henderson (1968), p.199.
24
Curtis (1999), p.123-4.
10

bipartisan resolutions on decentralization calling for appropriate legislation (June
1993). In September 1994, six local government associations put forward the
guidelines for the promotion of decentralization, and under the Socialist Prime
Minister Tomiichi Murayama, the Decentralization Promotion Law (DPL) was
enacted in May 1995. As a result of the cooperation among prefectural and
municipal authorities, various policy recommendations from the advisory councils,
and increase of advocates of decentralization, the Omnibus Law of Decentralization
(OLD), a comprehensive decentralization plan, was finally enacted in the Diet in
July of 1999.
25
In addition, the Koizumi administration created the Trinity Reform
Package (TRP) in June 2003 which aimed to restructure local tax, local allocation
tax grant, and national government disbursement.
26
These OLD and TRP included
the abolishment of the notorious central regulations on local autonomous decision-
making and fiscal independence.
In Korea, since the emergence of a civilian government, a decentralization
strategy surfaced as one of several governmental reform programs in the age of
economic stagnation.
27
Since the Yong Sam Kim administration (1993-1998)
launched its New Public Management (NPM) reform programs, namely the
‘Creation of a New Korea’ (sin hanguk) aimed at the transformation of the
inefficient and high-cost state-led system, decentralization became the basis of a
neo-liberal-style of governmental reform in successive governments.
28
Although the
direct election of local executives was implemented under his government, local

25
Furukawa (2002).
26
Doi (2004).
27
Authoritarian leaders (Chung-Hee Park, Doo-Hwan Chun, Tae-Woo Roh, 1961-1993) abolished
the local autonomy efforts or measures that were initiated in the 1950s, and postponed full-fledged
local democracy in the name of national security and economic development by revising the
Constitutions (Seong, 2000).
28
Kihl (2005). This will be discussed in the following chapters.
11

democracy was still under the micro-supervision of the central government.
However, the Korean economy was strained to the breaking point during its foreign
exchange crisis in the late 1990s, and the central government’s great influence over
business and localities was blamed for bringing inefficiencies in the national
economy. Hence, highly centralized authorities became a target of criticism, and
decentralization, which was understood to include de-concentration as well as
devolution in the Korean context, emerged as one of the top priorities in reform
agendas.
29
The Dae-jung Kim government (1998-2003) enacted the Law for the
Promotion of the Transfer of Central Authorities in January 1999 in order to
stimulate the transfer of central ministries’ decisional authorities to local
governments, and established Presidential committees dealing with decentralization
and governmental reform. Incumbent President Moo-hyun Roh (2003-present), with
growing pressure from both domestic and global factors for decentralization reform,
was elected as the sixteenth President of Korea by declaring “the age of locals.” In
several addresses and press conferences, he emphasized the role of localities in the
recovering economy and their responses to globalization, and suggested several
principles in pursuing decentralization.
30
With those principles, the Roh
administration established the new Presidential Committee on Government
Innovation and Decentralization (CGID) as the premiere institution for the reform
project in April of 2003. Collaborating with the Ministry of Government

29
Shi-Chul Lee (2007).
30
CNBD (2004), p.20-1. For example, his government suggested some core principles of
decentralization to resolve the ‘over-centralization’ problem in Korea: first, by delegating central
affairs to local governments to let local governments autonomously carry out local-friendly policies
(decentralization). Second, by diffusing industries and public agencies throughout the regions and
cities, allow local governments to revive local economies and establish innovative infrastructure for
sustainable development (de-concentration). Third, by dividing affairs between the central and local
governments, encourage local governments to manage their own human and fiscal resources so that
they can effectively respond to a more open world economy (division of affairs).
12
Administration and Home Affairs (MOGAHA), the CGID framed the blueprint for
comprehensive decentralization reform, namely the Decentralization Roadmap, in
July 2003 aiming at both decentralized and de-concentrated governance.
31
On
December 30 of 2003, as a result of those efforts, the Special Law on
Decentralization Promotion (SLDP) which drafted a manifesto for the pursuit of
decentralization was passed in the National Assembly. Based on this legislation
composed of three chapters and 21 articles, MOGAHA, CGID and related ministries
have been preparing the comprehensive list of central affairs to be delegated and are
designing new institutions.

Table 1.2: Highlights of Decentralization Reforms in Japan and Korea
Japan Korea
Major
Legislations
● Decentralization Promotion Law (1995)
● The Omnibus Law of Decentralization
(OLD, 1999)
● Trinity Reform Package (TRP, 2003)

● Law for the Promotion of Transfer of
Central Authorities (Jan, 1999)
● Decentralization Roadmap (2003)
● Special Law on Decentralization
Promotion (SLDP, 2003)
Target of
Reforms
1. Classification of national and local affairs
(clarify the rules of central government’s
intervention on local affairs).
2. Abolition of agency-delegated functions and
creation of new functions for local
governments.
3. Establishment of resolution council for
conflicts b/w central and local governments.
4. Transfer of central affairs.
5. Guarantee local government’s autonomous
organization and personnel authority.
6. Rationalization of national grants and local
taxations (Increase discretion)
1. Delegation of Central affairs to local
governments.
2. Delegation of the authority of public security
(police) and creation of local police.
3. Delegation of the authority of public education to
local governments (educational autonomy).
4. Abolition of Special Administrative Agencies
(SAA – local offices of central ministries).
5. Rationalization of national land local tax system
(raising the rate of local allocation tax).
6. Enhancement of authority of local councils
(strengthening the authority of local legislation).
Source: Choi and Wright (2004); Furukawa (2002); Ministry of Government Administration and Home Affairs
(MOGAHA, Korea, 2005); The Committee for the Promotion of Decentralization (1996- 2000).

Since the postwar period, there have been various kinds of attempts to
transform the stratified central-local relationship in both of these countries, yet there

31
CGID website, http://www.innovation.go.kr/eng/intro/what.htm (in English).
13

were only piecemeal changes. In this respect, although there are still a lot of
limitations as Rozman (2002) pointed out, decentralization efforts in the 1990s are
expected to bring a greatly impact local governance if the issues dealt in the above
laws were faithfully implemented.
32
As Table 1.2 summarizes, these laws for
decentralization reform are somewhat different from previous measures and
contained some radical changes, which could be a threat to the status of existing
central organizations and political stakeholders. First of all, transferring central
decision making authority and functions to localities literally means the shrinkage of
ministerial power. Indeed, as a consequence of decentralization reform that was
intertwined with the broader administrative reform programs, some of ministries
were at risk of reorganization in the late 1990s-2000s.
33
For central government, the
process of the distribution of functions between levels of governments, in fact,
includes the bargaining over the jurisdictions with local governments which were
subservient to central authorities. Through the aforementioned laws, the territorial
structure of the states was reorganized in the sense of giving more decision-making
power and control over resources, and more responsibilities and competences to the
non-central tiers of government: provinces (prefectures), municipalities, and regions.
In addition, empowered local politicians would challenge central politicians who
were connected to sectoral interests and enjoyed their powerful influence over

32
Rozman (2002).
33
There were significant reorganizations of central ministries in Korea (1998) and Japan (2001). In
Japan, since the Suzuki administration of the early 1980s along with the diminishing role of the
Japanese economy in world market, the increasing deficit of the central government’s general
account, and the growing number of influential political and economic figures, who called for a
decisive move toward the liberal market model, politicians and the government promoted or
advanced various forms of administrative reform including deregulation and decentralization (Carlile,
1998; Wright and Sakurai, 1986). In Korea, when the Dae-jung Kim administration launched a new
ministerial structure as one of the reform projects to overcome the 1997 economic crisis there was a
mass dismissal of civil servants and mergers or the abolishment of agencies, public enterprises, and
ministries (Pan S. Kim, 2000: 169).
14

policy issues. Needless to say, as will be discussed in the following chapters, there
are critical flaws in the above laws on decentralization reforms, and the delegation
of relatively important functions – such as fiscal authority – were delayed in both
countries. However, there can be no doubt that those attempts are more than
marginal adjustments without important political consequences. It seems quite clear
that the political meaning of these reforms is to move away from the former statist
tradition.
The puzzle is why Japan and Korea suddenly decided to decentralize central
authorities and fiscal resources to subnational governments. What makes central
politicians and bureaucrats whose resistance was the main hindrance of past reforms
agrees – partially agree or compromise – to decentralization reform agendas. In the
past, the gradual devolution and transfer of functions to local governments without
significant fiscal reform went from bad to worse, and the relationship between the
central and local governments fluctuated in this period.
34
Even with the most recent
reforms, some Korean politicians proposed the abolition of local elections and a
return to central appointment of mayors and governors by pointing out the
superiority of a centralized system.
35
Therefore, in the historical context of Japanese
and Korean decentralization reforms, the emergence of the voices of
decentralization from the national politicians who have been considered major
obstacles to foster the reform in Japan and Korea was a surprising phenomenon.

34
See Abe and Shindo (2002); Jang-kwon Kim (2000). For example, Abe and Shindo (2002)
pointed out that the backwardness of intergovernmental relations in Japan during the1980s stemmed
from the curtailment of allocation grants from the central government. Because of the budget deficit
in the 1970-80s, the central government reduced the grants by making an excuse of diminishing local
dependency on central funding in the age of localities. They called this phenomenon, “new
centralization.”
35
Joong-Ang Daily, December 17
th
, 2000.
15

To summarize, the formation of contemporary IGR through decentralization
reform across countries varies in that some countries far surpass others in the degree
of decentralization and in their causes for passing such reforms. On the one hand,
for most of the postwar period there have been less developed central-local relations
in Japan and Korea than in other countries with comparable wealth and international
economic integration, and even today the relations appear to be still limited in many
respects. At the same time, on the other hand, there has been tremendous
development in decentralization since the 1990s with new types of socio-economic
and political environments. Considering the puzzle suggested above, understanding
the causes that have fostered a series of decentralization reform programs in
formerly statist countries like Japan and Korea in comparative perspective is the foci
of this dissertation. By investigating the political process of decentralization, I focus
on the historical and political-economic contextual elements that promoted the
emergence of a decentralization agenda in the 1990s-2000s. I closely examine the
activities and motivations of political stakeholders, such as top political party
leaders, politicians, bureaucrats in central ministries, local politicians, mayors,
business interests, and civic organizations.
36
In doing so, I also pay attention to the
factors that brought about a more advanced level of decentralization in Japan than
that in Korea. To understand and classify the broad category of the causes of
decentralization in Japan and Korea as well as around the world, investigations of
the historical and institutional contexts and the immediate causes of these changes to
intergovernmental relations are necessary.
37

36
These actors were discussed as main political actors in several studies on decentralization reform.
See Abe and Shinoda (2002); Cutis (1999); Jang-kwon Kim (2000); Nishio (1999); Sakakibara
(2003); Seong (2000).
37
Gerber and Kollman emphasize to uncover the immediate cause (mechanism) and the more
fundamental one (sources) in understanding varying patterns of decentralization. Gerber and
16

1.2. EXPLANATIONS ON VARIETIES OF DECENTRALIZATION

Despite the profusion in recent years of scholarly interest in decentralization
around world, there has been little systematic work done on the factors and
processes that produce the variety of decentralization. In general, most of the
explanations in the political science literature have followed the logic of arguments
embedded in modernization, democratization, and globalization theory, which have
emphasized socio-economic factors or democratic politics as the primary forces
driving the promotion of decentralization. This section briefly reviews these and
other theories and assesses their ability to explain the puzzle described above.

Modernization, Democratization and Globalization: Modernization Theory
The underlying rationale in much of the literature concerning the variation of
decentralization has a tendency to emphasize the importance of the level of socio-
economic development as well as that of democratic governance. First, one group of
scholars argues that modernization factors such as the growth of local governments
in size, scale of economy, population, and expenditure strengthen the tendency to
decentralize over time.
38
For example, France, at the end of the Second World War,
had a major internal migration from agricultural areas to urban centers and towns,
yet those urban areas still retained the political-administrative system of the 19
th

century. In order to manage these changed socio-economic factors, it was clearly
necessary to rationalize this old system, and as a result of several attempts,

Kollman (2004), p.398.
38
For example, Bahl and Nath (1986); Gould and Zarkish (1986); Sharpe (1988); Stein (1999).
17

decentralization reform was carried out in the early 1980s.
39
Similarly, by providing
a logical explanation of the growth of local expenditure level vis-à-vis central one in
provision of public service delivery, modernization theorists argue that most
industrialized western societies experienced the rapid growth of sub-national levels
of government.
40
Indeed, on average, developing countries in general are not as
decentralized as their more advanced western counterparts.
41
Among the various
modernization factors, the rate of urbanization is considered to be one of the most
important elements that foster decentralization. Higher urbanization rates in
countries help explain the trend of decentralization. As population density in urban
regions increases, more government services are required. Yet, because the growth
of urban areas has increased the costs of the centralized provision of public services,
urbanization has led to a much faster pace of shifting central government functions
to local governments, which greatly strengthened municipal governments in much
of industrialized world.
42
In sum, the core argument of this functionalistic
perspective on decentralization is that the level of decentralization around the world
is highly dependent upon the level of socio-economic development in a country
Second, one of the most popular arguments regarding the causes of
decentralization is that democratization – or democratic consolidation – promotes
decentralization by opening up pressures from below for decentralization and
creating new political arena in localities.
43
That is to say, democratization theory
gained momentum or popularity through the idea that people should make decisions

39
Loughlin and Seiler (2001), Ch.8.
40
Bahl and Nath, ibid ;Gould and Zarkish, ibid.
41
According to Stein (1999: 117), the average of subnational shares of total government
expenditures in advanced countries is more than twice the size of that of countries in Latin America.
42
Diamond (1999), p.12; Sharpe (1988), p.378-9.
43
Diamond (1999); Turner (1999).
18

that affect their lives because policies handed down from the central government can
seldom meet specific localized environments, such as the condition of local markets,
businesses, urban political-economic structures, etc. In addition, as democratization
progressed, empowered local political actors with more vested responsibilities for
public policies can take initiative in reshaping the substance of policies at higher
levels of governments.
44

Third, some authors who emphasize the influence of globalization on several
different kinds of economic, financial, political, cultural, and social processes argue
that globalization affects the development of the subnational levels of government
and administration. First, as Sellers summarizes, globalization ignites the emergence
of a new pattern of political-economic development at the regional and local levels.
The linkage of the global and local levels in the age of a globalizing economy
promotes the development of some key regions that become the loci of
technological and industrial advancement.
45
Second, in the 1990s, many influential
reports and analyses that highlighted the benefits of decentralization reform were
published by numerous international organizations such as the OECD, the World
Bank, etc., and through these publications, the powerful idea of decentralization was
supposed to propel reform programs around the world.
46
In addition, international
movements in favor of decentralization are imperative elements that lead to
universal convergence on public sector reform programs including decentralization.
These reports and movements influenced by neo-liberalism or the New Public

44
Sellers (2002), p.94-5.
45
ibid. Loughlin (2001: 23-4) is somewhat negative to this opinion. He argues that globalization
makes central government cut down several regional aid programs that would help local governments
to deal with political-economic transformations in the age of global economy, and increases social
fragmentation that produce extra burdens on local governments.
46
For example, OECD (2001); World Bank (1999, 2005).
19

Management movement require each country to make lower levels of government
more responsible for activities in their territories under the banner of efficient
decision making and increased participation.
47
In this perspective, almost all
developing countries, as well as advanced ones influenced by international (or
exogenous) forces, are now implementing decentralization as one of their public
sector reform strategies.
48

Based on these assumptions, one would expect most of the rich countries in
North America and Western Europe to have relatively developed central-local
relations – i.e., more decentralized intergovernmental relationships. In other words,
if those modernization, democratization, and globalization arguments are correct,
the promotion of decentralization should be flourishing in democratic nations with
the sufficient economic and social ingredients that promote the formation of
decentralized central-local relationships: economic prosperity, high-levels of
urbanization rates and population density, well-developed and consolidated
democratic governance, and internationalization.
Such factors, however, do not seem to go far in explaining patterns of
decentralization reform in Japan and Korea in the 1990-2000s. Defying
modernization’s predictions, fairly wealthy countries like Japan and Korea, as well
as France, are ‘decentralization laggards.’ If one considers the Japanese case in
terms of the country’s scale of economy and trade, level of education and living
standards, for example, Japan stands out as an odd case. Japan already reached the
second largest economy in the world in 1970s, has the highest urbanization rates,
and is a leading country in many areas. The levels of education, as Ezra Vogel

47
The World Bank (1997).
48
Turner (1999), p.2-3.
20
te
formation
s

rtain
ts,
g
d
l

(1979) pointed out, have been very high for decades.
49
Korea, despite somewhat la
in industrialization and urbanization compared to western democracies, is one of the
fast-growing countries in the world, and is still experiencing a great trans
in many socio-economic structures.
50
In particular, as a result of rapid
industrialization and growth policy, the urbanization rates in Korea grew rapidly in
comparison with other countries, and were even higher than Japan and other
industrialized countries.
51
In spite of the experience of democratic governance and
democratic transition in both countries, the balkanization of various social force
such as civic organizations and local governments in the policy making process was
somewhat late.
52
From the late 1960s to the early 1970s, Japan witnessed the
proliferation of progressive movements in localities that took initiatives in ce
policy areas such as environmental pollution, and a group of scholars insists that
localities played a leading role in these policy areas.
53
In Korea, a vibrant
democratization movement from below developed into strong advocacy movemen
and those civic movements gradually play an important role in the policy makin
process.
54
By gaining memberships in various international organizations an
institutions, as two of the most technologically advanced countries, Japan and Korea
are now globally well-networked, and likely to participate in the trend of neolibera
reform programs.
Based on modernization theory’s predictions, both countries should by now
be one of the most decentralized countries in the world, and one would expect that

49
Vogel (1979).
50
Amsden (1989); World Bank (1993).
51
Bae and Sellers (2007); The World Bank (2004), World Development Indicator.
52
Jang-kwon Kim (2000); Park, ibid; Reimann (2003).
53
Jain (2005); Kitayama (2001); Smith (2000).
54
Bae and Sellers (2007), ibid; Sunhyuk Kim, ibid.
21

even if Japan and Korea lagged behind other countries in the earlier period in terms
of the level of decentralization, they should have caught up and become leading
countries. That is to say, if that theory were correct, those factors should have
resulted in the gradual development of decentralization in both countries. However,
despite the growth of modernization factors, decentralization reforms in the1990-
2000s were passed because of economic pressures and crisis, as mentioned before.
Moreover, unlike the theory’s prediction, some indicators show that Korea is faster
than Japan in adopting certain decentralization policies, though Japan in general has
more advanced central-local relations.
55
Therefore, there is a limitation in applying
the theory to explain why both countries’ decentralization reform programs occurred
in the late 1990s and the early 2000s and not earlier. While the theory maybe correct
in predicting the rise of decentralized governance in general and there are some
countries where modernization factors roughly correlated with the promotion of
decentralization, there is no systemic relationship between modernization factors
and the timing of the sudden emergence of decentralization legislation in Japan and
Korea, as well as in many other parts of the world in the late of 20
th
century.

An Ideational Approach: Two-level Explanation
In contrast to theories of modernization, democratization, and globalization,
the explanation for the sudden emergence of decentralization reforms offered in this
dissertation focuses squarely on the role of ideas associated with such domestic and
global political-economic changes. Instead of the modernization theory that

55
For example, the Japanese national information disclosure law (Gyoseikikan no hoyu suru joho no
kokai ni kansuru horitsu) came into effect in April 2001.However, in Korea, the law which was
initiated by a city council in 1991 was enacted in 1996. Information disclosure is a necessary
condition for letting residents freely access administrative and fiscal information of local
governments, and thus allow residents to participate in and monitor their local.administrations.
22

emphasizes the decisive role of socio-economic factors, my account focuses on how
political-economic stakeholders negotiate with each other under the rapidly
changing domestic and global political-economic circumstance in shaping a new
formation of the central-local relationship. In doing so, my explanation goes beyond
domestic political structures and institutions by highlighting the flow of
internationally accepted ideas through domestic political actors and agencies.
Therefore, paying attention to the flow of idea, my explanation for the
sudden emergence of decentralization reform in Japan and Korea is divided into two
parts. The first part consists of the domestic level explanation, which focuses on
domestic political-economic changes such as the dwindling status of centralized
power under economic depression, the increasing distrust in government, and the
rise of civil society and local governments. Domestic political-economic context
remain an important element throughout this dissertation as a location where the
political and institutional change occur. The second part explanation is based on
international factors such as the globalizing economy and the flow of internationally
accepted ideas. Under the global economy, national political elites consider the
promotion of decentralization as a strategic choice to secure national
competitiveness as well as their privileged positions.
First, it is necessary to fully understand the type and structure of the
domestic arrangement as well as the effects of modernization in explaining the
causes of varying degrees of central-local relationship, because the different aspects
of decentralization reforms are highly dependent upon them.
56
First of all, economic
stagnation and crisis in the 1980-1990s is not the only factor that brought about the
wave of decentralization reform in both countries, yet it encouraged countries to

56
Falleti (2005).
23

reconsider the inefficient ‘centralized development model’ that resulted in great
economic success for them during their industrialization periods.
57
In addition, as a
result of the mismanagement of economic problems that softened up the traditional
‘central power’ – i.e., bureaucrats in central ministries and sectoral politicians, along
with several corruption scandals, distrust in central governments increased
significantly. While those central stakeholders’ resistance thwarted decentralization
reforms from their original intention, those domestic political arrangements also
encouraged favorable circumstances for the promotion of decentralization.
Second, my ideational model incorporates “elements of international forces”
that are both strategic and transformative in nature, and involve complex
interactions between the state and social actors in the domestic political arena.
Those elements have helped spur on the formation of decentralization in two ways.
On the one hand, under the pressure of the international economy, national political
leaders would be liable to devolve centralized authorities to subnational units
strategically in order to avoid blame for economic downturns by sharing
responsibilities with local governments.
58
Simultaneously, lasting economic
difficulty in the new global economy would be a threat to the status of national
leaders who were in control of the decision making process during the period of
industrialization.
59

On the other hand, internationally accepted common ideas can provide more
immediate and practical policy references and direction to policy makers. This was

57
E.g., France (Gourevitch, 1980); Southern Italy (Putnam, 1993). Some theorists positively see the
relationship between economic growth and decentralization. Dillinger (1994); Anderson, Gibson and
Lehoucq (2004).
58
Kahler and Lake (2004); Pickvance and Preteceille (1991).
59
Giddens (2000); Sassen (1996).
24

the case of western democracies such as France, Britain, and the United States. Ideas
like Keynesianism and neoliberalism might provide a visible direction to resolve
policy problems stemming from malfunctioning economy and domestic political
change. In particular, the global wave of neoliberalism was one of the most
important sources of restructuring the central-local relationship in many European
countries as well as the United States.
60
Many reports and campaigns initiated by
influential international organizations such as the OECD and the World Bank affect
policy makers’ decisions related to restructuring their territorial organizations. In the
process, they give reformists or decentralists – what I call ‘idea bearers’ in this
dissertation – responsible positions to materialize the idea through somewhat
independent institutions.
61
This argument does not necessarily mean that both
countries faithfully follow the logic of neoliberalism, as Vogel pointed out, yet the
idea frames the issue of national reform agendas and also contributes to the
formation of specific programs and policies for policy makers.
62
To summarize, my
claim on the puzzle is that the flow of ideas for decentralization (neo-liberalism)
pushes various political actors to reassess the balance between the costs and benefits
of the status quo under the changing domestic and global environments. This means
that when the globalization and fiscal crisis are enough to impose changes in
Japanese and Korean central-local relations, the existing political gridlock shapes
the substance of the reform in a way that still allows them to maintain their power,
though they have to shed part of their interests in the process. Using the ideational
framework, I emphasize the role of ideas in shaping new relationships between
central and local governments, and argue that the immediate cause of these two

60
Pickvance and Preceille, ibid, p.197; Wolman and Goldsmith (1990).
61
Hall (1986); Weir (1989).
62
Vogel (2005). Also see Kihl (2005) for Korean case.
25
countries’ limited decentralization lies in the central actors’ interests in balancing
national competitiveness and their own leverage over local governments.
An ideational framework has been used by political economists in explaining
varying results of accepting new economic ideas and policies such as neo-liberalism
or Keynesian ideas. I apply the framework to the politics of decentralization reform
to explain varying degrees and scopes of decentralization. In particular, a growing
number of decentralists in political, economic, and social arenas, whose ideological
orientation is in making a decentralized governance system for the continuation of
national prosperity, are critical to achieving a certain level of decentralization in
Japan and Korea.

Alternative Explanation
Before ending this section, it is necessary to consider at least other
approaches as alternative explanations to the causes of decentralization across
countries including Japan and Korea. Even if changes in domestic political-
economic circumstance and power relationships, and the flow of ideas from the
international level are the major factors for explaining the various patterns of
decentralization in Japan and Korea in the 1990-2000s, it might be possible that
other processes resulted in those changes to intergovernmental relationships.
Theories of negotiation and party politics provide two possible alternative
explanations for policy change that deserve attention.
In contrast to the ideational approach used in my dissertation that emphasizes
the role of idea instead of interest, the theory of negotiation argument sees the
relationship between the central and local governments as a bargaining game in
26

which one side gains, while the other side loses.
63
Falleti (2005), who designs the
sequential theory of decentralization, argues that there are different sets of territorial
interests of national and local politicians – including presidents, governors, mayors,
etc. – and those different territorial interests and preferences among them produce
various sequence of political, fiscal, and administrative decentralization.
64
By
insisting that certain types of decentralization reform – in particular, administrative
transfer without fiscal authority – can decrease the power of local governments, she
argues that the consequences of the decentralization reform is largely dependent
upon the power relationship between politicians who represent each level of
government.
65
For example, if subnational governments’ interests over territorial
reorganization prevail, political and fiscal decentralization are likely to occur in the
first place, and those reforms strengthen the local governments’ negotiation power
over follow-up administrative transfers. On the contrary, if the national preference is
dominant, the transfer of administrative responsibility without fiscal support would
be preceded and it would strengthen the dominance of central government over
subnational units. Therefore, according to her logic, the sequence of decentralization
reform from political and fiscal to administrative one would bring about the greatest
change in central-local relationship.
66
It is hard to deny that there were bargaining
processes between national and subnational units in both Japan and Korea, and
inputs from below made a huge impact on the materialization of the substance of
decentralization reform. However, in the case of Japanese and Korean
decentralization, the theory cannot account for why ‘political decentralization,’ not

63
Rhodes (1986).
64
Falleti (2005), p.330-344.
65
ibid.
66
According to her, the Columbian case shows a significant improvement of local autonomy,
because political and fiscal decentralization preceded administrative decentralization. ibid.
27
d

fiscal one, was accomplished in the first place in both countries,
67
why Japanese an
Korean local governments have carried out ‘centrally-delegated’ administrative
functions under the elected local government system, and why the process of
decentralization in the late 20
th
century has been led mainly by central actors such as
ministerial bureaucrats, instead of local actors. Indeed, most of the issues regarding
decentralization were initiated and led by national politicians, except during the
initial stage of the reform.
68
More importantly, the theory does not provide an
explanation about why the issue of decentralization emerges as a political agenda in
the age of economic crisis and a globalizing economy.
The other explanation emphasizes politics instead of socio-economic factors,
by highlighting the role of electoral politics and political parties in the process of
decentralization. One explanation from this vein is that political parties which have
a substantive amount of resources and responsibility to support local regions, but
expect a decline in their ruling status in national politics under a highly centralized
system, have a tendency to push for central authority in bargaining over further
decentralization reform.
69
In particular, those political parties believe that they can
push central politicians and bureaucrats by dominating local governments and
societies through gubernational and local elections.
70
The other set of this political
explanation can be shown through the French example where there was a sharp
ideological division among French political parties that would either promote or

67
Political decentralization (local elections) were first introduced in the Constitution of 1947
(Japan) and 1952 (Korea). In Korea, local elections were abolished during the authoritarian regime
(1961-1987), yet were restored in 1991 and 1994 (Local Autonomy Act). Steiner (1965); Moon
(1999).
68
Furukawa (2002); Interview, Sung-sig Yoon (the former chairman of the Presidential Committee
on Government Innovation and Decentralization), October 19
th
, 2005.
69
Garman, Haggard, and Willis (2001); O’Neill (2003).
70
See Latin American cases done by O’Neill, ibid.
28

prohibit the shift of the Paris (central)-periphery (local) relationship.
71
Scholars in
this political dimension do not deny the influence of structural arrangements such as
socio-economic conditions, yet they emphasize that ‘politics’ matter in choosing a
new strategy to survive.
72
Regardless of the importance of domestic party politics in
explaining decentralization across countries, however, the theory of political parties
and election has a limitation. Although political parties – in particular, opposition
parties – in Japan and Korea have advocated decentralization reform, politicians in
general, with occasional exception were not supportive of decentralization
movements.
73
When the laws for decentralization were passed in the late 1990-
2000s, the long-dominant Japanese Liberal Democratic Party (LDP), which had
enjoyed highly centralized decisional authority with its bureaucratic counterparts in
central ministries, came back to power as the partner of a coalition government, and
political party leaders in Korea, in general, were less interested in decentralization
reform.
74
Instead, the process of reform was mainly led by bureaucratic
organizations and special committees.
As my dissertation will show, the ideational approach intertwined with
domestic political-economic and globalizing conditions provides a better
explanation for the promotion of decentralization by national leaders in Japan and
Korea. The neoliberal idea – again, whether it is faithfully implemented or not –
shapes the transformation of central-local relations by setting the terms and
conditions of when change is appropriate and providing the most likely policy

71
Gourevitch (1980).
72
O’Neill, ibid; Levy (1999).
73
Decentralization may empower local politicians who can be potential competitors to their
counterparts at the national level and may reduce the influence of national politicians on their
constituency. As many studies shows, one of the goals of election reform in Japan was to divide the
labor between national and local politicians by empowering local politicians. See Nishio (1999).
74
Interview, a senior bureaucrat in the MOGAHA (Korea), October 12
th
, 2005.
29

options for policy makers.
75
I do not argue that the idea is ‘the ace’ in explaining the
change, yet instead want to show how ideas interact with other factors – such as the
domestic political-economic arrangement and globalization – in specific ways to
cause varying degrees of decentralization in Japan and Korea.

1.3. RESEARCH STRATRATEGY AND ROADMAP OF THE STUDY

The rest of my dissertation explores a more empirically based presentation of
my ideational model of decentralization. In my dissertation, process tracing, which
is based on several stream of evidence, is primarily used to uncover the hidden
causal mechanism of certain decisions or policies.
76
The advantage of the process
tracing method is to link each stage of policy process and enable the researchers to
identify the reasons for how a particular policy or decision was made.
77
To test the
relevance of my explanation for the cases of decentralization reform in Japan and
Korea, process tracing requires a thick narrative description of the policy making
process. In addition, because I argue the degree and content of decentralization
reform is highly dependent upon the pattern of domestic political-economic change
and as well as its interaction with globalizing factors, it is necessary to investigate
how countries showing equivalent processes of decentralization produce different
(or similar) outcomes. To test the importance of ideas and domestic policy
circumstances as sources of changing intergovernmental relationships in Japan and
Korea, I look for evidence in governmental documents (ministerial reports,

75
Campbell (2004); Legro (2005).
76
Bannett and George (1997); George and McKeown (1985); Brady and Collier (2004); King,
Keohane and Verba (1994).
77
George and McKeown, ibid, p.226-7; Berman (2001).
30

yearbooks, whitepapers, etc.), international organizations’ reports and publications
(OECD and World Bank), political leaders’ discourses, media coverage, and
interviews with stakeholders.
78

This dissertation mainly deals with the Korean case while using Japan as a
reference point on the basis of Mill’s comparative design of most similar system
(method of difference) to explore the factors that led to the less developed
decentralization in Korea than Japan.
79
Japan is a good site in which to ground this
study, and Korea provides a fitting contrast to allow variation in cases.
Even though the idea plays a crucial role in policy change, as will be
discussed throughout the dissertation, the domestic political opportunity structure
such as socio-economic changes, the power relationship between stakeholders and
political struggles mediate the pure effect of the idea.
80
Therefore, it is necessary to
identify core political actors involved in the process of decentralization. In the study
of decentralization, many scholars often characterize their arguments as either a top-
down or bottom-up approach. Because the national policy makers, at least in Japan
and Korea, play an important role in the formation of decentralization reform in the
1990-2000s, this dissertation naturally pays attention to the political actors at the
center: top political leaders (president, prime minister), bureaucrats in ministries,
politicians in national assemblies, and reformists in governmental agencies. Yet,
from a cross-national perspective, I believe, neither top-down nor bottom-up
approaches alone work better. Instead, it is the interaction between national and
subnational political actors that is critical to understanding incentives for

78
For the Japanese case, I mainly use governmental reports and statistics, policy participants’
testimony that were published, newspapers, OECD surveys, and other secondary resources.
79
Lijphart (1971).
80
See Chapter 2. Campbell (2004).
31

decentralization. Indeed, pressures from below – i.e., local executives (governor and
mayor), associations of local governments, local politicians, civic organizations, and
businesses – are gradually perceived as important sources of authority migration in
many cases.
81
Therefore this research also draws from case analyses of the role of
localities in the politics of decentralization.
The dissertation is divided into six chapters. Chapter Two presents the
theoretical framework of the research. It examines the core components of ideational
approach to decentralization in both countries and analyzes how domestic political-
economic arrangements and an internationally accepted idea lead to decentralization.
Although the focus of the chapter is primarily on Japan and Korea, comparative
examples from other countries such as France are included.
Chapter Three explores the overall process of decentralization reform in
Japan and Korea by paying attention to what have been changed through the reform
programs. As I mentioned earlier, despite their limited nature, the legislation for
decentralization in both countries contains the abolition of various regulatory tools
that have enabled central government to control local units. At the same time, those
laws reflect the influence of pre-existing political economic arrangement of the
countries. Therefore, in this chapter, I analyze the flashpoints of the reform item by
item before I move my analysis to the political struggle over those legal changes.
The other part of the dissertation presents very detailed case studies of the
politics of decentralization in comparative perspective. Chapter Four focuses on the
political process at the central political arena by exploring how reformist political
leaders push forth the decentralization agenda under the rapidly changing
environment, and how preexisting political power – i.e., bureaucrats in central

81
Gerber and Kollman (2004); Hooghe and Marks (2004); Sellers (2002).
32
ministries and sectoral politicians – responded to the reform efforts. This chapter is
important for understanding how the initially ambitious proposals suggested by the
reformists were diluted or undermined during the political struggle.
Chapter Five, in contrast to the previous chapter, investigates the gradually
increasing political activism for decentralization from below. This chapter accounts
for the role of specialized committees, which were devoted to the promotion of
decentralization and play an important role as agents of the diffusion of the idea of
decentralization. This organization, filled with decentralists, contributed to diffusing
the idea and balancing the conflicting perspectives between the central and
subnational governments. I also examined the inputs from local government
associations, local politicians, and business interests, which have been involved in
the political process of decentralization.
The final chapter is comprised of a conclusion that draws together the
findings of the dissertation and examines their implications for the study of the
politics of decentralization and comparative politics.
CHAPTER 2
THE ORIGIN OF V ARIETIES OF DECENTRALIZATION:
AN IDEATIONAL FRAMEWORK

2.1. OVERVIEW: AN IDEATIONAL FRAMEWORK

Despite the rapid rise in number over the past decades, decentralization
reforms in the world have nonetheless emerged and grown to different degrees and
levels across space and time. As briefly seen in the previous chapter, there have been
a few attempts to provide a comprehensive theoretical framework to grab those
varieties, and domestic models that elaborate the role of electoral strategy or
democratization in bringing institutional changes to central-local relations. However,
they are not sufficient for understanding the specific formations of decentralization
reform across countries, though it is also true that institutional arrangement or the
political-economic conditions in a country have not been indifferent to the process
and outcome of it.
1
Instead, a group of scholars argues that the sources of varieties
of decentralization include factors at the international, national, and sub-national
levels.
2

The current decentralization drives in Japan and Korea resemble the wave of
decentralization around the world in many respects, yet there are somewhat
distinctive features as well. For example, the initiatives in pursuing the reform
programs are still at the center, which has dominated the process of decision making
in the era of economic development and continue to this day, although there have
been growing inputs and voices from local societies. Indeed, the emergence of the

1
Jun and Wright (1996), p.7.
2
Gerber and Kollman (2004); White and Smoke (2005).
33
issue of decentralization reform in both fifty-years-long central dominances in the
1990-2000s is noteworthy. To investigate the causes that produced the different and
similar patterns of decentralization in Japan and Korea, I build upon an ‘ideational
approach.’ I focus on the political process of decentralization along with the
principal pathways to trace the different outcomes of the respective decentralization
reforms. This chapter pays attention to the link between the domestic political-
economic context and the globalizing economy, which engendered the promotion of
decentralization. Doing so, I examined how the idea forges a new decentralized
system within the nexus between the two factors mentioned above.
Scholars in the field of political science have focused on how the ‘self-
interest’ of actors affects politics and public policies, and behavioralists,
institutionalists, and rational choice theorists are interested in the effect of self-
interest on public policies. Yet, recently, a group of scholars have become interested
in how policymakers driven by ideas rather than self-interest determine policy
outcomes.
3
According to them, various forms of ideas – e.g., paradigm, world view,
international norms, programs, etc. – affect policy making by providing alternatives,
strategic guidance or legitimacy to policymakers, and provide a discursive
background for policy debates.
4

3
Even some rational choice theorists admit that ideas matter for the public policymaking process
(Levi, 1997; North, 1990; Ostrom, 1990). A few students have been interested in the role of ideas in
public policy, since Peter Hall’s classic work of Keynesianism. See Mark Blyth, Great
Transformations (Princeton Press, 2002); John L. Campbell, Globalization and Institutional Change
(Princeton Press, 2004); Judith Goldstein and Robert Keohane (eds.), Ideas and Foreign Policy
(Cornell Press, 1993); Peter Haas, “Introduction: Epistemic Communities and International Policy
Coordination,” in International Organization (46:1, 1992); Peter Hall, Governing the Economy
(Cambridge Press, 1986); Peter Hall (eds.), The Political Power of Economic Ideas (Princeton Press,
1989); Kathryn Sikkink, Ideas and Institutions (Cornell Press, 1991); Albert S. Yee, “The Causal
Effects of Ideas on Policies,” in International Organization (50:1, 1996).
4
The ideational perspective draws attention to a wide range of concepts, including world views,
cultures, norms, models, beliefs, etc. Powell and DiMaggio (1991); Sikkink, ibid; Wildavsky (1987).
34
However, as John Campbell (2004) and Albert Yee (1996) point out, it is
necessary to pay attention to the casual mechanism that links the idea to the public
policymaking process.
5
In particular, there has been much less attention to the
conditions under which the effect of ideas is more or less likely to be effective,
because countries affected by ideas have different policy outcomes or different
degrees of institutional change.
6
Campbell states that, “Even when a crisis is
perceived and the possibility opens up for new ideas to affect decision making, there
are not guarantees that new programs will take hold and yield institutional change.
Certainly, all sorts of interest-based struggles and institutional constraints are
involved that mediate the odds of this happening.”
7
As he mentions, although the
effect of a new idea like neoliberalism in each country cannot be read simply from
the political struggle of specific interests, domestic institutional conditions including
the political-economic environment mediate the pure effect of the idea.
8
In case of
Japanese regulatory reform, for example, the U.S. experience of deregulation reform
provides an important motivation for Japanese reform, yet the political struggle of
domestic interest groups often interpreted the case of U.S. reform in a favorable way
to defend their interests.
9
The context shapes the adoption, use, and rejection of a
new idea, or vice versa. Therefore, as illustrated in Figure 2.1, closer scrutiny of
domestic as well as global dynamics needs to be considered. A ‘good’ idea has not

5
Campbell (2002, 2004); Yee (1996).
6
Campbell (2004), p.114-9.
7
ibid, p.117.
8
According to Weir (1989: 84-5), for example, the status of the Council of Economic Advisors in
the United States before 1960s was somewhat disadvantaged, yet under the Kennedy government the
staff of the Council who were leading liberal Keynesians enjoyed a more secured status in carrying
out their policies. Like this example, changes in the domestic institutional context mediate the effect
of a new idea in policymaking. Gourevitch (1989) dealt with the relationship between politics
(power) and the idea of Keynesianism.
9
Vogel (1996), p.38.
35
always been accepted, nor had a huge impact on policy formulation because there is
a ‘power relationship’ beyond the causal linkage between the idea and policy.
10

Figure 2.1: An Ideational Framework

Ideas
Beliefs
Globalizing
Economy
Shape domestic
Policy discourse
Weakened
traditional
political actors
Bureaucrats
Sectoral
interests
Emergence of
Reformists in
Governmental
orgs. &
agencies
(Idea Bearers)
Reform Drive
(Decentralization)
Decentralization
(Varying degree)
Business preference
Social actors
(Civic/ Localities)
Shape preferences
Educate Reformists
Provide action
plan/ options
Persuade, Negotiation
Domestic

First, the global context may affect the politics of decentralization through
domestic institutions and agents in materialistic and ideological ways. First a rapidly
changing global economy requires an appropriate level of domestic policy to
respond to it, and the response contains corporate, political, economic, and
administrative reforms, which are generally called ‘structural reform.’ A globalizing
economy provides a discursive background for the domestic discussion of structural
reform by framing various social issues. Second, norms, ideas, and beliefs affect the

10
Gourevitch (1989), p.87.
36
domestic decision making process by placing idea bearers in critical positions of
governmental organizations, and by shaping the options for domestic actors.
11

Second, policymakers facing serious economic difficulty and domestic
political change struggle to search possible options and directions for resolving
those policy problems. In particular, bureaucrats in central ministries and sectoral
interests who have enjoyed their heyday in the period of development cannot exert
an omnipotent power and have to reassess their interests under the era of
globalization. The flow of ideas such as neoliberalism or national competitiveness
might provide a visible direction or strategic guidance to them under great
uncertainty.
12
Although a group of scholars argues that self-interest has little impact
on policy outcomes, interaction between an idea and self-interest influences the
formulation of policy.
13

Third, as historical institutionalists emphasize, how new ideas like
neoliberalism as a paradigm, public sentiment, or a program for solving policy
problems is accepted in the policy process depends on whether actors with particular
ideas or beliefs come to occupy critical positions in governmental organizations.
14

In Japan and Korea, reformists – who were influenced by neoliberalism or had
specific reform plans such as decentralization – were placed at important positions
such as special reform councils, chiefs in administrative agencies and ministries and
political party leaders, and they contributed to putting forth decentralization agendas.

11
Given an institutional disequilibrium or uncertainty such as economic crisis, ideas allow agents to
reduce uncertainty by interpreting the nature of the crisis. Blyth (2002).
12
Goldstein (1993), p.3.
13
For example, according to Dobbin (1994), national principles that prescribe the desirable
relationship between the state and economy – rather than self-interests of policy makers – were
critical in determining railroad policy. However, his research neglected the possibility that decision
makers intentionally (or unintentionally) committed to those principles to conceal their hidden
motivation or interests. See Campbell (2002).
14
Hall (1997: 184).
37
Finally, input from below is also very crucial for promoting a reform agenda.
Even if a reform program was perceived as an effective solution, it may not be
carried out successfully if it lacks political legitimacy.
15
Decision makers discern
public opinion or voices from the society-level through various channels such as
public opinion polls, feedback from constituents, hearings, or policy suggestions. In
the case of decentralization, there is a clear division of interests between central and
local governments, and thus local governments (local government associations) and
civil society, as well as business groups, attempt to negotiate or persuade the
decision makers.
In this chapter, I have tried to show how political actors under the global and
domestic environment bring changes in central-local relations with special attention
to the role of idea. My ideational framework is designed to provide a holistic
approach to the politics of decentralization in Japan and Korea. The case analyses in
the next chapters will identify the distinctive worldviews of a crucial set of key
actors in the political process of decentralization under the great uncertainty of
economic recession, and trace the way in which those actors reassess their status
quo and translate their idea into decentralization reform. Until recently, political
leaders and institutions in Japan and Korea posed more obstacles than incentives for
the promotion of local democracy. In the 1990s and 2000s, however, there have been
changes in both the global and domestic political environments of both countries.
Under economic pressure or crisis, on the one hand, it was relatively easy to put
forth the decentralization agenda by minimizing political opposition from political

15
Campbell (2004: 96) states that, “public sentiments are normative background assumptions that
constrain decision making and institutional change by limiting the range of programs that decision-
making elites are likely to perceive as acceptable and legitimate both to their constituents and
themselves. Public opinion, values, norms, identities, and other “collectively shared expectations are
what I have in mind here.”
38
gridlock or sectoral interests. On the other hand, domestic regional inequality,
bureaucrats’ misconduct and growth of society contributed to making the
decentralization agenda one of the top priorities of government. In doing so,
traditional political economic elites and reformists armed with this new idea
negotiated the degree and level of institutional change by balancing their self-
interests and policy goal of improving national competitiveness through reforms.
This chapter examines two factors: a) the domestic political-economic
context that engendered decentralization reforms, and b) globalization (global
economy) and its impact on domestic institutional arrangements by paying attention
to the role of idea in the politics of decentralization.

2.2. ENGENDERING DECENTRALIZATION: THE DOMESTIC
POLITICAL-ECONOMIC CONTEXT MATTERS

The domestic political-economic context matters and in various ways it has
posed some of the largest barriers or promoters to constructing a decentralized state
structure in many countries. To fully comprehend how the context operates, a
comparative view is necessary. Because the components of decentralization reforms
and their interactions with the broader political-economic context are highly
determined by the type and structure of the state, comparing decentralization
programs within similar types of states is indispensable to fully understand the
decentralization process across countries.
16
As Table 2.1 shows, Japan and Korea,
despite differences in economic advancement and constitutional structure, – i.e.
presidential versus parliamentary system – experienced highly stratified central-
local relations in the postwar period, and they have attempted to change the

16
Falleti (2005), p.329.
39
intergovernmental relationship in very similar periods of 1990s.
17
The development
of their central-local relations, to some extent, resembles or differs from western
democracies and federal states, and also has an implication for newly industrializing
and democratizing countries.

Table 2.1: Structure of Local Governance in Japan and Korea
Structure of Local Governance Japan Korea
Type of Regime Democratic & Unitary State Democratic & Unitary State
Levels of Local Governments Two-tier local government system
(prefectures: to, do, fu, ken;
municipalities: shi, cho, son). Total 47
prefectures, about 1800
municipalities
Two-tier local government system:
1. upper-level (9 provinces (do)
and 6 metropolitans) 2. lower-
level (cities (si), counties (gun),
autonomous districts (gu)).
Constitutional Status of Local
Governments
Constitutionally guaranteed: the
postwar constitution (1947) included
for the first time a chapter on local
government (Article 92-95). Chief
executive-assembly structure (Local
Autonomy Law)
Constitutionally guaranteed: the
postwar and current constitution
(1948, 1987) has a chapter entitled
“Local Autonomy” (Article 117-
8). Executive-council system
(same as Japanese one).
Fiscal Relations Stratified (Central grants, local taxes,
bonds, and others)
Stratified (Central grants, local
taxes, bonds, and others)
Local Affairs Delegated Functions (Agency-
delegated functions, Entity-delegated
functions): mandatory
Autonomous Functions
Delegated Functions
Autonomous Functions
Source: Norton (1994); Moon (1994); OECD (1998, 2001).

In order to identify how those similarities and differences promote or
constrain the shape of the current decentralization reforms in Japan and Korea, this
section mainly analyzes the domestic political-economic context and changes in
postwar period. For this purpose, selective examples from western democracies –
mainly OECD countries like the U.S. and France – are also incorporated. As the
following analysis will show the domestic political-economic context is not a static
structure but has changed over time. The process of restructuring has allegedly

17
Muramatsu (1997); Park (2000); Reed (1986).
40
involved the dramatic steps of decentralizing a highly centralized power structure.
18

In particular, changes in the economic structure prevalent in the age of ‘economic
miracle’ and domestic political change became the biggest motivation of
decentralization reform.

The Crisis of Central-led Economic Model
The state’s reputation of Japan and Korea for having a high degree of
centralized power, compared to that in other similarly developed capitalist countries,
is quite justified. Prior to the crisis that engulfed East Asia in the latter part of 1997,
the countries in the region were noted for the distinctiveness of their public policies
and unprecedented speed of their economic development. As briefly noted in the
previous chapter, the image of those countries has often referred to ‘East Asian
Miracle’ or ‘Japanese Economic Miracle,’ symbolizing the successful achievement
of the peaceful democratization and buoyant economic growth. Numerous studies in
social sciences highlight a set of conditions for the prosperity in the region.
19
First,
the effective interventionist government and highly capable state bureaucrats aiming
at the construction of a competitive state in the rapidly globalizing market have
brought about the tremendous growth of a national economy in a very short period.
Second, through various policy tools such as administrative guidance and a highly-
centralized banking system, states effectively distributed limited resources to
selected industries – such as high-tech industries – in order to construct competitive

18
Turner (1999).
19
For example, Alice Amsden, Asia’s Next Giant (1989, Oxford: Oxford University Press);
Alexander Gerschenkron, Economic Backwardness in Historical Perspective (1962, Cambridge,
M.A.; Harvard University Press); Chalmers Johnson, MITI and Japanese Economic Miracle (1982,
Stanford: Stanford University Press); Robert Wade, Governing the Market (1990, Princeton:
Princeton University Press); Woo-Cumings (eds.), The Developmental State (1999, Ithaca: Cornell
University Press); The World Bank, East Asian Miracle (1993, Washington D.C.: The World Bank).
41
national in a short period. Through these mechanisms, the major East Asian
economies have been interpreted as ‘developmental states’ depending on the active
involvement of the central government in the market, instead of a regulatory state
emphasizing the minimal role of government.
20

Highly centralized territorial organization was the indirect result of the
tremendous economic success in Japan and Korea. The myth of the relationship
between a centralized system and economic growth has been observed in the earlier
period of industrialization in western societies.
21
Teune states, “the most general
argument for the relationship between governmental centralization and economic
growth is that government can act and by its very logic will act to offset the
disintegrating consequences of economic growth and to construct markets of size
and scale, including assuring economic transactions through law and providing
information to producers and consumers.”
22
In many cases, the central government
is in a better position to promote the national economy through transfers built into
the national budget.
23
Likewise, though leaders did not intend to, the central-
dominant and planned economic development processes produced a highly
concentrated population and national infrastructure in specific regions, which are
byproducts of centralized system.
24
As a result of central government directed
economic growth, the Kant ō region (Tokyo-Yokohama axis) in Japan and the

20
Even neoclassical theorists observe the strong intervention of the state in the East Asian economic
miracle (Evans, 1992: 151-2). Regarding the conceptual difference between the developmental and
regulatory state, see Pempel (1999) and Johnson (1982).
21
Teune (1982).
22
ibid, p.96.
23
Prud’homme (1994).
24
The major common theme of national development plans in Japan and Korea was ‘balanced’
national development. See the description abo about the Japanese and Korean Comprehensive
National Development Plan, OECD (2001) and OECD (2005), Territorial Reviews.
42
Sudokwon region (Seoul-Incheon axis) in Korea became the largest urbanized and
concentrated regions in the world.
25

However, the prolonged economic slump – since the1980s in Japan and
1990s in Korea – drove institutional changes in both countries, and many opinion
leaders including western commentators have called for drastic ‘neo-liberal-style’
reforms. The core institutions of the ‘East Asian economic model’ that served both
economies in the postwar period such as nationalized banking, the financial system,
and government-business networks were forced to launch reform programs to
rehabilitate the economy.
26

As will be discussed in the following section, one of the reform proposals
that top political and opinion leaders considered was decentralization. On account of
the unstable economy in the 1990s, the highly centralized state lost a great deal of
legitimacy, and decentralization is widely accepted as a tool to promise a range of
options to recover the economy. In particular, many international organizations are
pushing national leaders to carry out neo-liberal-style decentralization reforms in
order to obtain more efficient and responsive government.
27
According to the
classics of decentralization, it is commonly accepted that economic liberalization
includes decentralization, because it devolves the authority of certain tasks and
functions from central governments to local governments as well as non-
governmental bodies.
28
In addition, despite skepticism of the effects of

25
See T-Y axis ranked the first, and S-I axis was the third following New York. Demographia
website, http://www.demographia.com/db-world-metro2000.htm. Also Jinyeong Kim (1994) argues
the problem of ‘Tokyo-Uni-polar Centralization’ in the 1960s and 1980s.
26
Katz (1998); Vogel (2005); Wang-sik Kim (2005).
27
There are many forms, styles, and definitions of decentralization. Yet in some leading
international organizations, the term decentralization was used almost as a synonym for privatization
or represented the neo-liberalists’ perspective. See Bardhan (2002); Rondinelli and Minis (1990).
28
Rondinelli and Minis (1990); Turner (1999).
43
decentralization,
29
it should relieve congestion with debilitating bureaucratic
pathologies at the center so that central government focuses on a more limited range
of national functions.
30
Market theorists of local expenditure expect that
decentralization helps to improve efficiency in resource allocation because local
governments know local preferences more precisely.
31
Based on this belief in the
effect of decentralization, economic recovery or development became one of the
motivations for pursuing decentralization reform in many countries. With occasional
exceptions,
32
in many advanced capitalist societies where the state intervention
prevailed until the 1970s, the concept of big government was challenged sharply,
and it was required to reduce the size and functions of central governments as well
as to reorganize their territory.
33
For example, France which was considered to be a
highly centralized country and had central control over various social since the 19
th

century served as the model of a centralized nation-state to other European countries,
such as Ireland and Italy.
34
When France faced economic crisis in the 1970s,
however, the government, which experienced the combined effect of fiscal austerity
and weak civil society, frantically searched for decentralization as a solution.
35

29
Prud’homme (1994) argues that decentralization can cause inefficiency in service delivery,
regional inequality, corruption, and so forth because there are is little empirical evidence.
30
According to Rondinelli’s classic definitions (1990), the process of decentralization includes ‘de-
concentration.’ It is defined as a transfer of power to local units of administration of central
governments. Minis and Rondineli (1989) distinguish between three types of decentralization: spatial,
market, and administrative decentralization. In particular, spatial decentralization is defined as a
diffusion of population and functions geographically away from the centralized area.
31
This view came from public choice theorists who emphasize competition between local
governments in offering different packages of services and tax rates. See Oates (1972).
32
Although Margaret Thatcher’s government employed a ‘centralization’ strategy instead of
decentralization, it was employed to achieve the same goals as was decentralization in the United
States - a reduction in the role of public sector in the economy and welfare programs. See Wolman
(1988:428-9).
33
Pickavance and Preteceille (1991).
34
Loughlin and Seiler (2001).
35
ibid; Preteceille (1988); Levy (1999); Gourevitch (1977, 1980).
44
Economic decline, however, is not the only factor that causes
decentralization reform in a country, yet it forces a country to reconsider its existing
system of central-local relations. The case of the U.S. and the U.K. under the
Reagan and Thatcher governments show that economic recession was an important
factor for launching new federal-state relationship. While northern Italians focused
on participatory democracy, people in southern Italy believed that local governments
could accelerate the promotion of economic development and solve regional
disparity problems.
36
Therefore, based on the examples of those countries, one
might expect that economic difficulties would bring about some important changes
in a domestic political-economic structure, such as decentralization.
37
First of all,
increasing inefficiency in service delivery and economic management and
accumulating government debts would raise a question about the capabilities of the
central government – in particular, existing political gridlock - in managing those
problems. In addition, there will be pressure for resolving the congestion and
inefficiency of central areas – in general, capital regions – that should be resolved.
38

Therefore, based on the experiences in other countries and theoretical arguments,
one might expect that the economic bubble and slump in Japan and Korea would
result in a crisis of centralized governance, and there would be more demand for
reforms that would revitalize the national economy. The following analysis
exploring the changing economic circumstance in both countries, and will show how
this economic factor and context creates favorable conditions for the promotion of
decentralization.

36
See Putnam (1993), p.20-1.
37
Anderson, Gibson and Lehoucq (2004); Dillinger (1994).
38
Turner (1999), p.9
45
The Case of Japan:
During the postwar period, the strictly regulated, highly protected, and state-
orchestrated economy served Japan very well in recovering from war and in making
the ‘Japanese economic miracle’ possible. Before moving to the discussion of
economic stagnation in Japan, let me briefly review the core features of the Japanese
economic system that resulted in tremendous economic success before the 1990s. As
V ogel points out, the economic system of Japan is closer to a ‘coordinate market
economy (CME)’ where core economic institutions such as government, business,
labor, and finance are linked together.
39
First of all, the bureaucracy at the central
ministries such as the Ministry of Finance (MOF) and the Ministry of International
Trade and Industry (MITI) played an important role in managing the Japanese
economy. They protected domestic industries from highly competitive international
firms, and promoted competitive industries through various tools including
administrative guidance and industrial policy.
40
In addition, through intermediary
organizations such as Keidanren (Japan Business Federation), there was a close and
stable relationship between government and business that served selected industries
in international market.
41
Japanese firms also have a peaceful relationship with l
groups, and have an extensive supply network called keiretsu, which is a busine
conglomerate.
abor
ss
pan
s

42
With these core institutions of the economic system, postwar Ja
became a leading country in terms of economic productivity as well as in other area
such as higher-level of education, crime control, government efficiency, and so

39
Vogel (2005). The term ‘coordinated market economy’ (CMEs) comes from Hall and Sosckice
(2001). The other party is ‘liberal market economy’ (LMEs) where economic activity relies more on
market relations to resolve the problems.
40
See the classics on the role of Japanese bureaucrats in industrialization: Johnson (1982) and
Okimoto (1989).
41
Okimoto, ibid.
42
Vogel (2005).
46
forth.
43
According to the Institute for the German Economy, Japan with about 1,
percent growth had the strongest economic achievement among industrialized
countries in postwar period.
600

44

This corporative and economic governance system in Japan, which was
based on the close relationship between government and firms, however, bred
inefficiencies that have undermined its competitiveness and propped up
uncompetitive sectors. The increasing inefficiency of the system resulted in high
domestic production costs and lowered productivity. The most competitive, export-
oriented firms that represented Japan’s most advanced sectors had been carrying the
less competitive firms in its least advanced sectors.
45
In the early 1990s, Japan had
experienced the massive loss in the value of assets – exchange rates, stock indices,
and land prices – and the loss caused the tumid economy to stagger.
46
In addition, as
Figure 2.2 partially shows, the government’s economic management and policy
failures with the increasing unemployment rate, national deficit, and bankruptcy rate
have nearly paralyzed over the three years since 1990, and national financial
institutions overloaded with nonperforming debts.
47
Therefore, although the
Japanese interventionist government is still prevalent in various economic sectors,
many research institutions and economists were pessimistic about the future of the
Japanese economy because they expected that the aging population and reduced
technological advancements would decrease productivity.
48

43
Even Ezra F. Vogel (1979) analyzes those Japanese achievements in various sectors, and called
the country “Japan as number one” in his book.
44
Asahi Shinbum (November 26, 1999) cited in Vogel (2005), p.22.
45
See Katz (1998) and Pempel (1999). According to him, this is what is called the ‘Japanese dual
economy,’ which means the fragmentation of the industrial structure into the most competitive export
industries and the least competitive and domestically protected industries.
46
Yamamura (1997).
47
Pempel (1999).
48
Yamamura (1997: 292-3); Kato (1998: 458). With regard to the causes of Japan’s economic
47
Figure 2.2: Major Economic Indices of Japan, 1960-2001
-2
0
2
4
6
8
10
12
14
16
1960
1967
1974
1980
1987
1993
1998
Year
(%)
0
50
10 0
15 0
20 0
25 0
30 0
35 0
40 0
G rowth of G D P (% )
U nem ploym ent (% )
E xchange R ate (Yen)

Source: Japanese Yearbook of Statistics (2003)
Note: The calculation of exchange rate is Yen per dollar.

The economic slump and governmental failure in managing the economy
resulted in several changes in the existing core institutions and in the public attitude.
The mismanagement of the economic bubble and concentration in Tokyo caused
distrust in the past successful model of centralized economic development. Distrust
in government and growing complaints about the inefficiency of the centralized
system became one of the motivations for the promotion of a series of reform
programs including decentralization and deregulation. The Japanese model of
centralized economic development functioned quite well from just after the 1880s
through the 1970-80s, but eventually became dysfunctional as the technological
revolution and globalization accelerated and spread around the world. As those
processes accelerated, the search for new rules of the game and new institutions

trouble in the 1990s, there are two compelling perspectives. First, the policy failure school points out
that the Japanese government responded inappropriately to managing the bubble economy of the late
1980s and the downturn in the early 1990s. The other school emphasizes more fundamental structural
aspects of Japan’s economic difficulties (Sakakibara, 2003). For detail, see Vogel (2005), p.22-39.
48
began in the political-economic arena.
49
It is hard to separate out economic aspects
from the reforms of the 1990s. One of the immediate goals was to diminish the
status of the center.
Many are now arguing that highly-centralized state institutions should be de-
concentrated, relocated, or restructured. One the one hand, “Tokyo uni-polar
concentration” (T ōky ō ikkyoku sh ūj ū) has become the most urgent problem to be
resolved for economic recovery and vitalization.
50
In the era of modernization,
concentration of resources in major industrial regions such as Tokyo, Nagoya, and
Osaka were considered to be the fountainheads of Japan’s economic miracle, despite
the uneven development and concentration. Japanese government attempted to
relieve the regional disparity – Tokyo problem – through territorial policies like the
series of Comprehensive National Development Plans and local allocation grants
and public works programs since 1960s.
51
As a result of this effort, the problem of
over-concentration around the Tokyo area was to some extent relieved according to
statistics. For example, “Regional Disparity in GDP per capita” (2001) data shows
that Japan was 0.09, which was much lower than other OECD countries.
52
The
statistical figure, however, gives an inappropriate picture of the state of this regional
disparity. Although the population of the Tokyo metropolitan area (TMA) was to
some extent reduced during the early 1990s, net migration to the TMA started to
increase again from 1994.
53
Figure 2.3 shows that Kant ō region, including the TMA,

49
Sakakibara, ibid.
50
See Nishio (1999); The Committee for the Promotion of Decentralization (March 29
th
, 1996),
Interim Report. As the report shows, one of the reasons for pursuing decentralization is ‘de-
concentrating’ from Tokyo to regions.
51
For more on the history of Tokyo concentration and de-concentration from an urban planning
perspective, see Nakabayashi Itsuki (2006), p.55-80.
52
OECD average was 1.15. See OECD (2005b), OECD Regions at a Glance.
53
OECD (2005a), p.39. The source comes from Ministry of Internal Affairs and Communications,
Migration Census on Basic Residential Registers.
49
accounts for 35.2% of population and produces 39% of Japan’s GDP. It has become
more pronounced over the 1990s, and half of high-growth enterprises with rates of
growth of over 10% for several years were located in and around Tokyo, while other
regions were strongly affected by economic recession.
54
In addition, as the
development of so called “soft industries” – such as information technology (IT) –
and industrialization accelerated after the 1980s, the problem of concentration in the
TMA re-emerged.
55

Figure 2.3: The Pattern of Regional Distribution of Population and GDP (%)
0 1020 3040 50
H okkaido
T oho ku
Ka n to
H okuriku
To u ka i
Kin ki
C hugo ku
Sh iko ku
K yushu
Okin a w a
GD P
P o pu la tion
Are a

Source: OECD Territorial Database.
Note: Figures for Year of 2000.

On the other hand, there was also growing concern that various economic
regulations and policies produced inefficiency, uncertainty, and cost in responding to

54
ibid.
55
Jang-kwon Kim (2000) and Ministry of Land, Infrastructure and Transport (2001), White Paper
on Capital Region.
50
the rapidly changing international environment and globalizing economy. Those
include East Asian economic integration and massive migration of industries to
developing countries. In this context, the wrenching economic changes in the 1990s
which highlighted the shortcomings of the nation’s bureaucratic elites have never
been more obvious or more widely excoriated.
56
Therefore, distrust in go
organizations such as Ministry of Finance – which is notorious for its superpower in
economic and financial policy – is increasing.
vernmental
57

In conclusion, we can expect that these changes in economic conditions,
such as a decade of an economic bubble and regional disparities might provide an
opportunity for the promotion of decentralization in Japan. As Katz insists, delayed
attempts to transform the Japanese model are now making political-economic
reform more difficult.
58
Although, in fact, central institutions still exercise strong
power in reality, as Pempel discussed, changing economic conditions reduced the
stable status of central stakeholders, and led to piecemeal efforts at political-
economic reform, including decentralization in the 1990s.
59

The Case of Korea:
South Korea, with the other Newly Industrialized Countries (NICs) – i.e.,
Singapore, Hong Kong, and Taiwan – has been considered one of the exemplary
cases of the strong state-led industrialization and development model.
60
Since the
1980s, among a large set of explanations for Korea’s success, the most common

56
Curtis (1999).
57
Newton (2001: 210-1) and Pharr (2000: 173) pointed out that by far the single best predictor for
declining public confidence in Japanese government, including the Diet, was public official’s
misconduct. The waves of World Values Survey (1980, 1990, and 1999) show the tendency of distrust
for the Japanese government (over seventy percent).
58
Katz (1998).
59
Kingston (2004); Pempel (1998).
60
Amsden (1989).
51
theme was that institutional arrangements, such as the type of regime (authoritarian
rather than democratic), the role of government (interventionist rather than
regulatory government), and the economic policymaking structure (centralized
planning agencies like Economic Planning Board (EPB)) were particularly strong to
accomplish this phenomenal success in economic development.
61
The state had
effectively intervened to mediate market forces, labor, business, exporter and
importer by creating multiple prices, a somewhat high-level of the interest rate, and
fixed foreign currency rates.
62

Figure 2.4: Trade to GDP Ratios
0
2
4
6
8
10
12
14
16
18
Norway
New Zealand
Australia
United States
United Kingdom
Japan
France
Denmark
Italy
Switzerland
Germany
Netherlands
Spain
Canada
OECD average
Austria
Finland
K orea
S weden
Turkey

Source: OECD Country Statistical Profile 2006
Note: The ratio is the difference between 2004 and 1991 ratios in percentage scale.

Based on those institutional arrangements, Korea, one of the resource-poor
countries in the East Asian region achieved an unprecedented rate and scale of
‘export-centered’ industrial development since the 1960s. According to international

61
On this argument, see Amsden (1989); Evans (1992); Haggard and Moon (1990); Wade (1990).
62
Amsden, ibid.
52
statistics on the relative importance of foreign trade, including exports and imports
to Gross Domestic Products (GDP), as seen in Figure 2.4, foreign trade is composed
of a big portion of Korean GDP in comparison with other OECD countries in the
post-war period.
63
In addition, statistics show that Korea ranked 12
th
on the list of
largest countries in foreign trade.

However, in the wake of the crisis that developed in East Asia during 1997,
perceptions on the region have changed. Those conditions that provided a favorable
environment for the rapid economic growth of many East Asian countries, on the
contrary, have contributed to their inefficient and ineffective responses to the
globalizing economy. In other words, strong state intervention to boost national
industries and the economy initially succeeded in the 1970s-1980s, yet these
successes have also created path dependency such as the mismanagement of national
finance, improper big business (chaebol)-government relationships, and a rigid labor
market.
64
Confronted with the challenge of a globalizing economy, the myth of state
power in Korea has been declined or experienced transformation. Accordingly,
Korea has been at the center of a wave of structural reform, as in many other
countries. Its thirty-year performance of state-led and export-driven economic
development resulted in several domestic flaws that directly or indirectly caused the
foreign exchange crisis in 1997. After a series of major corporate bankruptcies and

63
The proportion was even higher than that of countries in Latin American and South Asian
countries, which is ranged from 10-25%. South Korea’s ratio in 1980-1990 was about 60% on
average. Except Germany and Scandinavian countries, other advanced countries show somewhat
lower levels of trade to GDP ratios (e.g. U.S. 14.9%, France 39.8%, U.K. 43.1% in 1980s). See The
World Bank (1993), p.39 and Amsden (1989), p.71.
64
Haggard and Mo (2000) paid attention to the political aspects of the Korean financial crisis in
1997. Heo and Tan (2003) discussed why path dependency was much more serious in Korea than in
Taiwan. As earlier social scientists such as Olson (1982) and Huntington (1968) estimated, the
strengthened labor power in Korea caused sharp declines in productivity (Heo and Tan, 2003: 688-9).
53
foreign currency crises in South Asia, which consisted of about 35% of Korean
exports at that time, Korea’s exchange reserves dropped dangerously low, promoting
a full-scale financial crisis and the necessity of external infusion of funds.
65

Facing the economic crisis, the problem of centralized power with respect to
functions and geography became a target of criticism. As Gregory Henderson’s
classic on Korean politics describes, the concentration of personnel, financial, and
political resources at the center was the origin of the “politics of vortex” in Korea.
66

That is to say, because political elites who dominate the center have exercised great
power over personnel and financial resources in Korean history, there has been
serious tension between regions to get closer to the power centers. Accordingly,
population and businesses have located around the capital region, because it
provided an easy path to central bureaucrats and politicians.
67
The origin of highly
centralized power started from the Park Chung Hee administration (1963-1979). The
military regime forcefully abolished local autonomy that was adopted in the first
administration (1948-1961), and took initiative in almost all policy areas with strong
state authority to catch up to other advanced industrialized countries in the world. To
modernize the economy and industry, the government strategically encouraged
economic development by providing financial and administrative incentives to
highly competitive and export-oriented companies, and adopted a ‘growth pole
policy’ that promoted the development of selected cities and regions – mainly big
cities and the capital region – which had the favorable conditions for achieving
export-oriented economic growth.
68
Because the regime’s top priority was to

65
Haggard and Mo, ibid.
66
Henderson (1968).
67
Wade and Kim (1978).
68
Bae and Sellers (2007); Kang (2002).
54
distribute limited resources to ‘competitive industries’ in ‘selected regions,’ the
export-oriented policy and growth pole development became their best choice to
achieve the national goal of economic modernization in short period.
69

Figure 2.5: The Concentration of Population in the SMA (%)
28.3
35.5
42.8
47.6
28.9
30.5
31.9
32.6
18.5 18.5 18.8 18.7
13.5
12.1 11.9 12.2
0
5
10
15
20
25
30
35
40
45
50
1970 1980 1990 2000
Ko re a (S M A )
Japan (TM A )
France (P M A )
UK (L M A )

Source: Presidential Committee on National Balanced Development (2004), p.46.
Note: Metropolitan Areas includes the core capital city and surrounding cities and suburbia.

As a result of this uneven development in Korean regions, the regime could
accomplish tremendous economic growth in a relatively short period of time, and
the selected big cities and regions such as the Seoul Metropolitan Areas (SMA) or
what is called ‘Seoul-Incheon Industrial Areas’) and Pusan Metropolitan Areas
(PMA or what is called ‘Coastal Industrial Areas’) grew much faster and greater
than other ignored devastating regions. First of all, as seen in the Figure 2.5, the
population of the SMA rapidly increased because of people looking for jobs in the

69
Rooted in the work of English economist and academic Sir William Petty, and associated with
French economist Francios Perroux, the growth pole theory refers to the grouping of industries
around a central core of other industries whose actions act as a catalyst to growth. Although growth
pole theory does not include geographical concentration of industries as a part of its criteria, it has
been applied to regional policy in many countries such as Britain and Asian developing countries.
55
metropolitan areas as well as because of a natural increase in the general population.
Almost half of the national population (47%) is concentrated in the SMA, which
consisted of only 11% of the national territory.
70
This pattern of concentrated
residency in SMA is much serious than that of other advanced countries such as
Japan, France, and the United Kingdom who experienced similar problems in their
industrialization processes.
71

Table 2.2: Indicators of Regional Disparity in Korea (2000)
Indicators National SMA (%)
Population
And
Housing
Area (Km
2
)
Population (unit: thousand)
Population Density (people/Km
2
)
Housing Rates (%)
99,800
48,289
484
96.2
11,754 (11.8)
22,525 (46.6)
1,971
86.1
Regional
Economy
Gross Regional Product (billion won)
Number of Manufactures
Number of Service Industries
Savings Deposit (billion won)
Amount of Loans (billion won)
465,183
98,110
794,095
404,661
310,804
223,081 (48.0)
55,874 (57.0)
360,102 (45.3)
275,394 (68.1)
202,797 (65.2)
Others
Number of Universities
Public Agencies
Medical Facilities
Number of Automobiles
162
276
42,082
12,914
66 (40.7)
234 (84.8)
19,471 (46.3)
5,983 (46.3)
Source: Ministry of Construction and Transportation (2002), 2002 Annual Report on National Land Use.
Note: Population and Housing indicators, number of universities and automobiles are 2001 data.

Even when the economic recovery programs were carried out by the Dae-
jung Kim administration (1998-2003), economic resources, foreign funds and
political authorities were much more concentrated at the center. This is because the
government-initiative economic recovery program aimed at the fastest and most
efficient resolution for the foreign exchange crisis.
72
As a result, aside from the
indicators shown in Table 2.2, 80% of top research universities, 100% of central

70
National Statistics Office (NSO) website, http://www.nso.go.kr.
71
OECD (2001).
72
Presidential Committee on National Balanced Development (CNBD, 2004), p.37.
56
government agencies, 91% of the headquarters of big businesses (chaebol), 77% of
information technology industries (ITs), about 60% of research and development
(R&D) investment, and 72.1% of industrial research institutes are located in the
Seoul Metropolitan Areas.
73
The problems from the over-concentration vary. First o
all, the concentration in the SMA caused the rapid increase of rent and transaction
cost so that businesses, had to impose higher costs. In addition, the degraded
environment and inefficient urban functions, such as the lack of amenities and
housing caused too much cost to the government.
f

74
Because of this regional
disparity, antagonistic regionalism between the advanced and devastated regions
became serious socio-economic problems in Korean society.
75

As social and economic costs derived from concentration in the SMA act as a
huge burden on the whole national economy and development, the central
government has continuously taken extensive measures and programs to reduce the
over-concentration problem. For example, the government initiated the program for
relocation of government agencies and public universities to other regions, and
restricted the new entrance of industries and companies to the SMA region that
could induce a large scale of population.
76
Despite these attempts, however, the
government under authoritarian leaders failed to manage the over-concentration
problem effectively.
To resolve a diverse set of governance problems stemming from over-
centralized political-economic authority and territorial disparity, non-military

73
ibid, p.41; Lee et al. (2002), p.49-54; OECD Territorial Reviews (2001b).
74
Jang-kwon Kim, 2000: 230
75
On regionalism in Korea, see Kwon (2004), p.548-552; Seong (2000), p.136-9.
76
This program was initiated in the early 1970s. It included the removal of some governmental
agencies and manufacturers to newly developed regions, but it failed because the newly developed
regions were located closer to the SMA. See OECD (2001b), p.96-7.
57
regimes since the late 1980s have announced and carried out extensive structural
and public sector reform programs. In particular, the reform programs initiated
under the Dae-jung Kim (1998-2003) and Moo-hyun Roh (2003-present)
administrations emphasize downsizing and reorganization of the central government,
and privatizing state-owned enterprises as advanced in the Gore Report popularized
in the early 1990s.
77
As a part of public sector reform, the severe disparity between
the center and the periphery became an important item on the reform agenda
because the government considered that the problems from over-centralization and
regional disparity were the major causes of the inefficient responses to economic
crisis. Therefore, decentralization, whose meaning includes devolution and de-
concentration in the Korean context, became one of the alternatives for encouraging
economic recovery, and demands for solving the regional disparity and transferring
authority for localities and civil society became stronger during this period.
78

In conclusion, based on the experiences of Japan and Korea, we can expect
that economic shock and slump in both countries at least open a policy window for
the shift of old central-local relations. Before the speed of economic growth gets
slow, there have been a lot of attempts to achieve local autonomy and
decentralization in the postwar periods of Japan and Korea. The reason why those
efforts have not been successful is simple: the highly centralized command-and-
control system worked very well. However, the crisis in economic governance has

77
A new governmental managerial method, New Public Management Reform (NPM) was
introduced to improve governmental efficiency at that time. See Al Gore (1993), The Gore Report on
Reinventing Government: Creating a Government that Works Better and Costs Less. New York: Time
Books. The former president Kim Dae-jung was inaugurated right after the economic crisis,
identified fraudulent business-government relations, the inefficient national banking system, and
uncompetitive big business to be the causes for the Korean economic crisis, and considered
reforming four core areas (corporate, labor, finance, and the public sector) for economic recovery.
See Korea Harold (1998), Let Us Open a New Era for the Nation to Overcome its Difficulties and
Leap Again. February 25
th
, 1998; Kihl (2005), p.195-200; W. B. Kim (2003), p. 62.
78
Won Bae Kim (2003).
58
brought about the increase of distrust in central government agencies, bureaucrats,
and politicians, and let them consider decentralization as an avenue for rehabilitating
the national economy. This will be discussed in the next section. As Karmack
expects, the deficit in economic performance in both countries clearly became one
of the causes of the national decentralization movement.
79

Changes in Domestic Political Surroundings
While the economic slowdown in both countries generated pressures for the
promotion of decentralization reform, the changes in domestic politics also played
an important role in advancing decentralization. For example, in some countries,
democratization (or democratic consolidation) was the primary cause of
decentralization reform. In developing countries such as the Philippines and
Indonesia, the collapse of the authoritarian regime in the mid-1980s and the later
part of the 1990s fueled a movement for local representation.
80
Therefore, scholars
who examine the political causes of decentralization do not deny the influence of
structural arrangements like the economy, but they emphasize that “politics” matter
in choosing a new survival strategy.
81
Domestic politics, party politics, or power
struggles still matter in explaining the varieties of decentralization.
Economic shock and slowdown lead to the questioning of centralized
policymaking and geographical concentration, and it still matters with respect to the
risks and costs associated with pursuing a centralized course. Despite economic
crisis, full-scale decentralization in Japan and Korea was not realized and there were

79
Karmack (2000: 236) classifies the causes of national reform movement into four categories: a)
global economic competition, b) democratization, c) information revolution, and d) performance
deficit.
80
White and Smoke (2005).
81
Gourevitch (1980); Levy (1999);O’Neill (2003).
59
only relatively limited changes in central-local relations, yet the Japanese and
Korean strong state impeded adjustment to the newly decentralized central-local
relationship which was the primary goal of decentralization reform.
Considering the crisis of the centralized economic model, a few elements
suggest that economic changes intertwined with political turbulence and events
contributed to the process of decentralization in both countries. On the one hand,
economic mismanagement, which is linked inextricably with political misconduct
such as corruption and policy failure deepened distrust of the central government,
and resulted in piecemeal efforts at reforms. On the other hand, despite their
relatively late development and limited representation, voices from below – i.e.,
civil and local societies – became important sources of changes to contemporary
central-local relations in Japan and Korea. Therefore, one might expect that the
current drive for decentralization reform can be explained by features specific to the
ongoing interactions between the center and the periphery in the context of the
larger national political economy.
82
The following analysis will show how these
economic and political changes are interrelated.
The Case of Japan:
Japan has struggled to reorganize and streamline its governmental
organizations and administrative system to respond to its rapidly changing domestic
and international economy. Since the Suzuki administration of the early 1980s, the
decline of the Japanese economy in the world market, the increasing deficit of the
central government’s general account, and the growing influential number of
economic and political figures who called for a decisive move toward the liberal
market model, politicians and government have put forward various reform

82
Anderson, Gibson and Lehoucq (2004); Hooghe and Marks (2004).
60
proposals, including deregulation and decentralization.
83
In these various reforms,
several political events and scandals acted as a catalyst for institutional change and
decentralization in the 1990s. In particular, among the various events and scandals,
three political changes influenced the emergence of a discussion about reconsidering
the role and authority of bureaucrats and politicians at the center: a) changes in the
role and authority of the central bureaucracy and cleavages in the political parties, b)
electoral reform and the division between national versus local politicians, and c)
the growth of local governments.

First, central bureaucrats and zoku politicians,
84
who perpetuated a politics
of interests in Japan for fifty years, faced serious challenges from opposition politics
and distrust from below. First of all, the image, reputation, and authority of central
bureaucrats were profoundly damaged through several political events and scandals
in the 1990s. Among various theories of Japanese politics, the ‘developmental state
model’ has been the most commonly accepted in explaining Japan’s postwar
political economy.
85
In this model, bureaucrats in the central ministries such as the
Ministry of Finance (MOF) and Ministry of International Trade and Industry (MITI)
set up strategies for national development and exercised strong political power by
using various instruments at their command. Despite some negative representations,
Japanese bureaucrats who were considered highly capable and dedicated to national

83
Wright and Sakuai (1986); Carlile (1998). The efforts for reform had been visualized from the
activities of Provisional Commission on Administrative Reform (Rinch ō, 1981-1983) and several
Provisional Councils for the Promotion of Administrative Reform (Gy ōkakushin). See Carlile, 1998.
84
According to Johnson (1995: 214), zoku politicians are “Diet members who have a specialized
knowledge of or a sustained interest in the affairs of a particular ministry or agency, and strong
connections with the industries or groups affected by the policies of that ministry or agency.”
85
For the summary of various models of Japanese politics, see Curtis (1999), p.57-9.
61
development dominated the policy process.
86
Naturally, powerful and accredited
bureaucrats in ministries became veto players in several attempts at reforming
central-local relations in the postwar period, because the core of the reform was the
transfer of their political, financial, and organizational authority to local
governments. Yet few Japanese were surprised to see the endless media exposure of
structured corruption at the heart of the nation’s most prestigious and professional
elite society.
87
A series of bureaucratic mishaps in national and local crisis such as
the Great Hanshin earthquake (Kobe) in 1995, the Aum Shinrikyo ō sect releasing
sarin gas at the Kasumigaseki subway in 1995, and HIV-contaminated blood in 1996
brought Japanese bureaucrats into discredit.
88
In addition, the collapse of the L
Democratic Party (LDP) after 38 years of dominance meant that zoku politician
could not enjoy their dominant status anymore in policymaking because they had to
form a coalition government to stay in power. Under this situation of increasing
distrust, bureaucrats in the central ministries and LDP politicians had to share their
initiatives with politicians in opposition parties, and this changing reputation o
them opened an opportunity for the drafting of political and administrative
programs in the 1990s.
iberal
s
f
reform

89
Despite their powerful influence on the agenda-setting and

86
Bowen, (2003); Woo-Cumings, (1995)
87
Curtis (1999).
88
For a detailed description of these events, see, Inoguchi (1997); Pempel (1999); and Shindo and
Abe (2002). To summarize: both local and central bureaucrats were criticized for their late responses,
inadequate preparation, and unnecessary regulation with respect to foreign-aid suggestions and
rescue activities after the Kobe earthquake. Despite a series of terrorist activities by the religious
zealots for several years, Japanese police, the Customs Office, and various security bureaucrats could
not detect anything to prevent the sarin gas terror at the heart of Tokyo (Aum Shirikyo ō case). At the
end of 1996, The Ministry of Health and Welfare (MOHW) was engaged in its own corruption
scandal for allowing HIV-contaminated blood to be donated to Japanese patients, primarily
hemophiliacs (Pempel, 1999: 141-142). In addition to these events, The Ministry of Finance (MOF)
bureaucrats had been criticized for mismanagement the bubble economy and for non-performing
debts.
89
Curtis (1999). Curtis (2002) describes the changed relationship between politicians and
bureaucrats in Japan. Also see Jin (2003).
62
strong resistance against reform programs, their dominant status has been dwindle
since the 1990s, and changes in bureaucratic organization created room for making
decentralization one of the major objectives of reform.
d

90

Second, after the adoption of the new electoral system in 1994, the request
for the division of labor between national and local politicians became stronger.
Pressures from below for empowering local politicians (local councilmen) whose
status in local politics have been little more than a mere name in postwar Japan were
strengthened.
91
As a matter of fact, a defining feature of Japanese politics under the
1955 system was the combination of clientelism and a central-dominant financial
structure.
92
That is to say, local politicians must rely on the financial graces of the
central government to do their job and the countrywide ruling party (LDP,) which
could easily access the financial resources.
93
In addition, candidates for the Diet
continued to rely on their personal political support organizations (koenkai) which
went to great expense to organize their campaign, and house elections were not
policy-oriented but constituency-service-oriented. A group of reformist politicians
believed that those inefficient Japanese policies were a result of the multi-member
district (MMD) election system, and proposed an election reform.
94
Aiming to
construct a more policy-oriented and party-centered two party system like that of the
U.K., Hosokawa’s coalition government introduced a ‘single-member district
(SMD) and proportional representation system’ to avoid the problems of expensive

90
Regarding bureaucratic resistance against several attempts to reform the bureaucracy, see Ikuta
(1995), p.145-183.
91
Nishio (1999).
92
Reed (2001).
93
See Scheiner (2006) Chapter 4. About the relationship between fiscal dependency and party
affiliation in advanced countries, see Sellers (1998). In general, a country where the local fiscal
structure is independent shows the strong role of parties in local political arena.
94
Hosokawa’s maiden Diet speech (1994) cited in Curtis (1999:144).
63
inter-party competition and the misappropriation of public money on constituencies
stemming from MMD system in January of 1994.
95
The newly introduced single-
member district system has ignited the debate regarding a division of labor between
national and local politicians. From the perspective of local politicians and mayors,
an elected Diet member who is the only member nationally representing a district
must be dedicated to national affairs rather than local and daily affairs, and this
division of labor requires the further transfer of political and financial authority from
the center to localities.
96

Finally, the growth of local society created a critical juncture that promoted
the introduction of local democracy. The experience of progressive movements in
1960-70s in many localities spurred the rise of independent governors and mayors
who provided general support for moving decentralization forward.
97
Some even
broke into key positions in the central political world (the Diet and central
ministries) and played a crucial role in promoting decentralization reform. In fact,
unlike ‘the second generation’ politicians who simply inherited their fathers’ seats in
the Diet, these politicians had been excluded from the appointment of higher
political positions by the LDP’s seniority rule and factional politics. However, after
the collapse of the LDP in 1993, innovative political leaders such as Morihiro
Hosokawa, Masayoshi Takemura, and Hiromu Nonaka who had considerable
experiences in local politics as governors, local bureaucrats and councilmen became
key men in the pursuit of decentralization by reflecting their personal experiences in

95
Krauss and Pekkanen (2004).
96
Nishio(1999); Otake (1998). Because all N-number of Diet members in MMD were devoted to do
constituency-related services and win public works, the role of local politicians were minimized
under the system. What local politicians could do was spend large amounts of the local government
budget to entertain national politicians with political bribes (See Johnson, 1995: 224; Pempel, 1999:
140).
97
Hook (2006).
64
local governments on several policy issues.
98
In addition to this rise of politicians
from localities, local governments in Japan have played an autonomous and active
role in the public policy process. Japanese local governments are spending two third
s of the nation’s budget, and accumulating knowledge and expertise on various
social issues such as welfare, the environment, and the aging society problem.
99

To summarize: the mismanagement of the economy and resulting financial
deficit discredited the authority of central ministries and zoku politicians to create a
turbulent political context which made it possible for decentralization to be
promoted in 1990s. Fragile leadership at the apex stemmed from mismanagement of
economic and public policies, and structured corruption. The collapse of the LDP
and electoral reform meant the LDP had to share their seats with the other parties
whose leaders were favorable to decentralization issue and local societies. The
Japanese who lost confidence in the Japanese Miracle model became skeptical of
central politics and institutions. The growth of local and civil society became
indispensable factor in explaining successful implementation of decentralization
policies. Therefore, although it should be noted that bureaucrats and zoku politicians
at the center are still focal points of Japanese policymaking and reform programs,
we can expect that that the changing political context and the realignment of this
relationship between the center and periphery might open an opportunity structure
for decentralization reform.
The Case of Korea:
The rapidly changing political context in South Korea promotes and hinders
decentralization reform. Though there were some similarities and differences from

98
Furukawa (2002); Nakano (2003). The former Prime Minister Hosokawa, for example, wrote a
book called “the logic of localities” (hina no ronri, 1991) about the difficulties of local governments.
99
See Steiner, Krauss, and Flanagan (1980).
65
the Japanese case, which experienced political realignment under the economic
bubble. The economic shock in the later part of the 1990s that started the discussion
of state restructuring to realize economic recovery is similar to the Japanese case.
Because of economic mismanagement during the 1997 financial crisis and a series
of corruption scandals among top politicians and their families, the general public
lost confidence in the central government and the political world. Economic crisis
was accompanied by a series of structural reforms including corporate and
administrative reconstruction and political realignment. In addition, the democratic
transition in 1987 and the enactment of full-fledged local elections in the early
1990s opened up the possibility of the growth of civil and local societies.
However, despite those changes in Korea, there are notable differences
between the Japanese and Korean cases with regard to the political context. Korea
only experienced local autonomy for ten years; this is not enough time for
cultivating political leaders who understand the situation of localities and can make
an impact on the central political arena. Despite the rapid growth of civil societies in
Korean politics, their representation and participation in the policy process are
relatively weak and limited.
100
Instead, strong presidential leadership under crisis
plays a crucial role in making reform a top government priority. The following
analysis will show why and how the similarities and differences between Japan and
Korea shaped the content and process of decentralization reform in a similar way
but to different degrees.
First, two critical factors: a) failure to effectively manage economic crisis
and b) structured corruption at the highest political level resulted in lowered trust in
government and political realignment. Up until the mid-1990s, the strength of the

100
Jang-kwon Kim (2000).
66
Korean economy received high marks internationally by maintaining the lowest
level of unemployment rates and national account deficit, as well as the highest level
of prosperity. However, after a series of bankruptcies of major companies such as
Kia Motors and Han-bo Steel and the currency crisis in Southeast Asia (Thailand
and Indonesia), Korea faced a serious problem in managing exchange reserves
which dropped dangerously low and required the immediate infusion of massive
foreign funds.
101
In experiencing this crisis, it turned out that there was a structural
flaw in the financial and banking system. The financial institutions and banks, which
were protected by agencies and ministries in the central government, provided
‘political loans’ to the selected conglomerates (Hanbo Steel, for example), which
lead to bankruptcy for insolvent loans.
102
In addition, the government did not have a
regulatory system to supervise transparent financial activities.
103
Therefore, the
mismanagement of the country’s economic and monetary policy, and non-
transparent financial assistance to government-favored companies and banks – what
is so called ‘crony capitalism’ from western observers – created a moral hazard
problem that caused financial crisis in the East Asian developmental state.
104
As a
result of this outbreak of the worst economic crisis in postwar Korea, the general
public lost confidence in the old regime and ended the rule of a long-dominant party
in Korea by electing the most determined opposition political figure, Dae-jung Kim
to the presidency.
105

101
See Kihl (2005), p.157-8. Excessive investment that surpassed the domestic saving level resulted
in the augmentation of foreign debt. In particular, short-term credit which was used to automatically
roll over at the scheduled time but was shocked by the collapse of big conglomerates in Korea
suddenly withdrew from the Korean financial market, and that caused a serious exchange reserve
crisis.
102
ibid.
103
ibid.
104
Regarding crony capitalism, see D. C. Kang (2002).
105
Dae-jung Kim (1998-2003) was the first president who was elected as the leader of opposition
67
In addition to the government mishaps of the economic crisis, the structured
corruption problem contributed to the drastic decline of trust in the Korean
government. The former president Tae Woo Roh (1988-1993), who was the first
popularly elected president after the democratic transition in 1987, was accused of
the accumulation of a staggering sum of business contributions during his tenure.
106

The former president Young Sam Kim (1993-1998), who was one of the leaders of
the democratic movement and initiated the anti-corruption campaign, also
experienced a series of loan and chaebol-related scandals that involved his son
(Hyun-chol Kim) and his most trusted aide (In-Gil Hong), so his campaign and
reform efforts were visibly weakened.
107
Moreover, although he successfully
brought the Korean economy out of the IMF bailout system in three and a half years,
Dae-jung Kim’s achievements in reforming the economy and administration were
blurred because of bribery and corruption scandals. Even his ‘inter-Korean summit
talk’ in June 2000, which gave him the Nobel Prize, was associated with bribery in
return for the summit talks that was loaned from the government-run bank.
Therefore, the Kim administration, which violated its own declared policy of
economic structural reform, lost its popularity and support.
108

As a result of the structured moral hazard problem and the lack of
institutional oversight that stemmed from the inappropriate relationship between
business and government since the industrialization era, the Korean government
faced strong pressures from below and from international organizations, such as the

party (National Congress for New Politics: NCNP) in Korean history. This presidential election
resulted in tremendous changes in political power. Kihl (2005); Wang-sik Kim (2005).
106
Kang (2002), ibid. He had spent about three hundred billion won (about 300 million dollars) out
of 500 billion one.
107
Kihl (2005), p.134.
108
Kihl (2005), p.297.
68
International Monetary Fund (IMF). In particular, economic failure and exposed
corruption under the democratically elected presidents (Young Sam Kim, and Dae-
jung Kim) disappointed the general public deeply, and the rate of trust in
government dropped drastically, as seen in Figure 2.6.
109
Accordingly, although the
causality between the lower level of trust in government and decentralization reform
is not clear, many reform programs, as a matter of fact, targeted structural problems
that caused these economic and governance crises. The reorganization of central
agencies, which was started in the mid-1990s to reduce bureaucratic dominance and
inefficiency has been continued and made bureaucrats recognize that their position
is not safe any more.
110
In addition, the programs for overcoming several ‘Korean
diseases’ such as regional cleavages, an inefficient national finance system, political
corruption, and chaebol issues emerged as urgent tasks for political reform in
successive governments.
111
When the concept of local elections and autonomy were
firstly introduced in 1991 and 1994, the adoption of decentralization was understood
as a tool of deepening democracy. However, after the economic crisis, empowering
localities and transferring functions and fiscal resources became an indispensable
condition for restructuring the inefficient and over-concentrated central system. In
sum, the mismanagement of the national economy and domestic affairs as well as
structured corruption since the 1990s broke the general public’s confidence in the
invincibility of the central government, and provided a direct or indirect opportunity

109
In a similar vein, a survey done by Shin, Park and Jang (2005) shows that democratic values and
beliefs among Korean people are steadily declining as well. Instead, a significant number of people
show ‘the sense of authoritarian nostalgia,’ which successfully tackled economic issues (Park and
Shin, 2006).
110
For example, In December 1994, a total of 115 divisions and agencies belonging to central
ministries were abolished or merged into other ministries. The powerful economic organizations such
as Economic Planning Bureau (EPB) and Ministry of Finance (MOF) were merged into the Ministry
of Finance and Economy (MOFE), and there were many lay-offs among bureaucrats. With regard to
the government reorganization in Korea in the 1990s, see Pan Kim (2000).
111
Kihl, ibid; CNBD (2004).
69
to reform several social and policy issues including the unbalanced central-local
relationship.

Figure 2.6: The rate of Trust in Government in Japan and Korea
3
4
5
6
7
8
9
1980 1990 2000
Year
Korea
Japan

Source: World Values Survey (1980, 1990, 2000 Waves)
Note: The scale (0-12) is an average of trust in government (parliament, executive, judiciary,
military, and police, 0 (low)-12 (high trust)).

Second, democratic transition and consolidation in the 1980s-1990s
generated enormous changes in the size and activities of civil society in public
affairs. Most scholars of Korean politics attribute the people’s participation in
democratic movement to the breakdown of the authoritarian regime, and the role of
civil society was central to bringing about democratic politics in Korea.
112

Furthermore, it is now widely agreed among the observers of Korean politics that
these transitional politics, which were lead by civil society, greatly determined the
dynamics of democratic consolidation. Empowered citizen’s organizations with
growing membership are now expanding their social activities, which are aimed at
promoting environmental regulation, improving the quality of life, consumer

112
Bae and Sellers (2007); Kihl (2005); Sunhyuk Kim (2000); Koo (1993).
70
protection, fair elections, distributive justice, and so forth.
113
In particular, as
Japanese local residents and civic organizations did in 1960-70s, non-profit
organizations (NPOs) at both the local and national levels became very active after
the 1990s, and there are many advocacy organizations, which value the quality of
life in their residential area.
114
A considerable number of empowered citizens
participated in voluntary organizations related to local affairs including welfare
service and environmental issues. Therefore, one might expect that empowered
citizen groups who are engaged in local affairs can recognize the problems of over-
concentration in the Seoul Metropolitan Area and mobilize for the promotion of
decentralization in Korea.
In addition to the growth of civil society at both the national and subnational
levels, the ten-year experience of self-governance in Korea provides the context for
further decentralization. Given that local-level elections had not previously been
held simultaneously, local elections in June 1995 marked a great opportunity for
beginning a new national-local government relationship. The full-fledged
implementation of self-governance frequently appeared as a campaign pledge in
presidential and national assembly elections,
115
because decentralization was
considered to be one of the indicators of the level of democratization. Direct local
elections since 1995, created new political channels to power, and empowered local
governments as well as their citizens. Elected local politicians – mayors, governors,
and city council members – took responsibilities to their voters, and acquired
decision-making powers, though there were the number of limitations, supervisions,

113
Kim, ibid.
114
Bae (2004: 150). Korean government enacted the “The NPO Aid Law (2001)” to financially
support NPO activities.
115
More specifically, the pledge on decentralization appeared in 1985 and 1992 National
Assemblymen elections, and 1988 and 1992 presidential elections. Both ruling and opposition parties
considered the Local Autonomy Act as a symbol of democratic consolidation (Yoo, 1994).
71
and regulations from the center.
116
According to the recent governmental survey on
local autonomy, 54% of citizens favored full fledged local autonomy.
117
However,
the same survey also shows that only 24% of respondents answered that they were
satisfied with the changes in local governance. In other words, many people thought
that ten years of this newly empowered local self-governance was gradually moving
the country toward democratic society, but specific benefits such as welfare,
environment, quality of life, and economic development from the self-governing
system were not enough to meet their needs.
118
Therefore, we can expect that the
growing concerns of local and civil society, which seek better localized benefits and
services with autonomous decisional authority, might become major sources for the
promotion of decentralization. In a similar vein, empowered governors, mayors, and
local politicians who have enjoyed more autonomous authority but faced limited
fiscal resources might request further decentralization reform.
In sum, as the Japanese case shows, the changes in political context in Korea
might work in a similar way to promote decentralization reform in the1990s-2000s.
Ineffective responses to the economic crisis of the late 1990s started to pull down
the authority of political and administrative leaders at the center. First of all,
political leaders, who had occupied key positions at the central government and in
the political parties since the era of industrialization, lost their power and popularity.
Instead, new leaders who headed the democratization movement seized power in the
government. In doing so, the practice of the beginner-level of local democracy was
enacted and implemented by those new actors in civil and local society. Therefore, it

116
Bae and Sellers (2007).
117
MOGAHA·CGID·KRILA (2005), Evaluation on Ten-Year Local Autonomy, p.7.
118
ibid, p.8-10. According to the survey, many people responded that public health and welfare
service (34.1%), environmental management (30.4%), and public safety (10.0%) should be improved.
72
is easy to imagine that empowered local politicians contributed to the promotion of
decentralization by constructing a visible relationship between the central and local
governments.
However, despite those similarities, the case of Korea is somewhat different
from that of her counterpart. In Japan, political leaders such as Hosokawa who have
experience in local governments and politics got into the central political arena and
played a crucial role in bringing up the decentralization issue, but Korea’s short ten-
year experience of local democracy was too short for developing politicians with
enough experience. Instead, political leaders at the center mobilized local politicians
to achieve their political goals. Two major political figures, Young Sam Kim and
Dae-jung Kim, were elected to the presidency by mobilizing voters and politicians
in regions where they were born.
119
Candidates for big city mayors or provincial
governors used to be elected or appointed by the central committee of political
parties. More importantly, despite the fast growth of local governments and civil
society, their role in taking initiatives in pursuing important social issues such as
decentralization was limited. In comparison with Japan where their local
government and civil societies are responsible for about 70% of local expenditure,
local governments in Korea implement only 30% of their local budget. Therefore,
this dependency on the central government hinders local governments from the
possibility of designing a self-sustaining system by itself.
In short, the analyses of domestic political-economic conditions presented
here suggest that changes in the political situation intertwined with the economic
slump to provide an opportunity for the promotion of decentralization. While there
is a structural logic behind those political changes in both countries that brings new

119
See Kwon (2004). For example, the former president Dae-jung Kim got over 90% of votes in
Cholla region where he came from.
73
issues to the table requiring somewhat innovative action for stakeholders at the
center, there is also room for an explanation that focuses on actors and their
relationship. In particular, the mismanagement of economic problems and structured
scandals softened up the political gridlock at the center, and under this circumstance
it was possible to energize a new intergovernmental relationship by empowering
civil and local society. Therefore, although resistance from traditional actors such as
bureaucrats and interest-related politicians at the center are still critical, this change
shed light on the promotion of decentralization.
For understanding decentralization and changes in the central-local
relationship in Japan and Korea with similar backgrounds, domestic political-
economic changes matter. The actual outcome of new central-local relationship,
either fully or limitedly decentralized, is in fact determined by the direct relationship
between domestic stakeholders in a specific circumstance. However, there is still a
question of why political leaders at the center and local and civil society choose a
specific policy, ‘decentralization,’ to restructure the country. To properly account for
the promotion and limitation of decentralization in Japan and Korea, domestic
explanations are limited. The international context for decentralization is crucial for
understanding both the changes in the domestic economic and political policy areas
and circumstances. Kathleen O’Neill (2003) mentions that the flow of idea and the
influence of globalization on decentralization process across countries are just a
nuanced one,
120
yet the internationally accepted idea has the greatest influence on
the substance of the decision of decentralization, when it coincides with the
domestic political-economic context. Therefore, because changes in the domestic
context alone fall short of capturing the full complexity of the promotion of

120
O’Neill (2003).
74
decentralization in a country, the analysis of decentralization requires a further
exploration of the effect of globalization. As the next section will show, the
changing international context of decentralization reforms provided new
opportunities for decentralists in both societies, and new pressures on their
governments.

2.3. CHANGES IN GLBOAL ENVIRONEMNT: GLOBALIZING ECONOMY
AND THE FLOW OF IDEAS

Just as state policies and political opportunities at the domestic level
systematically shaped the pattern and level of central-local relations in Japan and
Korea, the evolution of political-economic structures and ideas at the global level
have also affected the emergence of decentralization reform. As many scholars in
this field mention, international organizations such as the World Bank and the
Organization for Economic Co-operation and Development (OECD) published
numerous papers and reports that highlighted the benefits of decentralization in
governance in order to propel reform projects around the world. In fact, the social,
political, and economic influence of globalization on domestic politics – in
particular, central-local relations – were handled without careful consideration as an
opportunity structure or an immediate source of decentralization in conventional
studies, yet this chapter examines how the changing global political-economic
context and the flow of ideas make an impact on domestic policymaking and
political dynamics around the issue of decentralization. As Kahler and Lake (2004)
conclude, the effect of globalization on governmental authority is highly contingent
on the context of domestic politics. The following analysis shows that the
75
globalizing economy and the flow of ideas have the strongest effect when it is
understood within the circumstance of a specific country.
121

In fact, though the conventional wisdom is that globalization fosters
decentralization across countries,
122
there is still no clear causal relationship
between them. Instead, the effect of globalization and the globalizing economy has
been mixed. One the one hand, in many cases, national politicians and policymakers
attempt to devolve responsibilities for costly local spending to officers at the
subnational level when financial conditions are tight. In this case, decentralization
can be a strategic choice to globalization and the economy by national political
elites trying to consolidate or secure their positions under economic crisis, because
the strategy may minimize blame for their policy shortcomings.
123
Otherwise,
economic shock and the globalizing economy undermine national leaders who
dominated the decision making process, and there will be pressures from below for
restructuring the state.
124

One the other hand, ideas or knowledge from a globalizing world can create
an ideological climate that suggests that a highly stratified structure in a country is
futile and could hurt national competitiveness in the globalizing economy.
125
For
example, the process of economic restructuring since the economic crisis of the mid-
1970s and the global wave of neo-liberalism in European countries was the most

121
Although O’Neill (2003: 1071) considers the effect of globalization as a nuanced one, she agrees
that international consensus on decentralization reform has its influence when it coincides with the
political incentives for politicians and policymakers.
122
For example, OECD (2001).
123
Kahler and Lake (2004); Pickvance and Preteceille (1991).
124
Scholars such as Saskia Sassen (1996) argued that globalization may cause states to suffer a
reduction and destabilization in the institutions in charge of regulating the economy and a decline of
state sovereignty. Yet I do not mean that domestic institutions matter less and less because the nation-
states are incapacitated or hollowed out, unlike the opinions of Giddens (2000) and Sassen (1996).
125
Campbell (2004: 170) takes an example of the Clinton administration’s federal budget cut.
Clinton cited the pressures of globalization to legitimize a painful federal spending cut.
76
important aspect of the trend of territorial reorganization.
126
As briefly stated above,
the New Public Management movement (NPM) advocated and practiced in Anglo-
Saxon countries as a government reform model, and was popularized around the
world in the1990s following the Gore Report in Clinton administration.
127
More
importantly, policymakers who were affected by these ideas put reformers and
decentralists on important governmental positions to pursue reform programs, and
this group was gripped by the decentralization idea as a weapon against divergent
interests.
128
While a globalizing economy and economic crisis provides the
overarching structure for state restructuring, the flow of an idea like neo-liberalism
helps policymakers legitimate their policy solutions to the public.
The cases of Japan and Korea seem to have these aspects of globalization in
the context of decentralization reform. The current decentralization drive was
initiated under pressure from the globalizing economy, and the mode and direction
of the decentralization reform were influenced by the world-wide wave of authority
migration. The analysis will show how these globalization factors shape the new
relationship between central and local governments in both countries.

Globalizing Economy and National Competitiveness
A popular speculation on the relationship between the globalizing economy
and decentralization reform is that globalization has caused a downward shift in the
locus of governance by reducing the economic costs of smallness, and allowing
localities and regions with distinctive preferences to pursue their own political and

126
Pickvance and Preteceille, ibid.
127
The core logic of this model consists of the following three factors: a) downsizing the
government (small is better), b) employing corporate governance into public organization (private is
better), and c) empowering front-line workers (more discretionary contains more accountability). See
Osborne and Gaebler (1993).
128
Hall (1986), p.276-280.
77
economic strategies.
129
In particular, the economic slump or crisis is a powerful
triggering force for policymakers to pursue political-administrative reforms as well
because the sudden shock from the global economic environment altered people’s
perception of the existing political system as seen in the previous section.
Widespread public support for reform blocked resistance by powerful
interest groups and political gridlock by giving reform leaders greater credibility and
justification for implementing their reform programs.
130
Therefore, to respond to
financial difficulties in a globalizing economy, many countries including advanced
economies such as the United Kingdom, New Zealand, and the United States
attempted to restructure and become more flexible in responding to this rapidly
changing economic environment. In addition, developing countries such as Brazil
and Kenya desired to meet some global standards imposed by international
development organizations. As Karmack (2000) pointed out, global economic
competition is one of the causes of national reform; and the globalizing economy
and forces of a global standard foster domestic institutional change in numerous
ways. First, increasing global competition and economic crisis empower top
political leaders to take a substantial step forward toward political, economic and
administrative reform. Second, those changing global environments provide the
supporters of reform to relieve the opposition. As Peter Gourevitch mentions, the
economic crisis opens up a new opportunity and possibility for unusual policy-
making.
131

In a globalizing economy, the ‘old system’ of Japanese governance faced a
lot of challenges from these changing conditions. First of all, the failure to carry out

129
Alesina and Spolare (1997); Bolton and Ronald (1997).
130
Haggard (1995).
131
Gourevitch (1986), p.22.
78
effective financial and economic reform pressured Japanese economic sector to
catch-up with the more competitive industries of the United States and the United
Kingdom.
132
The wave of convergence and globalization that eroded the traditional
territorial boundaries separating the economic and financial market have heightened
competitive pressures in the economic sector, and put a premium on economic and
financial innovation. Japanese companies have moved out of the country or were
challenged by foreign firms, and bureaucrats experienced a substantial reduction in
the number of policy tools available to them.
133
The economic difficulty brought a
cleavage between internationally competitive sectors and non competitive sectors
and this cleavage resulted in the formation of different preferences to economic,
structural and administrative reform among them.
134
Given this situation, reformist
political leaders such as Morihiro Hosokawa and Ichiro Ozawa emerged, and their
appearance in Japanese politics constituted Japan’s greatest chance for realizing a
broad range of reform programs – including decentralization reform – that have
prolonged old patterns of sectoral networks (zoku).
135
In fact, up until the late 1980s,
there were several structural and economic reform programs, yet those reforms and
political corruption scandals like the Recruit scandal highlighted the apparent
dysfunctional character of Japanese system in the 1990s.
136
Therefore, although the
public was less interested in or did not reach consensus on the goals of various
reforms and the direction of those reforms there was not a simple replication of the
experience of the liberal economies,
137
and state restructuring projects created an

132
Norville (1998).
133
Pempel (1999); Vogel (2005).
134
See Pempel (1999), his last chapter (p.206-219).
135
Carlile (1998).
136
ibid, p.91-93.
137
ibid; Curtis (1999: 25-64); Vogel (2005: 42-43)
79
opportunity for the promotion of decentralization reform by empowering reformist
politicians and weakening integrative interest groups and the central bureaucracy.
The foreign exchange crisis in Korea triggered a series of structural and
political-administrative reforms. In 1998, the economic crisis and the imposition of
International Monetary Fund conditionality provided the Dae-jung Kim government
with a new mandate and leverage to implement the task of addressing the issues of
recharging national competitiveness under the globalizing economy. To be relieved
from the IMF bailout as soon as it could, the Kim government endeavored to
remove the barriers to economic liberalization and structural adjustment.
138
By
launching ‘the second nation-building campaign,’ – although the campaign was not
well accepted by the public – the Kim administration carried out important reform
programs such as the reorganization of the financial system and restructuring of
chaebol without serious social opposition.
139
In addition, during the period of the
IMF bailout, President Kim (1998-2003) effectively exploited “outside pressure” –
e.g. international investment banks, international organizations, etc. – to implement
structural reforms and carry out important reform legislation by securitizing the
status of the Korean economy.
140
Incumbent president Roh (2003-present) is also
devoted to continuing those structural reform projects under the sagging economy.
On major reform issues, he made it clear that his administration would be tough on
big conglomerate reform and the issue of government-business relations, and vowed
to create a new administrative capital city outside of the Seoul Metropolitan Area in
order to promote balanced national development in a globalizing economy.
141

138
The barriers included foreign ownership of land and foreign companies, which were forbidden
by past administrations. Mo and Moon (1999: 162).
139
Kihl (2005), p.177-180.
140
Mo and Moon (1999), p.160-1.
141
Kihl, ibid.
80
In sum, economic hard times in Japan and Korea play a crucial role and
create an opportunity structure for the promotion of various reform projects
including intergovernmental reforms, which have been delayed or failed in the
postwar period. The rapidly changing global economy and environment awakened
reformist politicians and bureaucrats, as well as the general public, to the danger of
national competitiveness. Although state bureaucracies in both countries buffered
their domestic economies from international markets while domestic industrialists
collaborated in the pursuit of national economic goals, the situation changed in the
1990s and those principles become subject to major external pressures.
142

The Flow of Ideas and Organizational Structure in Politics
Internationally developed and accepted ideas such as neo-liberalism affect
institutional change by virtue of the fact that key policymakers embrace new reform
agendas and issues, transport them into policymaking arenas, and carry them out in
ways that change institutions. In particular, under the great ‘uncertainty’ of
economic crisis and the political-social pressure for reinventing government and the
economy, top political leaders and decision makers mobilize ideas for
implementation of ‘certain types of innovative paths’ that constrain the range of
options for them.
143
Among those limited range of options, decision makers choose
policies that are publicly acceptable.
144
Therefore, the concept of ideas is very
useful for identifying why a particular and limited range of policy options like
decentralization and deregulation are adopted by national leaders.
145

142
Pempel (1999).
143
Blyth (2002). Campbell (2004: 115) puts, “most institutionalists agree that ideas other than
interests matter most for institutional change under conditions of great uncertainty, that is, when
decision makers are faced with unusual or unsettled situations that make it difficult for them to
devise clear programs…” For certain actors, such uncertainty is perceived as a ‘crisis.’
144
Weir (1992).
145
Yee (1996); Campbell (2004).
81
Under this great uncertainty of an economic crisis and the globalizing
economy, a certain set of concepts and theories facilitate institutional reform by
specifying and defining the economic and structural problems that policy makers
and top political leaders are faced.
146
First, those concepts and theories such as
liberalization of national industries or the reduction of state intervention in the
market order – i.e., neoliberal programs – help for policymakers as well as private
actors to chart a clear and specific course of action. They offer a “roadmap” that
provides a clearer direction of policy orientation and elicit socio-political support
under uncertainty.
147
Moreover, policy makers are likely to see those programs
favorably because they have an advantage of making coalition and gaining political
power and resources by dealing with those programs.
148
When Japan and Korea
faced economic recession and exchange crises in the 1980-90s, the implementation
of “liberal” reform programs such as deregulation, privatization, and
decentralization were believed to improve innovation, productivity, economic
growth, and national competitiveness.
149
In Japan, since the collapse of the Liberal
Democratic Party (LDP), prime ministers and top political leaders – in particular,
those who had limited bases of support from political parties – adopted the reform
strategy of liberalizing the economy. For example, against sectional politics and the
influence of LDP factions, Morihiro Hosokawa (1993-1994) tackled many radical
and difficult policy agendas such as the GATT Uruguay Round negotiation and
deregulation for curing the “Japanese disease” under the eight-party coalition

146
Campbell, ibid; Goldstein and Keohane (1993).
147
Goldstein and Keohane, ibid, p.17-20.
148
Blyth, ibid.
149
This belief can be found in the example of the crisis of Keynesianism and the adoption of
neoliberal programs in advanced economies such as the U.K and the United States. Selected
examples in Campbell (2004), p.151-2.
82
government.
150
Hashimoto (1996-1998) , who did not have a substantial support
basis had attempted to break the connection between public-works ministries and
tribe politicians by restructuring government organization,
151
and proposed so c
“big bang” reforms containing liberalization of the market and national econom
This circumstance – i.e., economic recession with globalizing economy and
breakdown of old regime – might provide a favorable condition for the prom
decentralization. Indeed major decentralization programs were legislated in th
period.
alled
y.
152

otion of
is

In Korea, widespread public support for reform blocked resistance by some
interest groups and political gridlock by giving reformist leaders greater credibility
and justification for implementing reform programs. Although neo-liberal reforms
increased during the IMF bailout, the government reform strategy began earlier than
the economic crisis of 1997. Young Sam Kim, the first civilian president since 1961,
announced his vision of a ‘globalization strategy (segyehwa)’ in Sydney, Australia
where he held a press conference following his highly visible participation in the
Asia-Pacific Economic Cooperation (APEC) summit in Indonesia (November 17
th
,
1997). Although his reform package was criticized for containing more rhetoric and
verbal attacks of the catastrophic consequences of the economic crisis of 1997,
Young Sam Kim’s proactive plan toward globalization brought some positive
change in Korea.
153
First, Kim’s globalization policy revealed the problematic
relationship between politics and business in Korea, which created inefficiency and
corruption, and overloaded in sustaining high-growth economy on people’s mind.

150
Curtis (1999); Shinoda (2000).
151
Curtis (1999); Furukawa (2002); Mishima (1998).
152
Vogel (2005), p.84.
153
Young Sam Kim’s globalization strategy was ambitious, yet the Korean economy was simply not
ready for a wide open-door policy (Oh, 1998: 150; Kihl, 2005: 140-1).
83
His policies such as an anti-corruption law, real-name banking system, and a fair
competition law attempted to reduce the chaebol’s predominance in the economy, to
increase international competitiveness by encouraging specialization in core
business activities, and to promote small and medium-sized companies.
154
Although
the reform was not successful to cure the ‘Korean disease’ (meaning the problems
stated above), it clearly showed the direction of the reform in preparing to open the
economy.
155
Second, his globalization policy pushed the government and business
practices to meet ‘global standards’ or international norms as referenced to the
OECD, the World Trade Organizations (WTO), and so forth. As the rate of
economic growth in his first term (1993-1995) declined, his administration carried
out reform programs and policies motivated by neoliberal ideas with the hope of
achieving economic ascendancy during his term in office.
156
For example, the idea
was mobilized to reorganize inefficient central ministries and made bureaucrats
recognize that their positions were not safe anymore.
157
As a result of Young Sam
Kim’s globalization drive, - although it was partially successful in that Korean
society slowly adjusted to the emergence of globalization – his policy became a
basis of rapid economic and political reform in the Dae-jung Kim and Moo-hyun
Roh administrations. By carrying out neo-liberal reform programs such as
privatizing public enterprises and deregulation, the Dae-jung Kim government
effectively mobilized political support from the general public and policy expert

154
Young Jo Lee (2000), p.104-112.
155
Kihl (2005), p.138-9. Despite the Kim administration’s effort to press for active globalization,
almost all sectors of society and business resisted its moves.
156
Liberalization policies were required to gain membership into the OECD (1996). In Kim’s
several addresses, he defined the concept of globalization as a borderless global economy, with the
liberalization of capital, technology, goods, and service that appeared in neoliberal theory. ibid,
p.152-4.
157
Many powerful ministries were merged and there were many lay-offs among bureaucrats in
December 3
rd
, 1994. Pan S. Kim (1999), p.169.
84
groups and stabilized his political basis.
158
He established specialized committees
dealing with issues of globalization and reform, and frequently mentioned his policy
combining neo-liberal reform and democratic consolidation in several addresses as
Diamond and Shin (2000) show. Incumbent president Roh pays attention to the
strategy of the ‘bloc economy’ in the East Asian region and emphasized the role of
Korea as a hub in the region.
159
He takes the lead in this structural reform process
by initiating somewhat innovative policies such as the creation of administrative
capital city.
160
In various addresses and press conferences, he frequently mentioned
the importance of the implementation of restructuring the state to achieve the goal of
national competitiveness in economic integration, despite opposition to his
policies.
161

In 2003 of Korea and the world, there has been a tremendous transformation
coming from the age of globalization, information, and localization, and we
must maximize the potential of localities to achieve national development
under the new environments….by promoting locals and regions as niches for
innovation and dynamics, this government will endeavor to achieve the
advanced country status through local development…
162

It is very important time for Korea whether to be a central country of Northeast
Asia or stay in a secondary country of the region…many countries considered
decentralization strategy as a crucial national priority in the age of global

158
Ha (2006:14) puts “Dae-jung Kim administration recognized that the exchange and financial
crisis and the pressure from the IMF were the greatest chances to implement neo-liberal reform
programs without serious challenges from social groups.”
159
He established the committee to prepare the Northeast Asian bloc economy, the Presidential
Committee on the Era of Northeast Asia, which deals with affairs related to Korean unification,
economic integration, and cooperation, etc.
160
Following Brazil’s example of building a new capital city, the Roh government announced the
construction of 7,130 hectares of a new administrative capital in Yeongi-Gongju region (August 11
th
,
2004). See http://www.citymayors.com/environment/korea_newcapital.html.
161
In fact, the opposition party called for the impeachment of President Roh for the violations of
abusing his power and electioneering, yet it was rejected by the Constitutional court in 2004.
162
Roh, Moo-hyun. Taegu Declaration. June 12, 2003 (emphasis added by the author). Available
on-line at http://www.president.co.kr/cwd/president/speech.html (in Korean).
85
competition and they are implementing a localization strategy to transform
their system to respond to global changes. In Korea, decentralization is very
delayed…
163

In sum, the common theme of those programs in the era of globalization was
to rebuild ‘small but strong government’ by reinventing central government that
required downsizing, privatizing, deregulating, and delegating central affairs and
organizations. In doing so, top political leaders in Japan and Korea mobilized neo-
liberal programs to stabilize their basis of political support by overcoming strong
opposition from old stakeholders at the center – i.e., central bureaucrats and sectoral
interests – and recognized the direction of the reforms needed to be taken under the
uncertain global economic context.
In a similar vein, the other side of the benefit of a certain normative value or
concept – known as an idea like neoliberalism or Keynesianism – is to ‘frame’ the
discursive background of current reform debates at the macro-level. This concept or
idea, or what Campbell (2004: 98-9) calls a ‘frame’ legitimized reform programs or
policies to constituents and opposition parties when top policymakers in politics (or
business) planned to carry out controversial or innovative reform programs.
164
In
doing so, the idea facilitated the adoption of those programs. For example, reformist
leaders in Japan and Korea defined the economic situation at the time as a ‘crisis’ of
the old model of economic management and emphasized the need for a new
approach to maintain the growth of the national economy and to cure existing

163
Roh, Moo-hyun. Forum on Five-Year Innovative Development of Incheon Regions. July 8, 2004.
Cited in CNBD (2004), p.28-29.
164
It is necessary for top political leaders or policymakers to justify or legitimize their programs to
general public or opposition parties through various rhetoric symbols or language tools (Schmidt,
2001). When British government adopted radical neoliberal programs in the 1980s, the Thatcher
administration successfully legitimized their programs by ‘framing’ that the country had a long
history of market-oriented principle and small government (Campbell, 2004: 99). Bleich (2002:
1063) mentions that the concept of a frame is the most likely to integrate into policymaking models
because it helps decision makers’ identify problems and specify interests and goals.
86
economic problems. Neoliberalism was the strategy used by those reformist
politicians and decision makers in both government and businesses.
165
The
advocates of neo-liberal reforms frame the implementation of neo-liberal reform
programs by highlighting the inefficiency and weakness of the existing centralized
system by arguing that the existing economic system might face serious crisis in the
age of a global economy. Under the name of improving ‘national competitiveness,’
somewhat radical reform programs were adopted. For instance, the former Japanese
Prime Minister Morihiro Hosokawa, based on his experience and vision for Japan’s
future, defined the Japanese dysfunctional politics and economy as a ‘Japanese
disease’ and brought about a somewhat radical reform agenda of deregulation,
decentralization, electoral reform, and so forth.
166
As seen in the above example of
Korea, the former president Dae-jung Kim effectively used the rhetorical language
of ‘achieving market-economy and democratic consolidation’ for national economy
recovering from an exchange crisis.
167
In conclusion, ideas provide strategic
guidance to political entrepreneurs by suggesting ways to achieve policy goals, by
framing the discourse, and proposing specific action s.
If so, how does it work in the policymaking process? As Yee (1996)
mentioned, a new idea like neoliberalism emerges through the process of scientific
revolution that was suggested by Thomas Kuhn. For example, the economic hard
times in the 1970s like the rise of the unemployment rate and inflation undermined
the assumptions of Keynesianism, and economists, think tanks, and policymakers
experiencing intellectual crisis began searching for alternative policies. To resolve

165
Similar examples can be found in conservative reforms in 1980s British and U.S. Hall (1986);
Campbell (1998).
166
Curtis (1999), p.106-7, 123.
167
Diamond and Shin (2000); Kihl (2005).
87
the problem, various alternatives were suggested, and finally neoliberal programs
were adopted by many countries.
168
Like this example, when the existing program,
paradigm, or specific policy cannot effectively resolve the policy failure under great
uncertainty, which the general public and policymakers perceive as a crisis,
policymakers, in turn, reexamine or reinterpret their previously taken-for-granted
policies and assumptions about their problems or situations. In doing so, perceived
problems or crises open up the possibility of adopting a new idea when the
policymakers were convinced that programs influenced by the idea would resolve
the policy failure and increase national competitiveness. Finally, actors convinced
by consultations and evidence perceived this new idea as an alternative.
169
Except
for the occasional exceptions, the benefits of neo-liberal reform programs in solving
economic problems are internationally known to political-economic leaders as well
as expert groups, and experiences in advanced countries like the U.K. and the U.S.
and serve as a model of reform. By the same token, it can be imagined that
decentralization reform, whose benefits are well known, is likely to be adopted by
policymakers in resolving problems stemming from a highly centralized system in
Japan and Korea. In particular, as seen in above, top political leaders perceive
decentralization reform as an alternative response to the globalizing economy and
for improving national competitiveness.
The source of an idea can be vary, yet a group of scholars suggest that
policymakers find an idea from epistemic communities, media, scholarly groups,
business consultants, international organizations, expert advisors, and so forth.
170

168
Campbell (2004).
169
Ibid; Sikkink (1991).
170
Haas (1992) argues the role of an epistemic community in the diffusion of ideas. Campbell
(2004) called these groups “brokers” of ideas. Hall (1993: 277) argues that past policies or
reasonable reaction to past policies can be a source of new ideas.
88
89

Experts or members of epistemic communities, by diffusing ideas that are adopted
by a wide range of policy actors such as governmental agencies, bureaucrats,
politicians, and corporate leaders, influence the background of policy debates.
171

Second, bearers of idea – e.g., members of an epistemic community – occupy
advisory councils or important governmental positions and insinuate their theories,
insistences, or views on public policies.
172
In Japan and Korea, several reform
programs including decentralization in the 1990s-2000s were clearly under the
influence of neoliberalism, – whether the programs faithfully follow the assumption
of it or not as, V ogel argued – and university-trained scholarly groups, business
groups, civil activists as well as international organizations (IMF and the World
Bank) contributed to the implementation of those programs.
173
In particular, as we
will see in the next chapters, experts who have been deeply engaged in the issue of
decentralization played a crucial role in pushing forward the reform programs of
intergovernmental relations in both countries by occupying administrative reform
councils, ministries, or even top political positions. Therefore, it is required to
investigate how a globally accepted idea shapes the discursive background and
influences specific decentralization programs in both countries.

171
Haas, ibid.
172
According to Haas (1992), this process is an ‘institutionalization of idea’ in government
organizations. Weir (1993: 84) argues that ‘administrative arrangement’ such as the open recruitment
procedure of the bearer of a new idea (Keynesianism) was the critical factor for the formation of
economic policy in Britain and the United States. Kathryn Sikkink (1991: 23-27) insists that certain
institutions bearing new ideas can practice the idea through organizational support or means of
expression to public policies.
173
Vogel (2005).
CHAPTER 3
DECENTRALIZATION PROPOSALS: THE SOURCES OF
POLITICAL DEBATES

3.1. THE DECENTRALIZATION TREND

The previous chapter of this dissertation argued that in order to understand
the sudden emergence of decentralization agendas in both countries, political-
economic factors at both the domestic and global level matter. As the rest of this
dissertation shall show, the development of intergovernmental relations in Japan and
Korea provides a good illustration of those arguments.
Decentralization reforms in Japan and Korea appeared later than other
equally advanced industrialized countries. The changes in intergovernmental
relations in both countries were made piecemeal, and there are still a lot of obstacles
to comprehensive decentralization reform. The indicators of local autonomy are still
weaker compared to those in leading western democracies such as the United States.
Although there has been tremendous development in the past decade, there are still
many challenges for realizing decentralization in these countries. Therefore, it is
necessary to investigate the overall process and substantive contents of
decentralization reform in Japan and Korea, to identify the core issues that became
the sources of conflicts and debates; and the major political actors who were
involved in the politics of decentralization.
Before decentralization became a popular policy tool for curing the ills of
governance across countries, Japan and Korea’s history in the twentieth century was
‘an age of central (or national) government,’ as discussed in the earlier chapters. In
that era, central government endeavored to achieve a set of national goals including
90
socio-economic development, and in doing so, central bureaucrats and sectoral
interests became influential. Yet, under the economic recession, the rationality of
centralized government lost its credibility, and decentralization became one of
keywords in the wave of administrative reform in late twentieth century. As B. Guy
Peters noted, it is assumed that what is so called ‘big government’ or the
‘administrative state’ is gone.
1
Therefore, decentralization, deregulation, and
privatization became popular reform strategies aimed and transforming highly
centralized governments.
Before the decentralization reform programs were enacted in both countries
in the 1990-2000s, there were several attempts for revising skewed central-local
relations. According to previous studies, there were at least four phases of
decentralization efforts before the 1990s.
2
Therefore, it should be noted what those
efforts contain and what were achieved, before we move to the discussion of current
wave of decentralization. This chapter starts with a brief analysis of the changes of
decentralization reforms in postwar Japan and Korea, and then focuses on the
decentralization reforms of the 1990-2000s and their limitations.

Japan: Phases of Decentralization Reform
The characteristics of the past decentralization reforms in postwar Japan
(1945-1990s) were that the sectoral politicians and central bureaucrats had a
tendency to seek somewhat modest changes, while the pattern of change in central-
local government relations over the past fifty years fluctuated. In other words,
transforming the central dominant model of intergovernmental relations has been a

1
Peters (1996).
2
Koike and Wright (1998); Choi and Wright (2004).
91
focal point of a series of administrative reforms in postwar Japan, and many reform
councils and institutions have placed decentralization on the critical reform agendas,
as noted earlier.
3
Yet, the accomplishment of those efforts have not resulted in
sufficient changes in central-local relations because of ‘pork-barrel politics’ – in
particular, resistance from central bureaucrats and politicians.
Under the prewar constitution (the Meiji Constitution), the central
government considered the prefectures and municipalities as local branch offices of
central ministries, and appointed governors and local officers who were the former
staffs of central government – in particular, the Ministry of the Interior (Naimusho).
4

As a consequence, until the Supreme Commander of the Allied Powers (SCAP)
carried out a lot of reform programs during the Occupation, including the abolition
of the Ministry of the Interior and introduction of electoral local democracy, the
central government exercised great administrative power through local
governments.
5

Based on the history of intergovernmental relations in postwar Japan, Koike
and Wright classified five phases of policy shifts over the last half century.
6
As
Table 3.1 shows, the first phase of decentralization (1945-1950) was the period of
founding the basis of local democracy in Japan. Through the revision of the
constitution (1946) and Local Autonomy Law (1947), the direct election system for
the establishment of local assemblies and executives was introduced, and the

3
Jun and Kato (1998); Furukawa (2002).
4
According to Horie (1996: 52), under the Meiji Constitution, governors and the head of counties
were appointed by the central government, and mayors of municipalities were elected by the city
council whose members were recommended by the Ministry of the Interior.
5
ibid, p.49. This centralization of administrative power was aimed at effective wartime mobilization.
6
This section is based on Koike and Wright (1998), Horie (1996) and Steiner (1965). The fifth
phase will be discussed in the later section.
92
responsibilities and functions for local governments were established
7
In addition,
the Ministry of the Interior, which was considered to be the enemy of local
democracy and which had exercised an omnipotent power over local affairs, was
abolished.
8

Table 3.1: Phases of Decentralization Reform in Japan
Phase Year Major Reforms and Events
First Phase: Foundation of
local Electoral Democracy

1945-1950
• New Constitution (1946): The concept of local
autonomy (authorities and responsibilities for local
affairs) and direct election system were introduced.
• Abolition of Ministry of the Interior
Second Phase: Centralization
in National Development

1950s-1960s
• Recentralization of administrative affairs: police
and education-related affairs (1951 (police), 1956
(education)
• Increase of agency-delegated functions (kikan inin
jimu): nationally mandated functions.
Third Phase: Progressive
Movements

1960s-1970s
• The National Development Plan (Zenso, 1962):
targeted the development of rural regions, and
more balanced development
• New Industrial Cities Act (1962): provided
incentives for local governments.
Fourth Phase: Collaborative
Devolution

1980s-1990s
• Decentralization reform proposals from various
reform committees: Rincho and the Provisional
Council for the Promotion of Administrative
Reform
• Privatization, National grant reduction, Federation
of local governments
Source: Koike and Wright (1998), p.204-216

The second phase from the 1950s to 1960s can be labeled as ‘a reverse
course’ to decentralization. In the name of industrialization and rehabilitation of the
national economy, an ‘efficient administrative system’ was stressed by national
political leaders and businesses. While local autonomy became gradually rooted at
the level of society, central politicians and businesses preferred a more rationalized

7
The Constitution (1946), Article 92-3.
8
Koike and Wright, ibid, p.207-8. Under the Meiji Constitution, the Ministry of the Interior played a
crucial role in mobilizing local governments during wartime. Horie (1996).
93
and efficient administrative structure – i.e., a centralized one – to support
industrialization. In this period, the authority for policy-making in public safety
(police) and the education field were centralized in the hands of central ministries
and agencies such as the National Police Agency and Ministry of Education. In
addition, by using what is so called ‘agency-delegated functions’ (kikan inin jimu),
central government could directly control over local governments which were
heavily dependent upon sponsoring central ministries.
9
Even some national
politicians proposed the abolition of the local election system, but it failed. In sum,
though political opposition from below blocked some dramatic changes to ‘re-
centralization,’ administrative means were effectively mobilized to control localities
in this period.
In the third phase, as central government-led industrialization and economic
growth produced serious urban problems such as environmental pollution and a
diminishing quality of life in localities, progressivism in metropolitan cities and
prefectures proliferated. Progressive mayors who were often opposition party
members and non-Liberal Democratic Party officials initiated somewhat innovative
policies to remedy those problems and confronted central agencies.
10
Although the
oil shock in the late 1970s affected the decline of progressivism, the mayors showed
the growing power of Japanese localities. Meanwhile, central government provided
incentives for local development through national programs such as the National
Development Plan (zenso) that intended to balanced land development. In addition,
central governments expanded rapidly by establishing many public corporations

9
The meaning of agency-delegated functions (ADF) in Japanese central-local relations will be
discussed in the later section. ADF which constituted 70-80% of local administrative tasks minimized
the scope of local political arena that politics at local-level could autonomously decide local affairs
(Muramatsu, 1997).
10
ibid, p.40-48; Steiner (1980), Ch. 9.
94
such as the Japan Housing Corporation and the Highway Corporation whose
functions were redundant with those of local governments. As a consequence, the
third period (1960s-1970s) can be characterized as the confrontation between
growing localities and a powerful central government that caused coordination
problems.
11

Finally, in the fourth phase (1980s-1990s), both central and local
governments experienced serious financial difficulties since the oil shock of (1973)
and faced constant pressure from many other countries to open up the domestic
market at the same time. Under this situation, Japan had no choice but to launch
several reform programs to respond to international pressures and the financial
crisis.
12
In particular, various reform committees such as Rincho (The Provisional
Commission on Administrative Reform, 1981-1983) and the Gy ōkakshin (The
Council for the Promotion of Administrative Reform III, CPAR, 1990-1992)
proposed policy recommendations strengthening local autonomy by rationalizing
national subsidies and abolishing agency-delegated functions.
13
Additionally, the
creation of the federation of local governments including prefectures and
municipalities was proposed in order to encourage inter-regional cooperation in
resolving trans-local policy issues.
14
As a result of these efforts, some reform
proposals such as spending cuts and privatization of the three big public enterprises
– Japan National Railways, Nippon Telegraph and Telephone Co., and Japan
Tobacco and Salt Public Co. – were successfully adopted and implemented. Despite

11
Koike and Wright (1998), p.211-2.
12
ibid.
13
For example, PCPAR issued a recommendation for decentralization in 1992 when the former
Prime Minister Hosokawa was a member (1990-1992). Since 1995, CPD has also issued several
policy recommendations by urging the abolition of agency-delegated functions, improvement of local
fiscal austerity, and so forth. Curtis (1999).
14
ibid, p.212-3; Jacobs (2004).
95
those efforts, however, there was no big change in central-local relations,
15
and
strong opposition from bureaucrats in central ministries distorted the original
intention of the reforms that were suggested by Rincho.
16

As appeared in the history of decentralization reforms in postwar Japan, the
government dominated the decision-making process through its highly centralized
administrative structure in order to achieve rapid industrialization, and even many
attempts to change the relationship were central bureaucracy-led in nature.
17

Meanwhile, the status of local governments in Japan was not lagging far behind
compared to other western countries such as Italy, France, and Germany in terms of
the institutionalization of local governance and the financial situation.
18
Yet, the
central government’s intervention on local affairs through various policy tools –
which were considered as the most notorious facet of centralization by localities –
still persisted.
19
As discussed in Chapter Two, the turbulent political economic
situation in 1990s-2000s – which can be labeled to ‘phase five’ – provided favorable
conditions for the promotion of decentralization by putting down strong resistance
from central bureaucrats and sectoral interests, and empowering reformists in the
governments, localities and businesses. Therefore since the legislation of the
Decentralization Promotion Law (DPL) in 1995, dramatic decentralization reform
proposals emerged. Along with the massive political-economic realignment in Japan
in the 1990s, the limited nature of central-local relations is changing toward a more

15
Furukawa (2002).
16
Koike and Wright, ibid.
17
ibid.
18
In Sellers’ local governance indicator study, Japanese local governance is more advanced than
Western European countries, and less than Anglo-Saxon countries in terms of the structure of local
governments, state-society relations, and financial relations. See Sellers (2003).
19
Nishio (1999).
96
decentralized system, and the politics of decentralization in this period results in
more advanced measures.

Korea: Phases of Decentralization Reform
Korea experienced a remarkable development in local democracy and
decentralization for the last two decades since its transition to democracy in the late
1980s. Whereas the authoritarian regime (1961-1987) forcefully suspended the
practice of local democracy for thirty years, the legal foundations of local autonomy
had already been set since the first Constitution of 1948. However, dating back to
the 1990s when political elites made efforts to reorganize local governments, the
practice of full-fledged local democracy was quite a recent phenomenon. Therefore,
unlike the experience of Japan, local autonomy in Korea is often described as
‘delayed decentralization,’ ‘local democratic lag,’ or ‘late adoption of local
democracy.’
20
The bottom line is that even in recent decentralization efforts, the
persistence of centralism in central organizations and the political world was a
critical barrier to local democratization, while various reform efforts under civilian
governments (1993-present) have been continued.
It is hard to identically divide decentralization reform in to the five phases
of the Japanese case, yet the following classification shows how centralism
prevailed in the practice of local administration.
21
In the first phase (1948-1961), th
Syngman Rhee government (1948-1960) was interested in establishing the
institutional basis for autonomous local administration. In this period, basic local
administration units – upper-level (province and metropolitan governments) and
e

20
Bae and Sellers (2007); Seong (2000); Sunhyuk Kim (2006);).
21
This classification of five phases in Korean decentralization is based on Choi and Wright (2004).
The OECD (2001) simply divides the phases of decentralization into two (1948-1987, 1988-present)
based on before and after democratization.
97
lower-level governments (city, town, and township) – were established, and popular
elections for local councilmen and executives were enacted.
22
Despite this
development of decentralization, the process of reform faced gradual opposition
from the dictatorship of the Rhee government, the Korean War (1950-3), so the
enforcement of popular local elections and the practice of local democracy were
delayed.
23

The second phase (1961-before democratization of 1987) was the dark age
of Korean central-local relations. Military regimes (3
rd
, 4
th
, and 5
th
Republic)
dissolved all local councils, displaced basic local governments (city, town, and
township) as autonomous local entities, and returned to the appointment system of
local executive heads. In addition, the Ministry of Home Affairs had omnipotent
power over local governments by sending national bureaucrats to local governments
and requiring approvals for all resolutions of local councils. Military leaders (Chung
Hee Park and Doo-Hwan Chun) suspended the implementation of local democracy
under the plea of national reunification, administrative efficiency for economic
development, national security (threats of North Korea), and financial scarcity of
local governments. As a result, they sacrificed nascent local democracy in order to
maintain their ruling power,
24
and central bureaucrats who dominated the process of
industrialization and economic development became much stronger.

22
The Fourth Amendment of Local Autonomy Act (1960). See Moon (1999).
23
It was not until the Student Revolution occurred and the Democratic Party gained power in 1960
that popular local elections were implemented (December, 1960). Choi and Wright (2004), p.5.
24
ibid, p.6; Seong, ibid, p.131.
98
Table 3.2: Phases of Decentralization Reform in Korea
Phase Year Major Reforms and Events
First Phase: Constitutional
Foundation of Local
Democracy

1948-1961
• Constitution of 1948: The legal status of local
government and local autonomy. Establishment of
basic units of local administrations. Enactment of
Local Autonomy Law.
• Delayed popular election until December 1960:
Korean War (1950-3), Dictatorship of the President
Syngman Rhee.
• Implementation of popular local elections under the
Democratic Party government (1960-1961).
Second Phase: The Dark Age
of Central-Local Relations
under Military Regime

1961-1987
• Military regime forcefully suspended the practice
of local democracy: The Military Commission
Decree No.4 (1961).
• Abolished local councils, appointed the executive
heads of local governments, and displaced basic
local governments as autonomous units.
• Centralized national economic development.
Third Phase: Democratization
and Preparing for
Decentralization

1987-1994
• Democratization and Amendment of new
democratic constitution (1987).
• Political leaders promised for restoration of local
autonomy during presidential campaign.
• Revision of Local Autonomy Act (1990):
Reorganization of local council and executive head
of local government.
Fourth Phase: Gradual
Development of
Decentralization
1995-2002
• Revision of Local Autonomy Act (1994): Popular
election for local executive heads and councils.
• Devolution Promotion Act (1999)
Source: Choi and Wright (2004); Moon (1999).

The third phase (1987-1994) is a turning point to democratization and
democratic consolidation. After the collapse of the authoritarian regime in June of
1987, a nation-wide democratic movement and political victory over
authoritarianism produced new constitution containing several democratic
mechanisms and institutions such as articles for the direct election of the president,
human rights, a constitutional court, and local governance. In particular, candidates
running for presidency – i.e., Tae-Woo Roh, Dae-jung Kim, and Young-sam Kim -
in 1987 election announced the enforcement of full-fledged local democracy as one
of their core campaign pledges, and the Local Autonomy Act that introduced the
99
direct election of local councilmen and executive heads of local government was
revised in 1988.
25
Although the development of decentralization in the age of
democratization made a meaningful step toward more decentralized governance,
however, centralism still prevailed in the political world. In the process of
decentralization, ministerial bureaucrats and politicians in the ruling party – mostly
old generation from authoritarian regime – were reluctant to share their power.
26

Decentralization for democratic local governance was gradually issued in the
governmental agenda, yet opposition from ministries and politicians and the lack of
a buttress of the reform from below were still not enough to support reform.
Whereas democratic movements at the national level flourished in this period, the
mobilization for local democracy from the local and civil society level was not
developed enough.
27

Finally, in the fourth phase (1995-2002), there was substantial progress
toward decentralization by allowing for the direct election of both local councilmen
and executive heads of local government through the revision of the Local
Autonomy Act (1994). In addition, since then local government has made their own
bylaws and ordinances regarding local affairs within the scope of legal and
constitutional boundaries. In this period, as the OECD report describes, Korean local
governments gradually strengthened their authority to decide public policies dealing
with local demands and problems, and the financial discretion of local governments
increased slowly but steadily.
28
Moreover, civilian government leaders have

25
Jong Soo Lee (1996), p.6. The local council election was introduced in the revision of the Local
Autonomy Act (1988), yet President Tae-Woo Roh who feared the growth of local political power
over central government vetoed the bill.
26
Seong, ibid.
27
Sunhyuk Kim, ibid.
28
OECD (2001).
100
emphasized the continuous pursuit of structural reform in order to overcome
economic slowness, and thus governmental reorganization programs were
popularized in this period. For example, as a part of the downsizing and
reorganizing efforts by the central government, the Law for the Promotion of
Transfer of Central Authorities was passed in 1999, and reform committees such as
the Presidential Committee on Devolution Promotion (1999) were established in
order to accelerate the transfer of central functions and government innovation.
Despite these developments, since the mid-1990s, however, central politicians still
did not pay much attention to the issues of decentralization, and bureaucrats in
central ministries – in particular finance-related ministries – behaved in opposite
direction to the reform.
29
Instead, the government-initiated economic recovery
program of the Dae-jung Kim administration ironically resulted in much more
concentrated economic resources and political authorities at the center because it
emphasized the ‘efficient’ and ‘fast’ rehabilitation of the national economy through
centralized organizations.
30

In sum, although the overall process of decentralization in Korean history
had showed somewhat tremendous development since democratization, the reform
was not finished yet, and still suffers from prevailing verticalism. Local
governments were to a large extent dependent upon financial grants from national
government. Their decisional power over local affairs was still limited, and
instructions or supervision from central ministries still existed.
31
As a result,
although the overall level and degree of decentralization in Korea was not far behind

29
Interview, a senior bureaucrat in the Ministry of Government Administration and Home Affairs
(October 12, 2005). According to him, reform programs in the Dae-jung Kim government more
focused on the efficiency rather than on equity so that bureaucrats in central ministries were less
interested in sharing their power with local governments.
30
Presidential Committee on National Balanced Development (2004), p.37.
31
Choi and Wright, ibid, p.8-9.
101
from other centralized countries in Western Europe as Japan was, much more
comprehensive decentralization is necessary to make a balanced relationship
between the central and local governments. Supportive participation from below for
further decentralization is also an indispensable condition for the promotion of
decentralization.
32
In this vein, the economic crisis and political changes since the
late 1980s provided momentum for the pursuit of decentralization reform by
empowering reformists and softening the resistance from the center. The following
analysis will show what the focal point of decentralization reform is, and what the
major achievements and limitations are in the fifth phase.

3.2. BEFORE AND AFTER THE 1990S: DECENTRALIZATION
PROPOSLAS IN THE FIFTH PHASE

The analysis of the fifth phase of decentralization below is quite a recent
phenomenon, though the favorable condition has been fostered since the 1990s. The
lesson from the past attempts to transform central-local relations, which were failed
or partially succeeded, was twofold: first, limitedness of the past reform programs
was due to strong resistance from central bureaucrats and sectoral politicians.
Second, the common target of the reform was to minimize or screen out the direct or
indirect intervention from central ministries. In analyzing the processes and
achievements in this phase, it shall be clear how those issues were resolved.

The Decentralization Proposal in Japan: Process and Achievement
The term ‘administrative reform’ is in general an inclusive expression that
connotes a whole range of policy issues such as deregulation, privatization,

32
Sunhyuk Kim (2006).
102
decentralization, government innovation, and so forth. In the case of Japan,
administrative reform frequently refers to a very specific form of policy reform,
privatization. It started in 1981 and various measures have been extended since
then.
33
Under the watchful eyes of the reform councils, the governments
successfully privatized three major public enterprises in the early 1990s, yet the
issues of deregulation and decentralization, which have been considered to be
significant components of administrative reform, have been accorded different and
special treatment. In other words, decentralization obviously becomes a real threat
to the power and authority of central bureaucrats and politicians, while political,
business, and social forces of the country have shown growing concerns over
decentralization during the last decade.
Unlike the decentralization reforms in other advanced countries, the debates
about decentralization in Japan have been mainly confined to the national level, and
as a matter of fact, the recent laws for decentralization reform in the 1990s were
initiated by the unanimous resolutions passed by both the House of Representatives
and the House of Councilors in June of 1993.
34
Following these resolutions under
the various circumstances discussed in Chapter Two, several innovative programs
were introduced: First, the government enacted the Decentralization Promotion Law
(DPL) in 1995 in order to establish the Committee for the Promotion of
Decentralization (Chiho bunken suishin iinkai), which became an effective and
indispensable organization in bringing and diffusing the decentralization idea.
Second, the Omnibus Law of Decentralization (OLD) touching on major problems
of Japanese central-local relations was legislated in 1999. Finally, the so called

33
Carlie (1998).
34
Nakamura (1996); Furukawa (2002).
103
‘Trinity Reform Package’ (Samni Ittai Kaikaku) dealing with local financial
problems was enacted under Koizumi administration in 2003. Needless to say, these
legislations contain somewhat radical changes in central-local relations by
restraining traditional measures of state intervention on local affairs, yet they are
flawed because of the political struggle that took place during the process of the
reform. Therefore, it is necessary to investigate the achievement and limitations of
decentralization to fully understand the politics of decentralization in Japan in the
fifth phase.
Since the great reform of the local government system in 1947, there have
been various kinds of attempts to transform the vertical central-local relationship in
the postwar period. However, despite those attempts, there have been only
piecemeal changes in intergovernmental relations in Japan. In this respect, it is
expected that the current decentralization reform drive since the 1990s would bring
a great impact on local governance if the issues dealt in the several laws were
faithfully implemented.
Table 3.3 lists the major reform items in decentralization-related laws having
been issued since the 1990s. Above all things, the establishment and activities of an
independent investigation committee, the Committee on the Promotion of
Decentralization (the CPD), was a driving force of current decentralization drive.
The legislation of OLD (1999) and TRP (2003), which are the most important laws,
was the product of the CPD’s policy recommendations made in the late 1990s and
the early 2000s.
35
Among various issues, major reform items materialized based on
those recommendations included the following issues: a) abolition of agency-
delegated functions (ADF), b) creation of new rules concerning central-local

35
Nishio (1999). Refer to Committee on the Promotion of Decentralization’s 1
st
-final reports,
retrieved August 18
th
, 2005 from http://www8.cao.go.jp/bunken/.
104
government relations, c) promotion of transfer of authorities from center to localities,
d) re-examination of compulsory organizations and positions, and e) streamlining of
central government disbursements and the amplifying of local revenues, and other
important intergovernmental problems in Japan.
36

Table 3.3: Major Decentralization Legislations since the 1990s
Decentralization
Reforms
Year

Major Issues
Decentralization
Promotion Law
(DPL)
May 1995
Murayama
• The establishment of Committee on the Promotion of
Decentralization (CPD)
• Empowered the Committee to make recommendations to the
Prime Minister
• Obligated the Central government to compile the
“Decentralization Promotion Plan” in 5 years
The Omnibus Law
of
Decentralization
(OLD)
July 1999
Obuchi
• Comprehensively amended 475 local government-related laws
(e.g. Local Government Law, Local Finance Law, etc.), 440
cabinet orders, 507 ministerial orders and 186 public notices
• Clarification of the roles of local government
• Abolition of Agency-Delegated Functions (ADF)
• Deregulation of jurisdiction of local affairs
• Creation of conflict mediating institutions b/w governments
• Devolution of 64 functions
• Creation of special cities with populations of 200,000
(independent from prefecture government)
• Autonomous organizational authorities in local governments
• Consolidation of grants-in-aid programs and increase of the
discretionary power of taxation
Trinity Reform
Package (TRP)
June 2003
Koizumi
• A reduction of central government subsidies including those
relating to public works programs (Diminution of 4 trillion yen
in 3 years)
• Reconstruct the local allocation tax system: the excessive fund-
securing functions should be abolished
• A reduction of central and local government expenditure and
transfer of tax revenue source of key taxes (income,
consumption, tobacco tax etc.)
Source: Yagi (2004); Doi (2004); Furukawa (2003); Nakamura (1999); Kamiko (1997); Nishio (1999)

First, the issue of the abolition of agency-delegated functions (kikan inin
jimu) was one of the most critical problems that brought controversies and conflicts
between decentralists and bureaucrats, and the CPD has treated the problem of ADF

36
Kamiko (1997).
105
as one of its top priorities through its first to fourth policy recommendations.
37

Under the ADF system, the ministries in central government have enjoyed superior
power over local governments by formulating policies that let local governments –
prefectural and municipal governments – implement vertically delegated
functions.
38
In doing so, through the various tools such as directive, administrative
guidance, and direct command, each minister (bureaucrats) could control and
supervise the executive heads of local governments carrying out national
administrative affairs such as foreigner registration and the management of
parliamentary elections.
39
Even central government could introduce the mandamus
procedures in order to assure compliance with ministerial directives in implementing
delegated functions.
40
From the decentralists’ point of view, many affairs has been
forced on local governments as a subdivision or local office of central ministries
under the ADF system, and the system became the number one target of
decentralization reform.
41
As a consequence, the ADF system was abolished and
divided into autonomous and entrusted functions by the OLD in 1999, as seen
Figure 3.1.

37
Takagi (1998).
38
Kume (2001: 206-221) elaborated the functions and implications of ADFs in Japan.
39
National Government Organization Law, § 15; Local Autonomy Law, § 150.
40
If a governor or mayor contravenes or neglects the execution of his duties as a national agent,
ministers may send him a formal order to perform. If they still disobey, the minister may request the
High Court to issue the order to the governor/ mayor (Local Autonomy Law, § 146).
41
The CPD (1996); Nishio (1990); Takagi (1998); Yagi (2004); Jain (2005). Unlike those
perceptions, Kume (2001: 209) argued that the problem of the ADF was not central government’s
intervention itself, but less financial subsidies for implementation of ADFs. Kume (2001) following
Muramatsu’s mutual dependent model of Japanese central-local relations insisted that the competent
ministries as participants of service delivery could include local governments for easier delivery of
services to local communities (Kume, 2001: 220).
106
Figure 3.1: Changes in the Classification of Local Duties

Source: Kamiko (1997); Yagi (2004); Takagi, 1998

About 45% of the duties under this system have been classified as local
autonomous affairs (jichi jimu) which were inherent to local government functions
such as urban planning authorities, business license authorities, school education,
some welfare policies, and so forth. The balance, about 39% of the ADF came under
a newly created category of duties, what is called ‘entrusted functions (hotei jutaku
jimu)’ including the practices of national affairs such as national elections, census,
the issuing of passports, maintaining of national roads, rivers, and so forth.
42

Therefore, the abolition of ADF was a huge leap toward a more decentralized
governance system, and local government, at least, secured the legal and

42
Local Autonomy Law 2 (2).
The ADF System

- Local government can not draft bylaws
& regulations on the ADF
- Local Council can not intervene
- Central government’s comprehensive
Intervention, supervision, and directives
- 561 duties before 2000
Local Government Function (LGF)

- Local government can draft bylaws
- Local council has authorities over LGF
- No central supervision (exception exist)
- 45% duties of ADF classified as LGF
Entrusted Functions (EF)

- Local government can draft bylaws
- Local council has authorities over EF
Except affairs about national security, etc.
- 39% duties of ADF classified as EF
- Central government will take the rest of
Duties & some of them will be abolished
107
administrative foundation of autonomous policymaking in dealing with affairs
labeled ‘autonomous’ or ‘entrusted’ duties.
43

Second, the second concern of the OLD passed in 1999 was to reformulate
or redirect the principles and ways of the central government’s intervention on local
affairs.
44
Under the past system – in particular, the ADF system – ministries at the
center could easily supervise local affairs or put some compulsory arrangements in
local administration through individual statutes or cabinet ordinances. To avoid the
arbitrary and compulsory interference of the central government, the OLD has laid
down basic principles with regard to the way of intervention: if it is necessary,
central government can intervene in local government affairs only according to the
law and cabinet orders that have legal basis (the principle of legal basis). If
necessary, central government should be more considerate of the independence and
autonomy of local governments, and the interference should be only as much as
needed to achieve the intended goal (the principle of least interference). Finally,
central interference should be carried out through fair and transparent procedures
(the principle of fair and transparent procedures).
45
Where there is a conflict or
disagreement over a certain issue to be resolved, local government—in case there is
a conflict or disagreement over local affairs between different levels of government,
can ask neutral organizations such as the Central-Local Government Dispute
Resolution Council to settle down the conflict between central and local

43
Entrusted functions (EF) are functions that central government originally was in charge of, but
local governments are now ensured to deal with them by appropriate measures. Therefore, central
government can intervene in some cases (e.g. national security-related or personal information-
related issues), although the EFs are now in principle ‘local affairs.’ (Kaneko, 2000). There were a lot
of debates regarding the characteristics of the EFs, but the CPD chairman Ken Moroi clearly
mentioned that the EF is in principal local affairs and central government can intervene in only
exceptional cases. See Ken Moroi (December 22, 1995), “Chairman’s memo – how to change Japan
through decentralization?”
44
Yagi, ibid.
45
The OLD, Article 245 (3).
108
governments.
46
In fact, because local governments in Japan have already had the
experience of being in charge of a significant portion of total national affairs by
spending about 60% of the national budget and hiring about 70% of the total civil
servants, blocking off the central government’s arbitrary interference into local
affairs instead of transferring more functions to localities was the most important
task in this reform.
47
Therefore, the establishment of principles and standards of
state intervention is expected to be effective in securing local autonomy, though
there are many drawbacks in the original bill stemming from ministerial
resistan
nts as

ce.
48

Third, by the passage of OLD in 1999, many affairs and functions of the
central government were transferred to prefectural and municipal governme
well as from prefectural to municipal governments, in accordance with the
perspective that the governments closest to local residents would provide better
services. By revising individual laws and orders, 64 items have been transferred to
local governments. Furthermore, 15 laws and 19 items have been transferred to a
new system of Special Case Cities (tokurei shi, pilot local governments). Those
cities are authorized to carry out affairs such as permitting development projects,
approving the private juvenile welfare institution, and business licensing for local
restaurants and hotels that were required to get approval from supralocal legislations

46
This council was established under the Ministry of Home Affairs, and based on the revised L
Government Law o
ocal
f 2000, Article 250-251.

of legal
e detailed politics with regard to the principles will be discussed.
47
Somusho (2004), 2003 White Paper on Local Finance; Somusho (1996), Statistics of Japan
(Nihon no T ōkei).
48
Yagi, ibid. In the process of OLD legislation, there were resistance from powerful ministries in
deciding the principles and type of central intervention (Takagi, 1998). As a consequence, there are
still loopholes that each ministries can intervene into local affairs avoiding the principles
basis, although the establishment of principles itself is a big step toward decentralization in Japan
(CLAIR, 2004). Th
109
or governments in the previous period.
49
The OLD have also granted an authority
basic-level local governments (shi, chi, son) so that those governments can tak
appropriate decisional auth
to
e
orities to implement local-friendly policies within
gubern
n
sh or
ns in

e

ational guideline.
Fourth, another concern for reformists was the abolition or reconsideratio
of what is so called hitchikisei. ‘Hitchi’ (必置) literally means must establi
organize, and ‘kisei’ (規制) means regulation. There were some duties or
qualifications that local governments were obligated to set up specific positio
their organizations.
50
According to the DPL (1995), central government has
compulsorily placed a standardized and detailed guideline about the number and
qualification for a considerable number of public offices and facilities as well as
their directors and employees. For example, through individual legislation and
orders, central government mandated local governments to hire qualified directors
and employees of public health centers, public libraries, local caseworkers, welfare
offices, juvenile services, agricultural offices, environmental services, and so
forth.
51
The critics for hitchikisei are twofold. Because the central government has
used it for controlling local administration, the regulation does not correspond to th
spirit of Article 92 of the Constitution, which stipulates local government’s
autonomous authority to form its organization and the true meaning of local
autonomy.
52
In addition, because the standard, number and qualification for the
offices and their employees are fixed by the regulations, it is difficult to provide
flexible public services to meet local needs, and manage an effective number of

49
The OLD, Article 252 (26). Until April 1
st
of 2002, 37 cities are designated as special case cities
5), Article 5.
PD, The Second Report (July 8
th
, 1997).
(CLAIR, 2004).
50
The Decentralization Promotion Law (DPL, 199
51
The C
52
ibid.
110
local officials and offices.
53
Therefore, to achieve the goal of autonomous
organizational authority and the provision of effective and comprehensive
administrative services, the OLD includes a re-examination of the regulation. As a
result, t
cal
ement
ired
, and
r.
57

hirty-eight laws containing hitchikisei were reviewed and 75 items were
abolished.
54

Finally, several local finance reform programs, one of the most significant
decentralization reform items, have been proposed in order to enhance grounds for
local self-governance. As seen in the earlier chapter, the major resources for lo
governance are composed of three: national treasury disbursement (kokko shishutsu-
kin), local taxes including local non-tax income - i.e., local bonds - and local
allocation tax (chih ō kofu-zei). First of all, the original goal of national disburs
was to support public projects that were related to national interests or requ
technical assistances.
55
However, the national disbursement system has been
criticized for its unclear share of accountability between central and local
governments, its inflexible financial management for locally-friendly projects
the production of inefficient red tape that burdened local governments.
56
The
national treasury disbursement was a ‘conditional’ transfer from the cente
Therefore, the CPD recommended the re-examination of or cut in unnecessary
national disbursements in its second and final recommendations, and the

o (1997), p.196.

local projects such as the local sewer system (subsidies). See CLAIR (2004).
blem
to get the subsidies next fiscal year. For detailed argument, see Sakakibara
53
ibid. Kamik
54
Yagi, ibid.
55
Local Finance Law, Article 10. For example, central government with its responsibility of paying
compulsory education expenses implemented the compulsory education policy (co-sponsor). The
central government also disburse local government for national election management (entrust) which
is in natural central government affair but is entrusted to local government for efficiency reason. In
addition, it subsidizes
56
The CPD (1997).
57
Sayuri (2005), p.215. Sakakibara (2003) points out the local governments’ moral hazard pro
leading to financial deficit. He argues that local governments arbitrarily multiply unit costs of
projects and public works
(2003), p.118-128.
111
recommendations were reflected in the TRP of 2003.
58
In August of 2004, the
cabinet subsequently charged six groups representing local governments, and
drafted a plan proposing roughly four trillion yen; about 20% of total national
disburs
r
a
any
ral
and

ement in subsidies by the 2006 Fiscal Year.
59

As White Paper on Local Public Finance (2004) indicated, the local
allocation tax (LAT) which has steadily increased since the 1990s is recently unde
criticism for causing local dependency on central funding and for the moral hazard
problem.
60
The function of the LAT is to secure enough funds for maintaining
standard level of administrative services at the local level. It would be ideal if each
local government ensures the revenue resources necessary for administrative
expenditures through local taxes collected from their residents. Unfortunately, m
local governments are unable to acquire sufficient tax revenue because there is a
regional imbalance. Thus, central government has reallocated certain ratios of
national taxes to local governments to balance their needs and revenues, and the
portion of the LAT in local revenue reached about 20% on average in the 1990s-
2000s.
61
Under the fixed ratio system of the LAT, local governments attempt to
maximize their benefits by pushing up their standard financial need so that cent
government expands the total amount of the LAT granted to them.
62
Therefore, the
LAT, deviates from its original intention of supporting local governments,
overfunds local governments. The Local Allocation Tax Special Account made loans

58
Doi (2004), p.19.
59
MOIAC (2004).
60
Doi, ibid; Sayuri, ibid.
61
The total amount of the local allocation tax is based on the basis of a certain ratio for national tax:
32% of income and liquor tax, 35.8% of corporate tax, 29.5% of consumption tax, and 25% of
tobacco tax. MOIAC (2004), p.9.
62
Doi, ibid, p.15.
112
annually and the accumulated debt of the account rapidly increased. As a
consequence, in the OLD (1999), an extensive review of expenditures in local publ
finance plans, the granting system, and the transfer of tax revenue sources were
recommended. The recommendations were actualized in the TRP of 2003 and the
cabinet decisions in 2004.
ic
d of fiscal year 2006, and more discretionary power
over ta on for local governments was proposed by the cabinet’s basic plan of
fiscal r
D,
0s.
of
re.
drive’s goal is to decrease the central government’s administrative and fiscal

63
Taxable resources shall be transferred from the center to
local governments by the en
xati
eform.

In addition, the OLD empowered of local councils by revising the Local
Autonomy Law,
64
transferred affairs to localities, and eliminated local
administrative officers.
65
Overall, most of the recommendations made by the CP
and the laws and plans made in the cabinet materialized during the late 1990s-200
As noted earlier, Japan’s local authorities are already performing a great deal
governmental work and account for about 70% of total government expenditu
Furthermore, unlike the period of before the early 1990s, local governments
frequently take initiative in some important policy areas such as information
disclosure and international affairs.
66
Thus, if the current decentralization reform

63
Doi, ibid.
64
In Article 90-92 of the Local Autonomy Law, the number of members is laid down a bylaw with
the upper limit stipulated by law, instead of its direct designation by law. In Article 112 and 115, the
condition when assembly members can submit a bill is relaxed from the consent of one-eighth of the
members to one-twelfth.
65
Takagi (1998) and Yagi (2004). Some local administrative offices engaged in social insurance and
labor-employment related affairs were legally under prefectural governments, but in reality, they
were under the command and control of the Minister of Social Welfare or the Minister of Labor
within the central government. The OLD abolished those local administrative offices and their affairs
have become under the jurisdiction of the central government.
66
Kitayama (2002); Jain (2005); c.f. Takao (1998).
113
intervention into local affairs, then central-local relations in Japan would make an
nprecedented step toward more decentralized system.
67

Decentr
recent
endas.
ous
ons
or
ut under

u

alization Roadmap in Korea: The Process and Achievement
In Korea, since its democratization in 1987, decentralization reform has
long been proposed as an integral part of ‘grass-root’ democracy, which was the
most recurring (or rhetoric) topic in the political world. In particular, two
presidents, Dae-jung Kim and Moo-hyun Roh employed unprecedented
decentralization reform programs as one of the top priorities of their reform ag
The main goal of decentralization reform in this period was to foster mutually
cooperative and equal relations between the center and localities through vari
types of decentralization strategies such as the transfer of authorities; the de-
concentration of population, public agencies, and businesses; and the division of
labor between them.
68
Because the past attempts to transform central-local relati
were halfhearted, they failed to maintain an efficient system for public service
delivery and to check the widening regional gap between the center and periphery.
In a similar vein, in previous administrations, there were not any strong leaders
institutions to propel the decentralization agenda.
69
Unlike those past reforms,
decentralization programs in the fifth phase (2002 – present) were carried o

67
Nakamura (1997).
68
CNBD (2004), p.20.
69
According to Seong and Park (2003: 48-9), for example, the Presidential Committee on
Devolution Promotion (1999) had several problems to lead the whole process of decentralization.
First, it was not a permanent consultative organization and had a get-together once a year for only
two to five days. Therefore there was not enough time to have deep discussion or negotiation about
the decentralization issues. Second, because bureaucrats from central ministries dominated the
committee, representatives from local governments could not have an opportunity to voice their
preferences. As a result, the activities of the committee faced serious challenge from both central and
local governments, and the process of reform was prolonged.
114
strong political leadership – in particular, a reform-minded president – and
decentralists in the governmental reform agencies and committees.

ax
ven
tions
ocal
lfare,

As briefly stated in Chapter One, Moo-hyun Roh was elected as the
sixteenth president of Korea in December 2002, showing strong intent to carry out
decentralization, de-concentration, and balanced development policies during his
term in office.
70
The Roh government claimed that the illness of Korean politics and
economy was a result of the inefficient distribution of resources between the center
and periphery, and suggested five directions for major reform – ‘roadmaps’ – such
as administrative reform, public personnel reform, e-government, financial and t
reform, and decentralization.
71
Among them, the decentralization roadmap had
guidelines designed to realign the structure of central-local relations within a gi
time period. The guidelines are: First, based on trust to local governments and
citizens, the central government first delegates central affairs, and then takes ac
to complement problems coming from the decentralization (first delegate then
complement). This principle was suggested because one of the causes of delay in
decentralization is that central government did not believe in the capacity of l
governments. Second, government affairs should belong to resident-friendly
government (subsidiary guideline). Central government has possessed too many
functions dealing with purely local affairs such as urban planning function, we

70
President Roh (2003 – present) declared himself as a decentralist. He was interested in the issue
of the concentration problem around metropolitan cities such as Seoul and Busan. Surprisingly, he
established the Center for Local Autonomy by himself in 1993, and was motivated for the promotion
of decentralization and de-concentration. See Moo-hyun Roh (2005), “A letter to General Public: The
Reason Why I Decided to Construct Administrative Capital,” Retrieved on July 20, 2007 from
http://www.president.go.kr/cwd/kr/archive/archive_view.php?meta_id=2005_pre_letter&page=2&cat
egory=&sel_type=1&keyword=&id=7ef08fd851bfbdde31cff42.
71
CGID (2003), News Letter (November, 2003). http://www.innovation.go.kr/news_arch/view.htm?
id= 124& page=5
115
and so forth. Third, the central government must delegate both functions and
authorities (comprehensive guideline). The problem of past decentralization r
was that the government just delega
eform
ted functions without giving appropriate
financial and human
: The Decentralization Ro
Decentralization Roadmap
resources.
72

Table 3.4 admap
Detailed Tasks
1. Functional Redistribution between Central and
Local governments
e

• Strengthening the local government infrastructur
• Comprehensive delegation of central affairs
al branches
2. Comprehensive Delegation of Financial and
Taxation Authority
e
• Implementation of local educational autonomy
• Implementation of local police system
• Abolition of central ministries’ loc
• Reduction of regional financial imbalanc
• Revision of local taxation system
• Strengthening local financial autonomy
• Procuring transparency in managing local finance
• Strengthenin
3. Strengthening Local Administrative Capacity
g autonomous local administration
• Innovating local governance and empowering local
bureaucrats
4. Activating Local Legislative Body and
Reforming Local Election System
• Activating local councils
• Reforming local election system
5. Building up Local Responsive Government
• Build up democratic checking-control system
• Reforming local government evaluation system
6. Activating Civil Society
• Introduce various resident participation system
• Strengthening infrastructure for civic activities
ocal • Intensification of collaboration b/w center and l
7. Making Cooperative Intergovernmental
Relations
• Building trans-local collaboration system
• Arbitrating disputes among local governments
Source: CGID (July 4
th
, 2003), Roadmap for the Promotion of Decentralization: Building Decentralization-
Styled Advanced Country.
be
nd

With these guidelines in the roadmap, ministries and agencies at the center
were mandated to draw out a somewhat detailed list of decentralization tasks to
transferred to localities. Those tasks included the comprehensive delegation of
affairs that have belonged to central ministries, improvement of local financial a
administrative capacity, empowerment of local councils which have exercised

72
CGID (2003). The Vision and Direction of Decentralization in Participatory Government. Also
Sung Jong Lee (2005), p.356; Jae-il Oh (2005), p.17.
116
minimal power in local policymaking, encouragement of civic participation in lo
affairs, and the establishment of collaborative networks between centra
governments.
cal
l local
oad reform subjects from central ministries
and age
ks
ion have
tic
ly
those
of
ir
n to
r

73
The roadmap required implementation of forty seven
decentralization-related tasks in seven br
ncies, as Table 3.4 indicates.
The reason why CGID, in collaboration with MOGAHA, put the those tas
together in the roadmap was that the imbalance between the center and periphery
still persisted, and those mandated tasks for the promotion of decentralizat
been heatedly disputed among various stakeholders, despite the dramatic
improvement in the quality of local democracy and autonomy since the democra
transition. The Roh government (called ‘participatory government’), in order to
successfully carry out those measures, gathered various opinions from scholar
groups, four local government associations, civic activist groups, and central
bureaucrats.
74
The roadmap was a product of political deliberation among
stakeholders. Since December 2002 when President Roh was elected, the
Presidential Transition Committee (PTC), which became a mother organization
CGID, organized several meetings, conferences, and hearings to express the
opinions regarding the decentralization project from non-political and non-
bureaucratic actors. For example, the PTC held conferences with the Civic Action
for Decentralization (CAD), the biggest civic organization for decentralizatio
settle the different opinions between them.
75
Based on the claims from non-
governmental actors and local governments, and surveys of the PTC and the
experiences of MOGAHA, the Roh administration could setup the big picture fo

73
ibid.
74
Interview with Sung-sig Yoon (October 19
th
, 2005).
75
January 21
st
, and February 5
th
, 2003.
117
decentralization in 2003 (CGID, 2003). There were some conflicts between the
government and civil society because civic groups and local governments wanted
carry out a more radical promotion of local autonomy. Politicians in the Nationa
Assembly were less motivated in the process of decentralization, and powerful
ministries at the center – such as the Ministry of Finance and Economy (MOFE)
which had to delegate a lot of power and budget to local governments – were clearly
reluctant to cooperate.
to
l

ant
pan
d of substantive, it addressed several
importa
,
with

76
Under these circumstances, although the possibility of the
passage of the law was not so optimistic by the early December 2003, the CGID and
MOGAHA endeavored to reconcile their different interests. As a consequence, the
Special Law on Decentralization Promotion (SLDP), which was the most import
legislation in the history of Korean decentralization, was passed in the National
Assembly in December 2003. This law is meaningful in that central agencies and
politicians forcefully and legally mandated the pursuit of decentralization, as Ja
did with its Decentralization Promotion Law (1995). In the SLDP, although its
characteristic was somewhat procedural instea
nt points of decentralization reform.
First, the law attempted to highlight the problem of the imbalanced
distribution of national affairs between the center and localities. In other words,
because national functions are composed of about 75% of central government affairs
12% of delegated affairs, and only 13% of local autonomy, central interference
local governments in implementing those national functions were obstacles to
securing local autonomy.
77
For central affairs, the local council could not make
bylaws or ordinances. Thus, it was required to reduce the intervention of central

76
Kim et al. (2004).
77
Hong (2005), p.65.
118
governments by delegating highly centralized functions to localities.
78
In addition,
the abolition of special administrative agencies (SAA, hereafter), which are l
branch offices of central ministries and have redundant fu

ocal
nctions with local
governm
cal governments,
civil
e
overnments
feared t on of national affairs without fiscal resources.
82

ents, were strongly recommended by the law.
79

Second, because the imbalance of finances and expenditures between
central and local governments increased, the law expressly stipulated that the state
ought to make special efforts to establish a stable fiscal basis for lo
which has been a critical and conflicting issue in the discussion of
decentralization.
80
The rate of taxes was about 80% (center) to 20% (localities), and
about 60% of local governments (151) had difficulty in remunerations for their
servants. Therefore, the law clearly addressed the reform of the local financial
system by proposing an appropriate level for the delegation of financial resources
from the center to localities and the creation of new tax resources.
81
In particular,
the principle of ‘first delegate and later complement’ was strongly required for th
successful implementation of fiscal decentralization because local g
he delegati

are

d out
d Forest). See Dong-A Ilbo (December 12
th
, 2004).
or
, yet Shin-An county in
/www.innovation.go.kr/policy/view.htm?id=
78
SLDP (2003), Article 6.
79
For example, the Ministry of Environment has several Local Agencies of Environment in the
provinces. Their jurisdiction is managing environment-related affairs in provinces where they
located. In contrast, each province has its own environmental division dealing with similar
environmental issues in its territory. Therefore, there have been jurisdictional debates between SAAs
and the division of local governments, and this is why the abolition of SAAs becomes a hot issue in
the decentralization process. From the perspective of local government, the establishment of SAAs is
a central governmentcontrol mechanism that constrains local autonomy (Sung Jong Lee, 2005; Seun-
Eun Kim, 2003). According to a newspaper survey from 2003, 177 mayors and governors pointe
that the following SAAs must be abolished: a) Local Agency of Small Businesses (Ministry of
Industry and Energy), b) Local Agency of Territory Management (Ministry of Construction and
Transportation), c) Local Agency of Environment (Ministry of Environment), and d) Local Agency
of Forest Management (Ministry of Agriculture an
80
SLDP, ibid, Article 11. Kim et al. (2004), p.5.
81
CGID·MOGAHA, ibid. For example, the fiscal independent ratio (local income/total budget) f
the City of Gwa-Cheon where central ministries are located is about 95%
South Cholla Province is only 7.5%. Refer the Table 3.6. in this chapter.
82
CGID (2003), Decentralization Roadmap. http:/
119

Third, it has been pointed out that local government could not exercise
substantive power over local affairs directly related to their citizens, because
strong central governments’ intervention in local governance by restricting
legislative power and the autonomous organizational authority of local governme
The mayor’s authority on managing organization and personnel is limited. As a
result, local governments were unable to carry out local-friendly administration and
policy and secure the diversity of localities. In order to transform this discrepanc
between the center and periphery, the SLDP proposed the encouragement of the
activities of local councils, the empowerment of public personnel authority at th
local level, the granting of urban planning authorit
of
nts.
y
e
y, and the exchange of civil
servant

e
nt
ent
of an in
meet local

between central and local governments.
83

Fourth, the law suggested designing a collaborative policy implantation
system between central and local governments, because the traditional top-down
communication between them caused inefficiency and conflict in policy processes.
There was no effective channel for local governments to reflect their voices to th
centralized policymaking. Therefore, in order to foster the participation of local
governments in national politics, the law recommended supporting local governme
associations as representatives of localities and encouraging them to participate in
the legislative process on a regular basis.
84
The law also proposed the establishm
stitution for conflict resolution between central and local governments.
In addition to the above tasks, the law mandated the transfer of authority
over public safety (police) and education to local governments in order to

59&page= 5&condition=&keyword=&teamcode=
83
ibid.
84
SLDP, ibid, Article 16.
120
needs. The law also proposed the promotion of the participation of civic
organizations and residents in the local policymaking process which is necessary t
secure local governments’ responsibility. Through these reform projects, the Roh
administration intended to construct a ‘local-oriented’ governance system that is
responsible for local affairs with autonomous decisional authority and financial
resources. With these decentralization efforts, the Roh administration also attempted
to relieve the highly concentrated Seoul metropolitan region by relo
o

cating to a new
adminis

p toward the
ill be
mitations and require continuous and further efforts to be accomplished.
LIZATION REFORM
Unfini
ar

trative capital in South Chung-cheong province in 2005.
85

To summarize, in retrospect, the decentralization roadmap and the
legislation of the SLDP as well as other de-concentration projects under the Roh
government reflect the reconciliation of diverse opinions and the debate among
vested interests. Those reform programs themselves are the biggest ste
construction of a decentralized governance system. The fifth phase of
decentralization reform in Korea, therefore, could be labeled as ‘collaborative
decentralization,’ if the reform were faithfully implemented. However, as w
discussed in the following section, the reform programs stated above have
li

3.3. LIMITED NATURE OF DECENTRA
shed Reform in Japan: Limitations
Ken Moroi, the chairman of the CPD called the recent decentralization
reform as “the third revolution” after the Meiji Restoration of 1868 and the post-w

85
Moving the administrative capital out of Seoul was Roh’s presidential campaign pledge, and it
was materialized in 2003, which brought a huge debate in Korean society. After sentenced
unconstitutional once in May 2004, the Roh administration re-legislated the law called ‘Special Law
on the Construction of Administrative-centered City’ in 2005. See Joong-Ang Daily, July 18, 2007,
http://joongangdaily.joins.com/article/view.asp?aid=2878176. Also see Shi-Chul Lee (2007).
121
local government reform because it resulted in more genuine local autonomy by
redefining the intergovernmental relationship in post-war Japan.
86
Even skeptics
have acclaimed the OLD as the cornerstone of democratic governance.
87
Howeve
many opinion polls show that many local leaders are suspicious about the future
progress of decentralization, and scholars such as Nishio Masaru label the current
r,

decentralization as ‘unfinished decentralization’ (Mikan no Gyoseikaikaku).
88

ocal
r
ade
any
rough

As an Asahi Shinbun Opinion Poll (2003) shows, about 40% of l
government leaders are still skeptical about the achievement of current
decentralization processes, and most of them in general point to local fiscal
problems as top priorities for the continuation of decentralization.
89
A recent Kyodo
News Poll (2006) even goes further by showing that 91% of local leaders fear thei
survival after fiscal austerity.
90
As such, regardless of the ambitious efforts m
from the Hosokawa to Koizumi administrations toward more genuine local
autonomy in terms of both administrative and fiscal aspects, there are still m
skeptics about the future of central-local relations. Mr. Taku Kajiwara, Gifu
governor and the chairman of the National Governor’s Association, says “the
decentralization plan gives 60% of the fiscal freedom local governments had asked
for, but I appreciate Prime Minister Junichiro Koizumi’s efforts to maneuver th
strong resistance from bureaucrats.”
91
However, in addition to local financial

86
Matsumoto (2000).
87
Takagi (1998).
88
Nishio (1999).
89
In both the Yomiuri and Ashahi Shinbuns Poll (2003), local leaders ask for more local power over
local finance and taxation and the abolition of national subsidies to accomplish more genuine local
autonomy.
90
The Kyodo News Poll was carried out in May and June of 2006, and 99.7% of governors and
mayors (1,884 responses among 47 governors, 1,843 mayors, and 23 Tokyo’s wards) responded.
91
The Japan Times (2004). Fiscal Decentralization OK’d without Key Items (November 27
th
, 2004).
122
problems, there are many limitations and issues to be resolved to pursue further
decentralization reform.

Figure 3.2: Various Surveys on D centralization Reform in Japan
92

e
Centralization Decentralization
36% of local leaders gave
only 3 points out of 10 about
the progress of current
About 60% of governors
and mayors replied that
decentralization items are
to some extent progressed.
(Asahi Survey, Jan., 2003)
decentralization reform
(Yomiuri Survey, Feb, 2003)
91% of local leaders fear their
cities won’t survive amid aging
society and shortage of fiscal
funds (Kyodo News Poll, July,
2006).

First, the reason why local leaders fear their localities’ survival is that the
process of strengthening the local finance system and transferring local taxation
resources is slowing down. Cuts in national subsidies and the LAT as planned in the
Trinity Reform Package of 2003 should be accompanied with the follow-up transf
of tax resources to local governments to make up for subsidy cuts, but there have
been no major transfers of appropriate taxation resources. The government agreed
trim 850 billion yen from subsides for compulsory education and 700 billion yen
from those for national health insurance, but regarding the trimming of other majo
er
to
r
subsides, such as welfare benefits and public works related subsides, the decision

92
Source: Ashahi Shinbun, January 26, 2003; Yomiuri Shinbun, February, 14, 2003; Kyodo News
Poll, July 24
th
, 2006.
123
was put off for another year.
93
Therefore, local government leaders’ were concerned
that the administrative burden and responsibility would increase without sufficient
changes in the budget system if the whole process of decentralization and the
transfer of fiscal resources are delayed.
94
Even the financial discrepancy has been
magnified among local governments because of the insufficient LAT, and some poor
regions’ can only deliver minimal public services because of their financial
situations.
95
Shintaro Ishihara, the governor of Tokyo, criticized the central
government’s attitude for favoring ruling politicians and bureaucrats in fiscal
decentralization debates.

Last week, the ruling party announced its overall vision of reform, but its content
goes nowhere near achieving decentralization. It seeks to reduce subsidies to local
governments by the prescribed amount of 3 trillion yen, hand over some tax
revenue sources in a way that does not facilitate financial independence of local
governments, and scale back local allocation taxes with no vision for reforming
existing system itself…Its is abundantly clear that the country’s politics have lost
the ability to coordinate between different interest groups, and given priority to the
interests of the ruling-party parliamentarians and bureaucrats…The so-called
Trinity Reform Package only brings the nation to the starting point of a long
passage toward true decentralization.
96

Second, there are still several problems in dividing the labor between central
and local governments. Based on the OLD and the Decentralization Promotion Plan
(the DPP, 1999) of the central government, only 64 items – including 13 items from
the central to prefectural governments and 38 items from the prefectural to the

93
ibid.
94
The CPD (2001), The Final Report (June 14
th
, 2001). In its final report in June of 2001, the CPD
regarded the passage of the OLD as a corner stone for the creation of decentralized society, and its
only concern was to secure enough local finances to implement newly devolved and devolving
affairs to local governments as the planned delegation of national affairs progressed.
95
OECD, 2005: 132-133; Schebath, 2006: 98
96
Ishihara (2004). Policy Speech at the 4
th
Regular Session of the Tokyo Metropolitan Assembly
(December 1
st
, 2004).
124
municipalities, were transferred to local governments, and some important
responsibilities such as national health insurance issues are still in consultation with
local governments.
97
Moreover, central bureaucrats (ministries) still retain the
power to interfere with the implementation of selected local government functions
through the issuance of ministerial instructions (daijin no shiji) by avoiding the
principle of legal basis.
98
In addition, it took too much time for each ministry to
agree on the definition of entrusted functions (jutaku jimu) and the appropriate
balance in the role between central and local governments in carrying out the
functions. The original intent of the CPD and the Ministry of Home Affairs was to
strengthen local governments by placing the entrusted functions, but the
compromise at the center was that this responsibility would be shared between the
central and local governments.
99

In addition to the above major weakness of the recent decentralization drive,
there were little efforts to strengthen the hollowing out of local assemblies and
enlarge civic participation in local affairs.
100
More importantly, with
decentralization as a part of the broader public-sector reform initiative, the OLD and
other decentralization reform plans intended to innovate central bureaucratic
organizations, but the streamlining of the central bureaucracy has not been achieved,
even though central control and intervention over local affairs were eased. Instead,
ministries at the center, which desire to maintain control over domestic affairs have

97
Barrett (2000), p.46. The reason why the number of transfers was relatively smaller than expected
was that the government’s emphasis was on relieving the degree of central interference rather than
devolving functions (Takagi, 1998).
98
For example, Article 245 (3) of Local Autonomy Law prescribes, “central government, if possible,
cannot interfere with local autonomous affairs (jichi jimu) and entrusted affairs (juutaku jimu).” In
this case, there is a possibility of arbitrary interference with local affairs according to how central
bureaucrats interpret the ambiguous words “if possible.” See Barrett, ibid and Takagi, ibid.
99
Nishio, ibid.
100
Keiichi (1999); Takagi, ibid.
125
created many ‘new functions’ and have devolved their functions without sufficient
budget resources to handle local governments.
101
Balancing the role between
gubernational governments (to, do, fu, ken) and municipalities is also a challenging
issue to be resolved.
102

In sum, it is clear that the decentralization drive as a part of a more macro-
level administrative reform program in Japan, under the favorable influence of
domestic and global circumstances, took a major step forward; and many political
actors involved in the process have tended to see the decentralization strategy
favorably.
103
In comparison with previous reform programs, decentralization since
the early 1990s clearly contributed to the promotion of genuine local autonomy in
many respects. However, many observers strike the right note that the limited nature
of unfinished decentralization reform as seen above resulted from pork-barrel
politics around the issue of the devolution of central authorities, and the financial
resources and functions of central actors – i.e., bureaucrats in the central ministries
and sectoral politicians.

Limited Reform, Unresolved Issues in Korean Proposal
Delayed Decentralization:
Obtaining an advanced state status through the construction of a
decentralized governance system was the top priority of the Roh administration, and
thus thirty items among the newly initiated one hundred five national goals to be

101
Furukawa, ibid, p.36-7.
102
ibid. Because the current decentralization drive focuses on the relationship between central and
gubernational governments, there is little effort to reform the relationship between gubernational and
municipal governments.
103
Scholars such as Kaneko (1999) and Keiichi (1999) claim that the decentralization scheme
provides an inadequate fiscal-legal framework. Muramatsu (2001) is somewhat neutral in evaluating
the current decentralization drive because he thinks that recent efforts are just authorizingthe current
authorities local governments have been carrying out during most of the post-war period.
126
accomplished in his term were closely related to decentralization. According to the
roadmap, which required the timely and systemic manner of implementing
decentralization reform, most tasks were achieved during the time period from 2003
to 2007; this is the same time period as President Roh’s term in office. Yet the time
line has suddenly been expanded to 2008, and many core decentralization policies
were delayed. For instance, the CGID and MOGAHA proposed the passage of “the
Packaged Delegation Bill” to avoid complicated legislative processes as Japan did in
April of 2004 because they must undergo the time-consuming process of revising 49
individual laws containing the delegation of central affairs, which could prolong the
whole decentralization project. However, the National Assembly refused to allow
the passage of the packaged bill and decided to revise 49 individual laws in
December 2004. In addition, because of resistance from other central ministries, the
original 515 affairs, which were selected to be delegated to local governments, were
reduced to 227 affairs.
104

As a result of delayed decentralization, only three among the total 7 subject
and 47 decentralization tasks
105
were completed in three years of the Roh
administration. Although already three years have passed since President Roh was
inaugurated, only the Special Law on Decentralization Promotion (January 2004),
the enactment of a resident referendum (July 2004), and the abolition of the Local
Allocation Grant Law were completed.
106
As Table 3.5 indicates, major

104
Dong-A Il-bo (2004). The Current Status of Decentralization Policy [1] (December 12, 2004).
Many sensitive issues including fiscal decentralization were dropped out of the list of items to be
delegated.
105
Under the seven subjects suggested in the roadmap as seen in Table 5.4, forty seven detailed
tasks are listed. The functional redistribution (10 tasks), fiscal and tax delegation (14 tasks), local
administrative capacity (8), local council and election relate (2), civil society (5), and cooperative
central-local relations (3). MOGAHA (2005), The Current Status of Five-Year Comprehensive Plan
for Decentralization, p.11.
106
MOGAHA (2005), ibid, p.11.
127
decentralization policies were delayed or have not been discussed yet because of
resistance from and conflicts among stakeholders. Therefore, Korea experienced a
remarkable decentralization process since the 1990s, but the process is not finished
yet. Verticalism still prevails, and local governments still depend largely on the
central government, which treats them as local administrative units rather than as
independent legal entities.
107
The vertical fiscal design leaves local authorities little
room for maneuvering, and constitutes an expensive administrative burden to the
central government. Instead, some local-based taxes such as the local property tax
(called ‘Comprehensive Property Tax’) which was a major source of local finance
became national tax.
108

To summarize, compared to the momentous and rapid change in countries
such as France under the clear leadership of political figures like Mitterrand,
Mauroy, and most notably Defferre,
109
the process of decentralization reform under
the leadership of President Roh was much messier and far more protracted, and the
outcomes were less dramatic. Despite the important role of decentralist politicians
who had been placed in key governmental positions since the 1990s, – especially in
the Roh administration – decentralization reform was stymied. The Roh government
placed decentralization on the government agenda by committing his cabinet (and
thereby also subsequent ones) to the reform with a clear timetable (the roadmap), yet
there are still critical and conflicting issues among stakeholders to keep the
decentralization process moving forward.

107
OECD (2001).
108
Interview with a specialist from the National Association of Mayors (NAOM), October 21, 2005.
109
See Gourevitch (1978) and Levy (1999) for French cases.
128

Table 3.5: Delayed Major Issues in Decentralization Project
Tasks in the Roadmap Timeframe
Current Status
(2003-2005)
Delegation of Central Affairs
(49 Central Affairs)
Legislation of three packaged laws in
three years (2004-2006)
First attempt failed. The process
will be delayed
Delegation of Police Authority
(Local Police)
Legislate local police law by 2004 and
implement by 2006.
The detailed content and plan have
not been discussed yet. Pending
Improving Local Education
Legislate local education law by 2004
and implement by 2006
Not yet discussed among
stakeholders (pending)
Abolishing Special
Administrative Agencies
(SAAs)
Gradually delegate the function of
SAAs to local governments in 2004-
2006
Pending because of resistance
from central ministries
Rationalization of National
and Local Tax System
Setting a plan of rationalization by
2004, legislation by 2005, and
implement by 2006
Pending because of resistance
Instead, local property tax became
nationalized
Source: Dong-A Ilbo (2004). The Current Status of Decentralization Policy [1]; CGID (ibid, July 4
th
, 2003);
MOGAHA (2005), The Current Status of Five-Year Comprehensive Plan of Decentralization.

Unresolved Issues:
It remains far from clear to what extent the devolution of authority from
central government to local governments will be successful because of strong
opposition to decentralization, and conflicts regarding some important issues in the
central ministries and with some politicians. The bottom line of the source of these
conflicts and opposition is over how many ‘substantial’ functions and financial
resources will be delegated to local governments.
110

First, the uneven distribution of national affairs between the central and local
government still remains a critical issue in these conflicts. Even trivial decisional
authorities such as levying an educational fee for city garbage men (Ministry of
Environment) and changing the names of the lowest local governments (up, myeon,

110
CGID (2003).
129
and dong) belonged to central government.
111
In addition, among the completely
delegated functions after the enactment of the SLDP in 2004, many of them have
been taken for granted and become local governments’ authority, yet central
ministries have held on to them. Compared to the cases of other advanced countries,
the unequal ratio of the distribution of national affairs (samu) between central and
local governments in Korea still remains around 75 versus 25 percents, despite
recent efforts of empowerment of local society. As seen in Table 3.6, there is no big
difference during the last ten-year experiment of local autonomy. Local governments
are still the local administrative units of central ministries when they carry out
entity-assigned (Danche wi-im) and agency-assigned (Gigwan wi-im) functions
under the supervision and direction of central governments. The central ministries
established national laws in major policy areas such as the economy, industry and
environment to keep control over local governments.
112

Table 3.6: Distribution of National Affairs (1994, 2002)
Y ear Total Affairs Central Affairs
Local Affairs
Designated Affairs Autonomous Affairs
1994 15,774
(100%)
11,744
(75%)
1,920
(12%)
2,110
(13%)
2002 41,603
(100%)
31,551
(75.8%)
1,311
(3.1%)
10,052
(24.2%)
Source: Korea Research Institute for Local Administration Korea Institute of Public Administration (2002).
Note: The Number of local autonomous affairs in 2002 includes the number of affairs that provincial-
metropolitan-basic local units collaborate.

111
Such trivial functions as local government-owned vehicle management (MOGAHA), divestiture
and reissue of teachers licenses (Ministry of Education and Human Resources), approval of planning
and revision of tour site (Ministry of Culture and Tourism), disposal of livestock wastes (Ministry of
Environment) have long belonged to central ministries (I. S. Kim, 2002). From local governments,
the delegation of those functions was nothing new, and they thought that central government
pretended to implement large scale delegation which should have been local affairs. Interviews with
specialists and civic activists (October 10-28, 2005).
112
Although the delegation of national functions was implemented since the Roh administration,
voices from localities were not institutionalized well. Accessibility was quite limited. Interview with
specialists at the local government associations, October 21
st
, and 25
th
, 2005.
130
Second, because of decades of efforts to improve the local financial
condition, the scale of the local expenditure share is relatively large among the
OECD countries, but revenue sharing has been consistently lower. Korea’s local
governments have little discretion of their tax bases and rates.
113
The problem of
financial decentralization can be divided into three areas. First, today, the share of
local public expenditure in Korea is larger than in classically unitary states such as
France or Ireland, but smaller than in federal countries such as the United States,
Germany or Switzerland.
114
The overall size of local expenditure sharing is
relatively large among OECD countries. However, local revenue shows a different
picture. Even after the several series of decentralization reforms in the 1990s, the
average share of local taxes was around 20%, and this figure has remained
remarkably stable during the 1990s.
115
Compared to most OECD countries, Korean
local governments have rather little discretion of their own tax bases and tax rates,
which makes local government more dependent upon the central government’s
grant-in-aids.
116

Second, after the passage of the SLDP, many central government affairs
began to be delegated to local governments, while the transfer of fiscal resources has
been delayed or cancelled because of resistance from central ministries. Because the
whole process of decentralization was dominated by the CGID and MOGAHA as
discussed in the next parts, other central ministries - especially economy and
finance-related ministries – have complained about the one-sided process of fiscal

113
OECD (2001b); IMF (1997); CGID (2003).
114
IMF (1997); MOGAHA (1999).
115
OECD, ibid, 68-9.
116
According to the classification of subnational taxes by the degree of central versus local control
as discussed in Sellers (2003),the OECD (2002), and the World Bank (2005:109), the case of Korea
is classified into the “limited autonomy” category. They defined the term “limited autonomy” with
regard to taxation in that the sub-national government sets the tax rate, but within centrally
permissible ranges. In this case the center typically specifies a high/low tax range or caps the top rate.
131
decentralization. Finally, as discussed earlier, there is a fiscal imbalance between the
center and periphery, yet the gap between metropolitan areas and smaller local
governments (Si, Gun, Gu) has become bigger despite the reform. Table 3.7 shows
that big metropolitan areas and provinces are much better in terms of their fiscal
independent ratio than that of smaller cities, counties, and districts.

Table 3.7: Fiscal Independence Ratio by the Size of Local Governments (2000)
Ratio
Metropolitan
Provinces
City (si) County (Gun)
Autonomous
Districts (Gu)
Less than 10% - - 5 -
10-30% 4 21 72 4
30-50% 4 22 10 52
50-70% 2 16 4 8
70-90% 5 12 - 2
90% and over 1 1 - 3
Total 16 72 91 69
Source: MOGAHA (2001); OECD (2001b).
To remedy the fiscal crises of local governments, the SLDP and the
following revenue transfer policies in the Roh government attempted to get better
local fiscal management by reforming the local allocation tax system,
117
t
central taxes,
ransferring
120

118
or establishing new taxation items.
119
However, those attempts face
strong challenges from ministries and are delayed just like in past reform efforts.

117
By increasing the legally fixed rate of local allocation tax from 15% to 18.3%, the government
attempted to increase the source of local revenue, and by reducing the ‘special allocation tax’ which
specifies the scope of local government expenditure (from 9.1% to 4% of total allocation tax), it
allowed somewhat autonomous management of the revenue (January 29, 2004). In addition, if local
governments efficiently manage the allocation funds, the central government would provide
incentives to them (MOGAHA, 2005: 24-25).
118
The government conducted research to transfer some of items in special sales tax (consumption
tax) to local governments (May 2004), and considered the establishment of a local sales tax (2003-
2004). See MOGAHA, 2005, p.26.
119
For example, develop new taxation items such as levying a local development tax on golf fields,
nuclear electronic facilities, etc (MOGAHA, 2005: 27).
120
Ju, Yong-Hak, interview (October 21, 2005); Kim, Sung Ho, interview (October 25, 2005).
132
In sum, although there has been a strenuous attempt to improve the
autono mestic

d
ered
.4. CONCLUSION
this chapter, I argued that the current wave of decentralization in Japan
and Kor

f
ral

mous status of local governments within this entangled global and do
environment, local governments in Korea have been dependent upon the center, and
remained relatively powerless in comparison with other Anglo Saxon countries as
well as Japan. Political figures in the Roh government showed strong intentions to
decentralize and succeeded in reforming some parts of central-local relations, yet
those projects were limited in their successes.
121
Therefore, to grasp the success an
limitedness as well as similarity and difference between Korean and Japanese
decentralization reforms in the 1990s-2000s, it is essential to investigate uncov
interests, motivations, and the behaviors of stakeholders under the rapidly changing
political-economic environment.

3

In
ea is a recent phenomenon compared to the overall development of central-
local relations in the postwar period. In both countries, changes and patterns in state
industrial and economic policies as well as the emergence of authoritarianism
(Korea) during the era of industrialization strongly influenced the persistence o
centralism. In doing so, bureaucrats in powerful ministries at the center and secto
politicians exercised powerful influence on local affairs, and local governments

121
Sung Jong Lee (2005).
133
were marginalized in the policymaking process, despite the growth of their sizes
powers over time. Whenever the government attempted to transform the
asymmetrical relationship between central and local governments, those a
center played a crucial role in making skewing the direction of reform. Yet, although
centralism in both countries still persists, the central actors have to stand with local
governments in policymaking in this period.

and
ctors at the
everal interesting findings emerged from the analysis of the chronological
develop

d Korea did
oices
d them
ide.
S
ment of decentralization reforms presented in this chapter. First, the sudden
emergence of comprehensive decentralization results from the combination of an
unusual economic slump and political realignment. In other words, the globalizing
economy and the collapse of traditional political parties in both countries created a
favorable condition for the promotion of decentralization in the 1990s-2000s, as
discussed in earlier chapters. Under this rapidly changing environment, my case
analysis in this chapter shows that the emergence of somewhat radical
decentralization proposals and the limited nature of reforms in Japan an
not simply come from struggles among vested interests. Those proposals and
legislations materialized under persistent centralism as well as from growing v
from below. The case analysis indicates that there is something more in the politics
of decentralization in the fifth phase. As will be discussed, the emergence of
reformist politicians who have ambitions for decentralization reform – I calle
‘idea bearers’ as explained in Chapter Two – took the initiative in pursuing the
reform programs, while bureaucrats and politicians at the center had to move as
Under a similar situation, the widespread role of idea bearers in the political,
economic, and social worlds contributed to the successful diffusion of a
134
decentralization agenda in Japan, yet the lack of the number of idea beare
reformers – in Korea resulted in the greater difficulty of mobilizing supporters and
resources for decentralization.
Second, despite the rap
rs – i.e.,

id development of local society in Korea, there was a
path dep
fairs in
ise
the 1960-
y analysis here suggests that major political stakeholders involved the
process ts
e
2003)
endency stemming from the disparity of local development in both
countries. That is, Japan, which already carried out about 70% of national af
the postwar period, was interested in removing the arbitrary intervention of central
ministries instead of the transfer of affairs, while the extensive delegation of central
affairs and budgetary matters to local governments is required in Korea. It seems
that modernization theory, as discussed in Chapter One, is appropriate in explaining
the role of local and civil society in the process of decentralization. However, an
explanation based on the ideational approach, which claims that the educational
effect of ideas on social actors including local governments provides a more prec
account for the emergence of the current decentralization drive because
modernization theory can not explain why the progressive movement of
70s in Japan could not bring about decentralization.

M
of decentralization include such as bureaucrats, those with sectoral interes
in the central government, reformists, local governments, civil society, and business
groups. An obvious question raised by this chapter is: why did central political
actors suddenly take a step back in the current decentralization drive? What wer
their hidden intentions or motivations? Considering the fact that until the early
1990s, central actors in both countries discouraged the development of a new
central-local relationship, the sudden emergence of the OLD (1999) and TRP (
135
136

in Japan and the SLDP (2003) in Korea is rather puzzling. The next chapters of the
dissertation explore this question and turn to the ideational explanation presented in
Chapter One and Two.
137

CHAPTER 4
THE POLITICS OF DECENTRALIZATION AT THE CENTER:
POLITICAL GRIDLOCK AND REFORMISTS

If the strong verticalism among policymakers at the center were still
persistent, one might expect that rapid change in intergovernmental relationships
would be difficult to begin. However, as Michio Muramatsu noted, the relationships
between the central and local governments in Japan and Korea are not a zero-sum
game or mutually independent.
1
Instead, it would be more precise to describe the
current decentralization process in both countries as one of prevailing centralism
and growing localism. Stakeholders at the center still dominate the process of
decentralization, but pressure from below is growing. As Chapter Three shows, after
ignoring the reform of central-local relations for most of the postwar period, the
Korean and Japanese governments are now encouraging the promotion of
decentralization, and regularly include representatives of local governments,
business, and civic organizations in advisory councils and consultations on
decentralization policy. Explaining this sudden shift in those governments’ attitudes
toward actively supporting the promotion of reform, thus, is critical for
understanding the cause of various modes of decentralization in Japan and Korea.
This chapter explores this question and uses the ideational model presented in
Chapter One and Two to show how a new idea of neoliberal reform, transnational
diffusion of ideas and domestic political-economic opportunities have influenced the
growth of decentralization. Based on the analysis of five phases of decentralization
reform in the postwar period, this chapter sets out to investigate the politics of

1
Muramatsu (1997).
138
decentralization at the center by emphasizing major stakeholders’ motivations,
interests, political exchanges, and ideas.
The main purpose of this chapter focuses on the role of reformist politicians
in central governmental organizations by highlighting how the reform idea under the
political-economic structure of central political world is diffused. Refer to Figure
2.1 presented in Chapter Two. The great uncertainty of the national economy and the
rapid pace of political realignment provided the momentum for top political leaders
– i.e., the prime minister and president – and their policy advisors, who were
empowered under a rapidly changing environment and armed with neo-liberal ideas
to put decentralization on the agenda. Decentralists who occupied important
positions in governmental organizations contributed to the promotion of
decentralization. In contrast, sectoral interests – i.e., bureaucrats in powerful central
ministries and politicians, who had been reluctant to develop local autonomy in the
past continued to be resistant in negotiations for the transfer of authority and
responsibility to localities. They prefer to maintain the status quo under the pressure
of reform and loosen connection of political gridlock.
It might be true that theories of pork-barrel politics or political gridlock
provide better analyses with regard to the limited nature of decentralization reform,
as Chapter Three indicated. However, the following analysis will show that the
‘interest-oriented’ analysis has a limitation in explaining the Japanese and Korean
models of decentralization politics. I argue that the ‘neoliberal idea,’ instead of
‘interest’ provides reformist politicians with the tangible power to put forth a
decentralization agenda by occupying important positions in governmental
organizations and showing visible policy directions under uncertainty.

139

4.1. THE EMERGENCE OF DECENTRALISTS IN GOVERNMENTAL
ORGANIZATIONS: POLITICAL LEADERSHIP AND IDEA BEARERS

The Case of Japan: Prime Ministers and Reformist Politicians
As mentioned in the earlier chapters, the dominance of powerful central
ministries, the Liberal Democratic Party (LDP), and sectoral politicians resulted in
the traditional image of a highly stratified central-local relationship and prolonged
decentralization reform in Japan. In the current decentralization drive, as expected,
there have been a lot of political debates and negotiations among central political
figures – i.e., sectoral interests vs. reformists – with regard to the degree and range
of functional and financial resources to be delegated.
2

However, it is a notable change that the process of decentralization has
smoothly proceeded without serious conflicts or troubles in the decentralization
drive of 1990s-2000s compared to the past series of decentralization reforms, though
resistance from zoku politicians and public works-related ministries still persists.
Resisters are still very sensitive to specific percentages or amounts of authorities and
money to be transferred in the process of negotiation, yet in general they agree with
and accept the whole idea and plan of decentralization.
3
Not hollowing out central
governments, therefore, the nature of ‘limited decentralization’ in Japan shows that
central and local governments are strategically interdependent in the age of
globalization and domestic crisis.
4
The legacy of central dominance during the era
of industrialization substantially influenced the trajectory of central-local relations.
Japan did not make a full conversion to an autonomous model of local governance.

2
Jang-Kwon Kim (2000); Sun-Eun Kim (2003); Nishio (1999); Takagi (1998).
3
Masujima and Kobayashi (2003).
4
Hill and Kim (2000); Nakano (1998).
140

As such, the recent decentralization drive in Japan cannot be understood in a
simple thesis of pork-barrel politics. In Japan, even bureaucrats in central ministries
are reluctant to apparently oppose neo-liberal reforms such as deregulation and
decentralization,
5
but they are not the potential losers in this reform drive. The idea
of national competitiveness, which can be understood as neo-liberalism provides an
opportunity to reassess their positions in the current political-economic situation.
Accordingly, it is essential to fully investigate what their interests and motivations
are and how they interacted in the politics of decentralization from a top-down
perspective.
6
By analyzing the underlying political dynamics at the center, we not
only grasp how central actors - in particular, zoku politicians and bureaucrats – were
ambivalent about the whole reform drive but also understand their positions on
specific decentralization issues which are sensitive to their interests. In doing so, we
can explain why they favor some reform measures and oppose others and why they
attempt to impose particular conditions on the detailed decentralization items.
According to the previous studies, various stakeholders are involved in the
politics of decentralization. The Ministry of Home Affairs (Naimusho, now Ministry
of International Affairs and Communications, somusho) has contributed to the
promotion of decentralization by dealing with classifying delegated functions and
fiscal resources, and negotiating with other public works-related ministries such as
the Ministry of Construction (now Ministry of Land, Infrastructure, and Transport)
and Ministry of Finance.
7
Without political confidence and the decision of prime
ministers such as Hosokawa and Murayama in decentralization reform, the series of

5
Vogel (2005).
6
See the World Bank Discussion Group, http://www.worldbank.com/mdf/mdf1/topdown.htm.
7
Akizuki (2001).
141
decentralization-related bills would not be passed in the Diet. The emergence of
decentralist politicians and the business class in the 1990s became an important part
of decentralization politics.
8
In this chapter, I mainly focus on the role of prime
ministers and their staffs, bureaucrats in central ministries, and politicians. As
discussed earlier, the Committee for the Promotion of Decentralization (CPD) plays
a key role in coordinating deliberations and mediation of conflicting interests with
regards to the issues of decentralization.
9
However, because the specialized
committees – i.e., the Committee for the Promotion of Decentralization (CPD) –
played a crucial role in mediating different voices and interests between central and
local governments, I will analyze their activities in the next chapter.
The Emergence of Reformist Prime Ministers:
Many observers of Japanese politics have long argued that the prime
ministers and top political leaders depend on a strong bureaucracy for the
formulation of and execution of public policies. Unlike strong presidents in other
countries, the prime minister of Japan exercises given his limited powers and
authorities, and thus traditional studies have often described the leadership of the
prime minister and top politicians as weak players in politics.
10
That is to say, in the
postwar Constitution (1947), the Diet, the representative of people, elects the prime
minister, and he organizes his cabinet to administer the civil service in the
bureaucracy. Yet the postwar experience of rapid industrialization and modernization
advantaged bureaucrats of individual ministries in the policy process, and by

8
Nishio (1999).
9
Barrett (2000), p.41.
10
For example, Johnson (1982) and Pempel (1974). Karel von Wolfren even goes further by arguing
that the Japanese bureaucracy is so strong that the role of top politicians including the prime minister
has been limited in policy processes. According to his argument, the Japanese political system has no
political leadership (von Wolfren, 1989).
142

cooperating with American Occupation authorities, bureaucrats in ministries took
the initiative in carrying out major reform policies. On the one hand, as T. J. Pempel
pointed out, the role of bureaucrats who were highly competent and loyal to their
ministries grew in power in policymaking during the occupation period, and
maintained their authority after the occupation.
11
On the other hand, the prime
minister has always faced potential challenges from the LDP majority members or
groups of factions who attempted to replace him with their group leaders if given the
chance. The prime minister did not necessarily have a concrete basis of support from
his mother party.
12
As a result, despite the prescription of the Constitution, the
Japanese prime minister in postwar Japan was not as powerful as his counterparts—
the bureaucrats in individual ministries and the LDP majority members.
However, it would be a mistake to rule out strong leadership of the prime
ministers and politicians in the politics of decentralization in the 1990s. Muramatsu
and Krauss conducted a case study on the role of bureaucrats and politicians in
Japan and concluded that politicians, parties, and the Diet, unlike the thesis of
bureaucracy-dominant model, have played a surprising role in policymaking
processes.
13
Gerald Curtis mentions that many politicians having somewhat
specialized knowledge of specific policy issues are deeply involved in the policy
process to get desired policy outcomes.
14
Shinoda emphasizes the pivotal role of the
prime minister as a national leader in orchestrating the interaction between

11
Pempel (1984), p.94. Shinoda (2000) called this phenomenon “issue-specific sectionalism”
among individual ministries.
12
This is what is called faction politics (Shinoda, ibid: 10-16). If the prime minister’s popularity
drops significantly or he makes a serious mistake, such factional politics surface to replace the prime
minister.
13
Muramatsu and Krauss (1984).
14
Curtis (1999), p.6-7.
143

legislators and bureaucrats in reform politics by using his various political
resources.
15
Although there is no doubt that bureaucrats are still critical in Japanese
policymaking, the prime minister who is supported by informal political resources
from both inside and outside exercises his vested constitutional power in pursuing
his policies.
16

In reality, politicians and the prime ministers have been one of the critical
players in the ten-year-long politics of decentralization in Japan since 1993. The
origin of the current decentralization reform drive was, as mentioned in above,
almost the identical resolution on decentralization (calling for appropriate legislation
at the Diet houses) in 1993,
17
and the emergence of coalition government pursuing
series of economic, administrative, and political reforms.
18
In doing so, the prime
ministers such as Hosokawa and Murayama put decentralization on the top of the
governmental reform agenda, and they considered decentralization as an important
strategy to raise national competitiveness as well as local development.
19
Therefore,
it is necessary to carefully investigate the role of the prime ministers and politicians
in the politics of decentralization.
The prime minister showed a different political leadership style since early
1993 when the thirty-eight years of LDP dominance ended. From the emergence of
the Hosokawa government in 1993 to the Hashimoto government in 1996, the strong
political leadership of the prime ministers under coalition governments discontinued

15
Shinoda, ibid.
16
For example, ties with bureaucrats, the appointment of powerful former bureaucrats in the
cabinets, relationship with opposition parties, a high level of public popularity, and connections with
the business community and the U.S. let the prime minister exercise much stronger authority than
that described in the Constitution (Shinoda, ibid:203-5).
17
Nishio (1999).
18
Curtis (1999).
19
Nakano (1998).
144

the politics of sectionalism and the influence of LDP factions as political control
shifted to a non-LDP coalition and the eight-party system.
20
The unusual leadership
style during this period contributed to the launching of important policy agendas and
put political-economic reform measures like deregulation and decentralization on
the agenda despite resistance from bureaucrats and zoku politicians.
21

Among a number of the prime ministers since the 1990s, Morihiro
Hosokawa was the “maverick politician” who tackled many radical and difficult
policy agendas such as the GATT Uruguay Round negotiation, deregulation,
decentralization, and political reforms for curing the “Japanese Disease.”
22

Hosokawa, lead the Japan New Party (JNP) by making a coalition with seven other
political groups, and was inaugurated in 1993 right after the House of
Representatives (the Diet’s Lower House) passed a no-confidence resolution against
the LDP government. There were several elements that brought about the Hosokawa
administration’s radical reform agendas: first, his experience at the prefectural
government for eight years as a governor made him take disgust at contentious
political conflicts among politicians, bureaucrats, and interest groups – i.e., zoku
(‘tribe’) politics – at the center.
23
He started his political carrier at the center and
then became the governor of Kumamoto prefecture (ken) where he was born. During

20
The eight parties: The Japan New Party (JNP), Sakigake, Japan Socialist Party (JSP), the Renewal
Party, Komeito, the Democratic Socialist Party (DSP), the United Social Democratic Party, and the
Democratic Reform Federation. Shinoda, ibid.
21
Curtis, ibid, p.106-7.
22
ibid.
23
See Hosokawa and Iwakuni (1991). In the preface of the book, Hosokawa expressed his
annoyance with the irrationality of central politics. He states, “I had served this country as a member
of the Diet, I was sick and tired of “the logic of Nagatacho” because the interest of ministries always
prior to people’s interests…I made up my mind to change localities if the nation is not changed, and
then I became a governor of my native Kumamoto prefecture.” Nagatacho of Tokyo is the center of
Japanese politics where the Diet, the Prime Minster’s Office, the LDP, the JSP, and so on are located.
The logic of Nagatacho means that there is a huge gap between people’ desire and the central
politicians/bureaucrats’ policy agenda.
145

his two terms as governor, he experienced and witnessed how regulations, directives,
and fiscal control from central ministries restricted local governments from
effectively responding to matters concerning localities.
24
He even went further by
arguing that Japan in a rapidly changing global environment would not be
uncompetitive, if an unresponsive and conservative central system were not to be
changed.
25
Proposing local government innovation in line with neo-liberal ideas, he
insisted that localities, instead of central government, had to take initiative in policy
processes and advocated an independent role even in international affairs.
26
In
addition, his served the Third Provisional Council for the Promotion of
Administrative Reform (Gyokakushin III) as the vice-President and made an effort
to promote decentralization by launching a ‘pilot local government system’ which
gave more autonomous power to a number of selected local governments.
27
Based
on his local experience and vision for Japan, Hosokawa wanted to be put on the
record in modern Japanese history as the prime minister who resolved “Japanese
problems” by deregulation, election reform, and decentralization as well as other
diplomatic efforts to maintain good relationships with East Asian countries and the
United States.
28

Second, in order to maintain the fragile coalition government with eight
political groups, and to prevent zoku politics and the sectionalism of politicians and
bureaucrats in ministries from taking over, he appointed the leaders of six coalition

24
ibid. Also see Nakano (2003: 183).
25
Rozman (2002).
26
ibid, p. 210-14. In reality, while he served Kumamoto prefecture as governor (1983-1991),
Hosokawa actively promoted international trade and other economic exchanges with foreign cities
and regions (e.g. Montana, U.S.). Regarding the increasing role of Japanese local governments in
international affairs, see Jain (2005).
27
Nakano, ibid.
28
Curtis, ibid, p.123.
146

parties to important cabinet positions, and created a highly centralized decision-
making system.
29
Even before he became the prime minister, he continuously
warned of the problems of bureaucratic dominance, sectionalism, and the vertical
decision-making system in Japanese central government, and wanted to create a
centralized policy system which was operated by coalition party leaders in the
cabinet.
30
Therefore, his government created the Council of Representatives (Yot ō
Daihy ōsha Kaigi) of the coalition parties, and with an unprecedented 70% public
support rating, the council became a core institution shaping major policy outcomes
such as the Uruguay Round (opening rice market) and political reform packages.
Despite heavy criticism against Hosokawa’s centralized decision-making system, his
government successfully launched important reform programs including
decentralization,
31
and discontinued the issue-specific sectionalism in ministries.
Therefore, up until 1996 when the Hashimoto administration started, old system
leaders such as bureaucrats in ministries, LDP leaders, and zoku members could not
regain the upper hand in policy initiatives.
32

Third, collaboration with other decentralists who were former governors or
mayors such as Masayoshi Takemura increased Hosokawa’s political power to
control the radical decentralization issue.
33
Takemura, who was one of the core
political figures of Hosokawa’s coalition government, was the leader of the Sakigake

29
Shinoda, ibid, p.24.
30
See Hosokawa and Iwakuni, ibid, p.10-31.
31
The centralized decision-making system failed to pass the bill increasing the level of the
consumption tax from 3% to 7% (Nakano, 1997). As Shinoda (2000) mentioned, political reform
bills were very popular in Japanese society so that Hosokawa’s central decision-making could get
political support from the public. However, the consumption tax increase proposal, which required
serious negotiation was criticized for the system’s undemocratic nature (Nakano, 1997: 66-8;
Shinoda, 2000: 40). The failure of tax increase became a cause of Hosokawa’s resignation.
32
Nakano (1997).
33
Curtis, ibid, p.106-8.
147

party, a former bureaucrat at the Ministry of Home Affairs, and the former governor
of Shiga prefecture for twelve years. As a popular, innovative, and reform-minded
governor, he was in regular touch with Hosokawa to exchange the ideas for the
promotion of decentralization
34
and provided Hosokawa with a bloc of Sakigake’s
votes. Igarashi Kozo, formerly minister of Construction under Hosokawa mobilized
Japanese socialists to promote local autonomy, and designed the Japan Socialist
Party’s political stand on decentralization – e.g., proposing the abolition of agency-
delegated functions (ADF), enacting the Decentralization Promotion Law (DPP,
1995) and establishing the Committee for the Promotion of Decentralization (the
CPD).
35
As such, Hosokawa’s allies and collaboration with decentralists such as
Masayoshi Takemura, Igarashi Kozo, Hiromu Nonaka, Tomiichi Murayama, and
Tsuruo Yamaguchi gave more momentum to the decentralization reform effort in the
early and mid-1990s.
36

In addition to Hosokawa’s efforts, some of his successors played key roles in
the process of decentralization. In particular, Tomiichi Murayama put the promotion
of decentralization as one of particular urgency. The CPD was established and
empowered during his term, and the DPP was passed in the Diet. With specific
recommendations from the CPD, his government endeavored to faithfully carry out
the decentralization project.
37
When zoku Diet members and bureaucrats strongly

34
Nakano (2003), p.182.
35
Igarashi Kozo, whose carrier goal was decentralization, served as Chief Cabinet Secretary under
Prime Minister Murayama, and played an important role in constituting the Committee of the
Promotion of Decentralization (appointment of key personnel). His initiative in promoting
decentralization sparked the discussion, studies, and proposals among research institutes, parties,
think thanks, etc. See Nakano (ibid: 185-6) and Matsumoto (2000: 23).
36
Nakano, ibid; Furukawa, ibid.
37
The Ministry of Foreign Affairs of Japan (1995). Policy Speech by Prime Minister Tomiichi
Murayama to the 134
th
Session of the Diet. Retrieved October 14
th
, 2006 from http://www.mofa.
go.jp/announce/announce/archive_2/diet.html. Nakano (2003) mentioned that Murayama was
148

opposed putting a section about the establishment of the CPD’ in the
Decentralization Promotion Law of 1995, Murayama’s leadership decisively
contributed to establishing an institution for decentralization reform by urging the
establishment of the CPD and appointing decentralists onto the committee.
38

In contrast, his successor Hashimoto (1996-1998) from LDP was not
enthusiastic about decentralization in comparison with his predecessors. Instead of
decentralization, he focused more on reorganizing central government
(administrative reform program) in order to establish a ‘prime minister-centered’
administrative system by streamlining bureaucratic organization and cutting off the
bureaucrats and zoku politician relations.
39
However, under the structure of the tri-
party coalition government – the LDP, SDPJ, and Sakigake – Hashimoto as the
leader of the government had no choice but to support the decentralization programs
launched by the Murayama government.
40
The leaders of coalition government
agreed to actively support the CPD’s policy recommendations regarding the
abolition of agency-delegated functions and fiscal transfers to subnational
governments.
41
In addition, Hashimoto established the Administrative Reform
Council (ARC) under the Prime Minister’s Office (Kantei, November 19
th
, 1996)

unprepared to be prime minister under the turbulent political environment in the early 1990s, but he
decided to faithfully implement two policies: the promotion of decentralization and improving
relations with other Asian countries. Murayama was the former local councilor in Oita prefecture,
and originally came from the Trade Unions of Local Government Workers (Jichiro).
38
Takagi (1998).
39
Curtis, ibid, p.21. Hashimoto did not have a substantial support basis in the LDP like other LDP
prime ministers. He was not the leader of any faction in the LDP. Therefore, he wanted to block the
connection between public-works ministries and zoku politicians by restructuring the government
organization (Mishima, 1998; Furukawa, 2002). About the background of Hashimoto’s
administrative reform, see Mishima (1998), p.968-970.
40
Furukawa, ibid, p.30-1.
41
The tri-party agreement on the pursuit of decentralization was announced on January 8
th
, 1996,
and this agreement materialized in “The Basic Direction of Hashimoto Administrative Reform” (June
18
th
, 1996) and Decentralization Promotion Plan (1998).
149

and several decentralists like Ken Moroi, the chairman of the CPD, were included.
In doing so, the possibility of organizational resistance from powerful ministries was
reduced because conflicting decentralization administrative reform issues should be
compromised at the council.
42
As a result, major policy recommendations by the
CPD were accepted by the government even though resistance from bureaucrats and
zoku politicians increased under Hashimoto’s leadership.
43

In July of 1997, Prime Minister Hashimoto resigned for losing the election
and Keizo Obuchi became the new head of Japan. The inauguration of the Obuchi
government means the re-direction of economic policy from small government - i.e.,
reforming central finance and streamlining government expenditures through
administrative reform programs – to big government by expanding public
expenditure on public works to boost Japan’s economy.
44
Therefore, under this
changing policy trend, the CPD’s fifth policy recommendation (1998) containing a
reduction in central ministries’ public work programs faced serious challenges from
ministries and related zoku politicians affiliated with the Ministry of Construction,
Ministry of Transportation, and the Ministry of Agriculture, Forestry, and Fisheries.
Moreover, Prime Minister Obuchi, a typical LDP politician, was not interested in
decentralization even though he indicated that he would work out legislation to

42
Takagi (1998).
43
As will be discussed, when Hashimoto from the LDP was selected as prime minister, many
bureaucrats and zoku members who were the target of decentralization felt easy about the re-
emergence of LDP prime minister (Takagi, 1998). However, as noted, the situation of the LDP was
not the same as the LDP under 1955 system. The LDP did not have a majority in both the lower and
upper houses in the Diet, and needed to make a coalition government (Carlile, 1998: 98-100). In
addition, Hashimoto who disliked the bureaucracy’s subtle tampering on reform-related affairs,
attempted to cut off the bureaucratic and political influence on Administrative Reform Council
(Mishima, 1998: 971).
44
Takagi (1998). His economic recovery policy focused on fostering employment by helping small
and medium-sized enterprises financially. See his speech at 145
th
Diet session (1999),
http://www.mofa.go.jp /announce /announce/1999/1/119-2.html.
150

reform local finance and transfer authorities from central to local governments in
several addresses and press conferences.
45
However, the Obuchi government could
not reverse the wave of decentralization reform, and passed one of the most
important bills in Japanese decentralization history, the Omnibus Law of
Decentralization in July 1999, though the phase of decentralization reform became
slow.
There was a growing confrontation between decentralists and central
ministries-zoku coalitions, but decentralization efforts continued after Obuchi under
Prime Minister Koizumi administration. What Koizumi accelerated in his term was
local finance reform and the devolution of central affairs to local governments
through the legislation called the Trinity Reform Package (2003). He pushed
forward sensitive policies which were passed the Diet.
46
He pressured government
ministers and bureaucrats who had a lukewarm attitude toward decentralization into
taking specific step to promote decentralization.
47
Despite criticism for his Trinity
Reform Package, which would transfer tax resources and cut national subsidies
simultaneously, Koizumi’s reform drive aimed to revive Japanese prosperity through
reforms in the following areas: social security, education, public works, industrial
promotion, and public safety.
48

45
For example, see Kyodo News (May 25
th
, 1998), “Obuchi eyes legislation to help local gov’t
finance” and policy speech by Prime Minister Keizo Obuchi (August 1998), http://www.mofa.go.jp
/announce/announce/1998/8/807-0.html.
46
Hanson, Richard (2003). Koizumi Takes Policy out of Politics. Asia Times (June 26
th
, 2003),
Retrieved October 20
th
, 2006 from http://www.atimes.com/atimes/Japan/EF26Dh04.html.
47
Japanese Policy and Politics (April 7
th
, 2003), Koizumi urges Gov’t to Take Steps to Promote
Decentralization. http://findaticles.com/p/articles/mi_m0XPQ/is_2003_April.
48
The CPD.2001. The Final Report. There was dissatisfaction from both central ministries and local
communities to Koizumi’s decentralization drive. For central ministries, transferring tax resources to
local governments means the dwindling status of their organizations. Local communities were
dissatisfied with the transferring process, and subsidies were reduced drastically. See DeWit and
Kamazaki (2004), Koizumi’s Flawed Political Economy of decentralization. Japan Focus (October
151

In sum, contrary to the ‘bureaucracy-centered’ perspective used to anticipate
the limited role of prime ministers in Japanese politics, decentralist prime ministers
were critical in initiating and shaping the issue of decentralization reform, which
had been ignored in the post-war political agenda. First of all, much of the reform
programs to revitalize the national economy were supported by the general public,
and decentralization reform was thought to cure the ‘Japanese disease’, so it
remained as one of the top priorities of the past decade. In particular, prime
ministers such as Hosokawa and Murayama who squared their perception on
national competitiveness with decentralization, were dedicated to reconstructing
central-local relations in order to make the country more competitive, and
contributed to laying the groundwork for a decentralized system in Japan. In doing
so, they could soften bureaucrats and zoku members’ voices under the rapidly
changing domestic and global environment. Their experience in localities, alliance
with collaborators (decentralists), the changing political situation (coalition
government), the stagnant domestic market, and shared neo-liberal ideology,
fostered the decentralization movement. Even prime ministers like Hashimoto and
Obuchi who were less interested in decentralization could not reverse the wave of
decentralization. Although, bureaucrats and zoku members started to resume their
positions and the issue of decentralization became the target of pork-barrel politics
when Hashimoto and Obuchi were inaugurated, the most important and extensive
legislation on decentralization reform did pass. Furthermore, prime ministers’
addresses with regard to the continuation of decentralization reforms kept
decentralization on the government agenda.

14
th
, 2004), http://www.japanfocus.org/products/details/1824.
152
The Role of Politicians:
As Barrett and Nishio pointed out, the current decentralization drive began
with reform proposals initiated by top political leaders and politicians in a number
of political parties.
49
As a matter of fact, this is not the first time that the issue of
decentralization has become a top priority on the reform agenda in Japanese postwar
politics, and the processes of centralization and decentralization has been repeated
over fifty years like ‘the swing of the pendulum,’ as Chapter Three explored.
However, the continuity of decentralization reform in the 1990s was based on two
facts: a) the structure of coalition government and b) the emergence of decentralist
politicians.
Jang-Kwon Kim called the political alliance for the 1990s’ decentralization
reform a ‘loose coalition.’
50
This coalition means that each of the political parties,
factions, and individual politicians has a different motivation and interest in
decentralization, but they cooperated anyway to purse the reform, which is unlike
previous reform efforts. For example, on the one hand, some political leaders in the
LDP and rightwing political parties, central bureaucrats, and businessmen have a
tendency to perceive decentralization reform as a tool for restoring national
competitiveness and public trust by increasing administrative efficiency. On the
other hand, socialists in Japan, including the JSP aim to resolve inequality problem
in localities through transferring authority to localities and increasing citizen
participation.
51
However, although a lot of dissenting voices and perspectives on
decentralization from each political group appeared in the process of reform, the

49
Barrett, ibid; Nishio, ibid.
50
Jang-kwon Kim (2003), p.236
51
Barrett, ibid, p.35-6.
153

coalition governments made cooperation more likely.
52
The Liberal Democratic
Party, in particular, was not enthusiastic about decentralization, but under a coalition
government with the Socialist Party and Sakigake - which were convinced that
decentralization was critical to stabilize their political ground - it had no choice but
to compromise.
53
In particular, the three parties formed the ‘Tri-Party Council for
Policy Coordination’ (Seisaku Chsei Kaigi) to discuss issues in the decentralization
project, and dissenting opinions were compromised in the council.
54
Therefore, to
stay in power under the structure of coalition government, each political party
agreed to put decentralization agenda on one of top priorities by compromising
sensitive issues related to ‘votes.’
55
A policy window for decentralization was
opened with the collapse of LDP dominance and political realignment in the early
1990s.
In addition, as noted above, the ideological background of decentralist
politicians in the cabinet as well as in the Diet was important for the promotion of
decentralization reform. In Japan, the cabinet is at the center of policy processes,
and undertakes over 80% of the bills submitted to the Diet. Thus, it is required that
most policy decisions in the cabinet obtain consensus among cabinet members and
party leaders of the coalition government, and placing decentralists in key positions

52
Eight parties before 1996 and three parties (LDP-SDP-Sakigake) since 1996.
53
Furukawa, ibid.
54
For example, the CPD recommended abolishing ‘local administrators’ (chiho jimukan) in To, Do,
Fu and Ken governments that limited a governor’s personnel authority in its fifth Policy
Recommendation, but the Socialist Party opposed to clearly mention the abolishment in the
governmental bill of decentralization because the party was supported by Jichir ō (All-Japan
Prefectural and Municipal Workers Union). Therefore, the issue of ‘local higher officers’ was
ambiguously documented in the final form of the decentralization plan after several discussions in
the Tri-Party policy coordination (Nishio, 1999).
55
Jang-kwon Kim (2003).
154

in the cabinet made it possible for the decentralization reform to be implemented.
56

As pointed out earlier, political figures such as Masayoshi Takemura (former Chief
of Sakigake Party), Igarashi K ōz ō (former chief cabinet secretary and a Socialist
Party member), Hiromu Nonaka (LDP leader), and Ishihara Nobuo (former chief
cabinet secretary) put forth effective coordinative power over the central ministries
and political parties to promote decentralization.
57

The origin of political leaders’ attitudes toward the current decentralization
drive was a ‘competitive discourse’ stemming from neoliberalism. Many politicians
interested in a greater role for Japan in politics and the international economy were
preoccupied with the notion of ‘national competitiveness’ in the age of globalization.
For example, the LDP leader Ichiro Ozawa, in his famous book “Blueprints for a
New Japan: The Rethinking of a Nation” (Nihon Kaizo Keikaku, 1993), claims much
stronger central political leadership is needed to effectively respond to the changing
international environment, and he simultaneously makes a stand for the promotion
of decentralization by arguing that decentralization could contribute to the creation
of a strong state as well.
58
He insists that central government should devolve affairs
- except those that are critical to central government - to local governments so that
central government can focus on national-level issues.
59
By linking localism and
nationalism, leaders of Sakigake Party Masayoshi Takemura and Shusei Tanaka, in
their party’s platform, also argue that ‘making good villages and towns’ (machi
zukuri) will lead to the prosperity of the country.
60

56
Furukawa, ibid, p.29.
57
Refer to Nakano (2003), p.181-4.
58
Ozawa (1993), p.25.
59
ibid, p.98.
60
Takemura and Tanaka (1995), Sakigake no Kokorozashi (Sakigake’s Ambitions), Tokyo: Keizai
Shinbumsa.
155
ompetitiveness
d with
ue
rm in Japan.
he Case of Korea: Top Political Leaders and Reformists
tions in Chapter Three
shows
ers

al
ic

As such, the prevalence of ‘decentralization rhetoric’ among major political
figures in the 1990s was based on thinking that local prosperity in politics as well as
in the economy would lead to a more competitive nation in the age of
globalization.
61
Although advocates of the decentralization-national c
rhetoric were not strong enough to overcome the central bureaucrats arme
zoku politicians, decentralist politicians in the cabinet and political parties of
coalition government played an important role in bringing the decentralization iss
on the legislative agenda.
62
In conclusion, the idea bearers – i.e., decentralists –
were critical in brining changes in the fifth phase of decentralization refo

T
The discussion of decentralization in past administra
that strong central bureaucrats and politicians dominated the process. Yet,
even after democratization in the late 1980s, political figures and bureaucrats in
central ministries, the Blue House (the Office of President), and ruling party lead
remain powerful. Therefore, previous studies on the politics of decentralization
concluded that the limited nature of decentralization as well as other reforms in
Korea reflected interest politics between central politicians and bureaucrats.
63

Indeed, in the current decentralization drive, advocates of traditional centralism
prevailed, and politicians and bureaucrats at the center still occupy important
governmental positions. As I mentioned, however, their reputation of the centr
government suffered from irreparable damage because of policy failures, econom

61
Nakano (1998), p.522.
62
Nakano (2003).
63
Jaewon Yoo (1994); Seung Jong Lee (2005).
156
er of

he conventional wisdom regarding the attitude on reform in the literature is
that the
actly
hout big
e of

crisis, and corruption scandals. In addition, the democratization movement in
governmental organizations also has hit one and another since the collapse of
authoritarian regime. In particular, since the economic shock of 1997, the pow
central actors has been challenged by changing public attitudes questioning their
competency and accountability in the age of a global economy. Bureaucrats in the
ministries and central politicians who represented the image of inefficiency, pork-
barrel politics, red-tape, corruption, and so forth became targets of public sector
reform.
T
bureaucracy and politicians always move against the reform.
64
It is
important for public officials in the Korean bureaucracy to secure their positions as
the laws guarantee life time employment.
65
Transferring central affairs to local
governments means the reduction of their offices as well as power in the
organizations. However, the politics of decentralization in Korea does not ex
follow this wisdom. Despite the delay of decentralization reform stemming from
resistance within government and National Assembly, the process of
decentralization has proceeded relatively smoothly and continued wit
troubles under the Roh government. Compared to past reforms, the current driv
decentralization has been somewhat successful in the delegation and redistribution
of authorities, as analyzed in Chapter Three. The Special Law on Decentralization
Promotion (2003) contained several important tasks for decentralization that had
failed under the authoritarian regime and earlier democratic governments.

64
For example, according to James Q. Wilson, all government agencies have a strong tendency to
avoid any course of action that may bring a change in existing managerial arrangement and structure
(Wilson, 1989: Chapter 12).
65
Byong-man Ahn (2003).
157
tees
mentio
s
mber
.
,
inistration

office as President in February 2003, he brought
forward
important

As one of the top executives of several presidential advisory commit
ns, the characteristics of bureaucrats in Korea is that they comply once the
direction of policy is determined.
66
That is to say, once the decentralization agenda
materialized, bureaucrats who are responsible for the implementation, in general, are
obedient to the will of top political leaders. Compared to the case of Japanese
decentralization, the decentralization processes were initiated by the limited nu
of reformist politicians, yet even the small number of them under the changing
political-economic context could secure compliance from the bureaucratic world
Though there was organized resistance in the latter stage of decentralization reform
the combination of the will of the top political reformer – i.e., the president – and
the obedience of the bureaucracy was the key to decentralization in Korea. In
contrast to Japan, central politicians were less interested in the process of
decentralization, and thus bureaucrats in the Ministry of Government Adm
and Home Affairs (MOGAHA) and the Presidential Committee of Government
Innovation and Decentralization (CGID) tried to cultivate support from them.
67

CGID, as the more powerful and authorized consultative committee, played a
crucial role in mediating differences regarding the substance of decentralization
reform, as the Japanese CPD did.
When Moo-hyun Roh took
many of his policy staffs’ recommendations in national agendas with regard
to the resolution of disparities between the center and periphery, and
‘decentralization and ‘balanced development’ became one of the most

66
Interview, Sung Sig Yoon (October 19
th
, 2005).
67
Interview, a senior bureaucrat in MOGAHA (October 12
th
, 2005).
158
The R
priorities to be carried out in his government.
68
To understand how various actors
and their interests were reconciled in the process of decentralization, careful
investigation of the motivation and interactions among stakeholders is necessary. In
this section, I mainly focus on the role of the president and his staff, bureaucrats in
central ministries like the MOGAHA, and politicians in the National Assembly and
political parties. The main process of decentralization reform in the Roh government
was promoted by the interactions among those six groups.
69
Unlike the process of
decentralization reform, which was promoted by the Committee for the Promotion
of Decentralization under the Prime Minister’s Office in Japan, the CGID and
MOGAHA took the lead in the whole process of decentralization in Korea. In
addition, the President played a crucial role in coordinating inter-branch fighting on
some sensitive issues such as the delegation of core functions and the abolishment
of agencies. Because of the tradition of an executive-dominant governmental
structure since the authoritarian regime, actors in the central government took
initiatives in decentralization policy as they did in other policy areas.
70

ole of Presidential Leadership:
The transformation toward democratic governance of Korean politics since
the democratization movement in the late 1980s placed the Korean ‘imperial
presidency’ in a relatively weaker position than other political actors such as
bureaucrats, politicians, and big businesses. In particular, public opinion, which was

68
CNBD (2004); Shi-Chul Lee (2007).
69
Figure 4.1 was drawn based on earlier studies and interviews (Kim et al., 2004; Lee, 2004; Sung-
bin Lim, 2004).
70
See Kihl (2005); Moon and Mo (2000) as Pempel (1992) discussed the Japanese case. Amsden
(1989) describes the power of economic bureaucrats in policy making, but Yang (2004) mentions that
there is a power shift among bureaucrats from economic to social-welfare agencies. However, at least
in decentralization cases, the MOGAHA has taken initiatives.
159

weary of authoritarianism, became adverse to strong presidential power. Intertwined
with political corruption scandals, economic slowness and the growth of opposition
parties, presidents since the 1990s – Tae-Woo Roh, Young-sam Kim, Dae-jung Kim
and Moo-hyun Roh – have not enjoyed strong political power as their predecessors
did.
71
However, it would be a mistake to rule out the importance of strong
presidential leadership in bringing about the changes in central-local relations. Top
political leaders – in particular Dae-jung Kim and Moo-hyun Roh - since the late
1990s have provided general support for the decentralization efforts, and intervened
at certain critical junctures to keep the process moving forward. In particular, two
presidential authorities played a crucial role in keeping the issue of decentralization
as the top priority of the government by mapping out the following strategies: a) the
political appointment of decentralists in key governmental positions and b) the
coordination of bureaucratic and inter-ministerial conflicts.
72
Because their ultimate
policy goal of reform was to design in order to overcome the economic crisis and
governmental inefficiencies, they worked out strategies to promote national
economic competitiveness by adopting neoliberalism. In doing so, whether it was
their intention or not, they adopted the idea from international organizations
coercively or voluntarily.
73

First, the presidents influenced the agenda-setting process of decentralization
reform, by appointing decentralists – politicians or policy specialists – in key
executive or advisory positions in governmental organizations and agencies. For

71
For example, Mo (2001) called “political gridlock” among bureaucrats, business interests, and
politicians in Korean reform politics.
72
Like in Japan and France, the emergence of decentralist political figures plays an important role
in the process of decentralization.
73
Kihl (2005).
160
urthermore,

example, Dae-jung Kim established a standing advisory committee, Presidential
Advisory Committee on Policy Planning, and hired ‘reform-minded’ scholars.
Incumbent President Roh, in particular, exercised his personnel authority by using
the criteria of the combination of personal and identical tendency in the selection of
candidates for the cabinet members and important political positions.
74
Soon after
President Roh took office, many high-ranking positions were filled with persons
who shared the same political philosophy of decentralization, de-concentration,
balanced development, and other reform ideologies. For example, one of the core
advisors to Roh regarding the issue of decentralization was Byoung-joon Kim, a
well-known scholar in public administration and urban policy at Kook-min
University. Kim was appointed as the chairman of the Presidential Advisory
Committee on Policy Planning, which was established to design coherent national
reform policies and coordinate various reform agendas proposed by other
governmental agencies. In addition, President Roh promoted some decentralists into
top executive positions such as the Minister of Government Administration and
Home Affairs. The former minister of MOGAHA, Doo-Kwan Kim had served as
just the headman of a small village and country (gun) in Gyeong-Sang Province, but
he was promoted to the head of MOGAHA, which was quite unusual.
75
F
the chairman of the CGID, Sung-Sig Yoon, and the chairman of the Presidential

74
This type of personnel policy has been criticized by opposition parties and the mass media. They
called the style, ‘code personnel’ or ‘cronyism.’ Yoon-ho Nam (2006). Current Categories of
Cronyism.” JoongAng Daily (August, 13
th
, 2006). http://joongangdaily.joins.com/article/view.asp?
aid= 2798294.
75
Minister Kim’s political image as a successful headman of a small village and county in Korea
(President Roh’s press conference February 27, 2003), but he suddenly became a famous political
role model of successful local governance. However, the sudden and unusual promotion from
headman to minister resulted in great criticism from the opposition parties and the mass media as
well as among cabinet members (Dong-A Weekly, March, 13, 2003 retrieved from
http://www.donga.com/docs/magazine/weekly/2003/03/05/ 200303050500048/
200303050500048_5.html.)
161
,
y

Committee on National Balanced Development (CNBD), Kyeong-Ryung Seong
were recognized as ‘decentralists’ in their publications and activities at the
professional journals and academia.
76
President Roh personally confessed publicl
that he was influenced by Chairman Sung-Sig Yoon’s book, The Vision and Strategy
of Government Innovation (2002), and recommended the book to ministers and
bureaucrats.
77

As such, in terms of the time sequence, the Roh government, backed by the
ruling party, placed decentralization on the top of its governmental agenda by
committing ministries to decentralization issues and by Roh using his personnel
management tools. Political appointees occupying key positions - in particular, the
Special Policy Staff in the Presidential Office, Chairman of the CGID and CNBD,
and the minister of MOGAHA - dominated the process of decentralization reform by
forming a ‘decentralist coalition’ in the Roh government. Therefore, presidential
authority over personnel decisions and government organization became an
important indicator of the president’s will to pursue decentralization.
78
Most of the

76
Chairmen Yoon and Seong were prominent scholars in academia. Yoon was the professor of
public administration at Korea University and got his doctoral degree from the University of
California at Berkeley. Seong was a professor of sociology in Hallym University and got his Ph.D.
from Stanford University.
77
Dong-A Ilbo (2004). Roh, Recommended to Read Professor Yoon’s book, ‘The Vision and
Strategy for Government Innovation’ (September 19
th
, 2004). In this book, Professor Yoon argued
that efficient governmental organizations require the placement of ‘self-motivated’ reformist
bureaucrats in government agencies and the horizontal formation of networks among them. President
Roh adopted this idea and cited in his several addresses and press conferences as well as the state
council meeting.
78
Interviews with local governments staff members and civic activists (October, 2005). Most
interviewees believed that there is a relationship between the will of the President about
decentralization and his political appointment style. For example, when the successors of the former
minister of MOGAHA (Doo-Kwan Kim) were appointed, most interviewees worried that the
president’s intention to decentralize became weaker because those successors had no experiences in
decentralization issues. Two successors (Young-kyo Oh and Sung-kwan Huh) since the resignation of
the former minister Kim in September 2003 were the former vice-minister at the Ministry of Industry,
162

interviewees in this research project pointed out the president’s will as the most
important factor that contributed to the promotion of decentralization.
Second, although CGID was given powers to conduct investigations and
deliberations on basic matters related to decentralization, the umpire coordinating
different voices and conflicts among central agencies is vested in the president.
While the president has utilized a variety of techniques to build his management
capability, he has used the presidential policy staff in the Presidential Office as a
bridge to the ministry and the ministerial bureaucrats. In order to keep the
presidential policy staff in the presidential orbit, the Presidential Office hosts regular
meetings in the Blue House to discuss policy issues, and the implementation of
reform policies, legislative strategies, and the coordination problems with other
agencies, which frequently came up in these meetings. By having contacts with the
senior department staff – i.e., the vice-minister – on a regular basis, the presidential
policy advisors and staff tried to reinforce the president’s value and the immediate
policy goals. However, when these efforts faced resistance from the career
bureaucrats in the MOGAHA, the president directly worked with them to resolve
the conflicts.
79
Hugh Heclo described this situation as ‘a government of strangers’,
which meant that the president rarely knows the second level of government
employees and the political appointments, but the legacy of the ‘imperial
presidency’ in Korea gives the president the very powerful authority to intervene in
governmental processes at any critical juncture.
80

Commerce, and Energy (MOCIE) and a former business professor at the Dong-A University in Pusan.
79
Interview, a bureaucrat who has served as the chairman of the Public Workers’ Labor Union in
MOGAHA (October 18
th
, 2005).
80
See Heclo (1977). Interview, Sung-Sig Yoon (October 19
th
, 2005).
163
Despite the political obstacles of a divided government, President Roh
effectively used his authority to resolve the conflicts among bureaucrats and
ministries at the earlier stage of the decentralization process. He empowered related
institutions such as the CGID and the MOGAHA, which had only been secondary or
advisory government organizations in past administrations, by giving them critical
roles in the whole process of decentralization. However, in the later stages of the
decentralization process, which required political support from other stakeholders
such as politicians and parties, the presidential leadership faced strong challenges
against decentralization.
In sum, as Japanese prime minister did, the Korean president was motivated
by the goals of national economic recovery. Neo-liberal reforms gave an impetus for
the promotion of decentralization. By being directly or indirectly involved in the
process of decentralization, the president provided the direction for state
restructuring by transforming central-local relations, exercised effective personnel
authority to hire decentralists in governmental agencies, and arbitrated among
opposition parties, central bureaucrats, and sectoral politicians. Therefore, as
interviewees pointed out, the strength or weakness of the will of president was a
critical element in the success of decentralization.
Politics in MOGAHA and Bureaucrats
Unlike Japan, where the role of reformist politicians was indispensable in the
legislation of decentralization reform, Korean politicians at the center were less
interested in the whole idea of decentralization. Instead, central ministries – in
particular, the Ministry of Government Administration and Home Affairs
(MOGAHA) – played an important role in designing specific programs and
developing the schedule for decentralization reform, and contributing to the
164

activities of advisory committees by sending out their bureaucrats. In addition, the
MOGAHA, as Figure 4.1 indicates, develop a detailed list of affairs to be delegated
and is responsible for coordinating different voices with other ministries. While the
CGID is engaged in the creation of the overall decentralization policy, the
MOGAHA makes specific policies to give a shape to the bigger plan.
81

The MOGAHA was the created by the merger of the Ministry of
Government Administration and the Ministry of Home Affairs in February 28, 1998,
during the Dae-jung Kim administration’s governmental reorganization.
82
The
mission of the ministry was mainly divided into two parts. First, it attempted to
construct a more efficient and customer-oriented administrative system by
introducing an e-government system, a performance evaluation program, and a self-
innovation system to government organizations. This task is basically related to
managing civil servants and government organizations, which belonged to the
former Ministry of Government Administration before 1998. Second, the ministry
takes responsibility on the improvement of local administration and the self-
governance system through authorities of empowerment or supervision. The
ministry must strengthen local administrative capacity and self-governing
competency by providing political, administrative, and financial support; and make
an effort to delegate central affairs to local governments, which had belonged to the
former Ministry of Internal Affairs.
83
As such, because the MOGAHA deals with

81
Interview, a senior bureaucrat who has been in charge of decentralization-related affairs for 20
years in MOGAHA (October 12
th
, 2005).
82
Because of the economic crisis in 1997, there had been a mass dismissal of civil servants and
either the merger or abolishment of agencies, public enterprises, and ministries (Pan Kim (2000:169).
83
MOGAHA website, http://www.mogaha.go.kr/english/jsp/sub01/sub01_02.jsp. In addition,
MOGAHA is in charge of public safety issues (police), social participation (NGO aid policies,
women participation), and disaster prevention. See also OECD (2001b), p.59.
165
government administration, decentralization, and innovation tasks, it played and
plays a crucial role in the past and current administrations’ reform projects. Two
divisions: the Division of Local Administration and the Division of Local Finance
and Taxation, are in charge of the process of decentralization.
As one of the core reform-related institutions in the Roh administration, the
MOGAHA was in charge of carrying out several important tasks for the completion
of decentralization reform. In particular, the MOGAHA investigated the central
affairs that may be delegated to local governments, prepared the government bills
regarding decentralization projects, and held discussion sessions and conferences
with private experts and research institutes as well as local governments and civic
organizations. Unlike the CGID, which dealt with the development of the broader
policy issues of decentralization, such as establishing local education and a local
police system, and abolishing special administrative agencies, the MOGAHA made
an effort to realize those broad policy ideas suggested by the CGID and other
research communities as shown in Table 4.1

Table 4.1: The Major Tasks of MOGAHA in Decentralization Projects
Major Tasks and Obligation Cooperation
1. Develop the practical list of central affairs to be delegated.
2. Preparing government bills on delegation.
3. Developing practical strategies of Local Police system
4. Abolishment of Special Administrative Agencies
5. Measuring the decentralization level and develop indicators
6. Improving Local Allocation Tax system
CGID, other Ministries
National Assembly, CGID, Parties
CGID, National Assembly
CGID, other Ministries
Local Government Associations
MOFE, MPB
Source: MOGAHA∙CGID (2005), p.15-60.

166

In 2003, the MOGAHA, in charge of decentralization reform projects,
prepared and submitted the bill, Special Law on Decentralization Promotion, to the
National Assembly, which would require the agreement of or co-operation from
other central ministries and agencies because the bill contained the delegation and
reorganization of those agencies’ functions and budget. Thus, in order to pass the
bill, they had to overcome opposition to these sensitive issues. First, the MOGAHA
had to negotiate with the Ministry of Finance and Economy (MOFE) and the
Ministry of Planning and Budget (MOPB), which are the most powerful ministries
in Korea, in order to achieve the goal of fiscal decentralization by allocating the
central sources of taxation and finance to local governments. Indeed, most of those
tasks, such as the creation of the local consumption tax and local income tax, the
adjustment of taxation resources between the national and local taxes, and an
increase in the rate of the local allocation tax from 15% to 18.3% to make up for
unbalanced local finance,
84
were very sensitive issues to the MOFE and MPB
bureaucrats and their organizational identities.
85
Bureaucrats in those ministries, on
the surface, opposed the comprehensive delegation of those fiscal authorities to local
governments because they thought the sudden delegation of those authorities would
cause instability in the management of national finances. However, they doubted
that local government could effectively manage delegated fiscal resources, and they
believed that it was essential to establish institutional devices that comprehensively
supervise the activities of local finance in order to prevent abuses of the budget.
86

84
Listed in MOGAHA (2004), p.28-30. Interviews, bureaucrats in the MOGAHA (October 12
th
,
October 18
th
, 2005) and Sung Sig Yoon (October 19
th
, 2005).
85
Kim et al. (2004), p.47.
86
Interviews, bureaucrats in the MOGAHA (October 12
th
, October 18
th
, 2005). They were skeptical
about the capabilities of local governments and they thought this capacity problem was one of the
biggest obstacles of fiscal decentralization.
167

Accordingly, MOGAHA officials who tend to support decentralization faced strong
challenges from finance-related ministries, just as decentralists did in Japan.
87

Second, as briefly discussed in the previous chapter, the abolishment of the
special administrative agency (SAAs) was an important issue that caused serious
conflicts between the MOGAHA and other ministries. The SLDP prescribes that the
government must transfer the affairs of special administrative agencies to local
government if there are redundant functions between local government agencies and
SAAs (Article 10 ①). The issue of the abolishment of SAAs was an obstacle to
decentralized governance since the 1980s. The abolishment suggested by previous
administrative reform committees faced strong resistance from central ministries
because the abolishment of SAAs means the transfer of their functions, authorities,
employees, and budgets.
88

Table 4.2 shows the major special administrative agencies in December 2003.
There were 6,511 SAAs and about 190,000 employees in those SAAs.
89
There are
two criticisms of the problems of SAAs. First, the functions of some of SAAs, such
as the Local Environmental Agency under the MOE, the Small and Medium
Industry Agency under MOCIE, and local offices of the Food and Drug Agency
under the MOHW overlapped with those of agencies and divisions in local
governments. Therefore, as discussed in the previous chapter, the existence of SAAs

87
MOGAHA and other finance-related ministers attempted to adjust the different opinions on
comprehensive fiscal decentralization through meetings called “A meeting for economy-related
ministers”, but critical issues were not resolved (Dong-A Ilbo, December 13, 2004).
88
The Administrative Reform Committee under Tae-Woo Roh administration first suggested the
transfer of local branches of national agencies (SAAs) to local government in July 1989, and the
abolishment was issued in June 1996 once more. In the process of massive government
reorganization in the period of the Economic Crisis, the abolishment of SAAs was reissued in 1998,
but it failed because of challenges from central ministries (MOGAHA, 2004: 21).
89
The number of SAAs was 3,058 in 1985, 7,783 in 1993, and 7,402 in 1998 (Dong-A Ilbo,
December 15, 2004).
168
caused inefficiencies in terms of budget and human resources.
90
Second, there were
managerial and coordination problems between SAAs and local governments. For
example, if the Local Environmental Agency (LEA) and environmental division in
local governments evaluate the same pollution problem differently, there might be
intergovernmental conflicts in resolving the issue, and in most cases the central
government had to use its superior position in the policy making process. Therefore,
SAAs have functioned as a supervisor or superior executive branch to local
governments as well as the executor of central policies.
91

Table 4.2: Major Special Administrative Agencies (SAAs)
The Status of Special Administrative Agencies
Ministries Major SAAs The Number
of SAAs
The Number of
Employees in SAAs
MOFE Local branches of National Tax Service (NTS)
Local Tax Offices (under NTS)
The Customs under the Korea Customs Service
175 19,799
Ministry of
Justice
The Prisons, Immigration Offices, etc.
The Prosecutor’s Offices (Supreme, Higher,
Local)
193 23,457
MOGAHA National Police Agency, Local Police Agencies 3,189 92,488
Ministry of Labor Local Labor Agencies 46 2,135
MOIC Korea Post Agency, Local Post Agencies
Local Post Offices
2,056 29,021
MOCIE Small and Medium industry Agencies 12 361
MOCT Local Territory Management Offices
Local Aviation Agencies, Aviation Management
Offices, National Highway Management Service
54 3,547
Ministry of Health
and Welfare
Local branches of Korea Food and Drug Agency
Local branches of National Quarantine Offices
34 620
MOE Local Environmental Agencies 17 671
Source: Dong-A Ilbo (December 15, 2004); MOGAHA (2004), p.20-21.

The MOGAHA was initially in charge of selecting the SAAs to be
transferred to local governments, or abolished in the earlier period of the Roh

90
MOGAHA (2004), p.21.
91
Soh (2002).
169
mbiguously

administration. However, it failed to persuade each ministry and to make even an
initial plan for reforming SAAs because of strong resistance from central ministries
having SAAs in localities. For example, the LEA under the Ministry of Environment
argued that there might be serious environmental degradation from overdevelopment
due to the pork-barrel politics of local mayors, politicians, and businesses, if the
authority of the LEA were to be transferred to local governments. In addition, the
Local Small and Medium Business Agency under the MOCIE, the Local Labor
Agency under the MOL, and the Local Food and Drug Agency under the MOHW,
strongly opposed the transfer of their organization. As a result of such opposition
from ministries, the CGID took over for the MOGAHA in November 2003, and the
CGID established a taskforce team to push through the issue of the abolishment of
SAAs in February 2004.
92

To summarize, because of strong resistance from other ministries, the
MOGAHA had difficulty in passing the bill of the SLDP, and thus urgent issues such
as the enactment of local educational autonomy and local police were delayed. In
the process of deliberation, however, bureaucrats in the MOGAHA, who were in
charge of decentralization-related projects for many years and embraced neo-liberal
ideas, played a crucial role in the development of decentralization.
93
They were
motivated by their ideology and faithfully followed the will of top political leaders,
but the inter-ministerial conflicts show that there have been a lot of politics and
resistance among ministries.
94
As a result, such conflicting issues were a

92
Dong-A Ilbo, ibid; Interview with Y. H. Ju, National Association of Mayors (October 21
st
, 2005).
93
Most of the bureaucrats in the MOGAHA are confident of the necessity of local autonomy and
decentralization based on their experience of local affairs. Interview, a senior bureaucrat in
MOGAHA (October, 12
th
, 2005).
94
Those conflicts are not easily captured by mass media or scholarly works because bureaucrats in
Korean ministries value “unity” in their organizations, but the several interviewees confessed that
170
Without
ms for
)

treated to reduce denunciations without any practical policy alternatives.
95
politicians’ support for these bills, decentralists in the MOGAHA and the
Presidential Office as well as the CGID contributed advancing decentralization
projects. However, in spite of their efforts, the SLDP and the follow-up progra
the promotion of decentralization were delayed relative to the Japanese OLD (1999
and TRP (2003).

4.2. RELUCTANT MOBILIZATION: SECTORAL INTERESTS AND
CENTRAL BUREAUCRATS

In Chapter Three, the development of mutually dependent central-local
relations in Japan and Korea could not be achieved because of sectoral interests of
central bureaucrats and politicians, which is commonly called zoku politics (tribal
politics, Japan) or political gridlock (Korea). Although interest politics is still
important in explaining the limitedness of decentralization, as the following analysis
shows, the current drive of decentralization is not solely the product of pork-barrel
politics. In this section, my analysis focuses on the role of zoku politicians and
bureaucrats in Japan, and bureaucrats in powerful ministries and central politicians
in Korea.

there have been conflicts and resistance in central ministries. Interview, bureaucrats in MOGAHA
(October 12
th
and 18
th
2005) and civic organization leaders (October 10
th
, 26
th
, and 28
th
2005).
95
Article 10 (○
1
to ○
4
) about SAAs and 11 (○
1
to ○
5
) about fiscal decentralization just
ambiguously prescribed the duty of government to do something for them, but no practical directives
are included. If the law clearly prescribed the way of abolishment of SAAs or the transfer of fiscal
resources to local government, the SLDP would not be passed because of resistance (interview, a
senior bureaucrat in MOGAHA, October 12
th
, 2005).
171

The Case of Japan: Zoku Politics
The conventional wisdom is that Japan’s postwar local system has not
matured because of its highly centralized institutional and financial structure despite
various viewpoints on it.
96
As seen in the earlier chapters, central government has
the authority to issue reports on the affairs and administration of local authorities;
give technical advice and recommendations on organization and management;
request corrective action if local governments fail to observe the law or carry out
responsibilities adequately; demand reports and investigation of local authorities’
financial affairs; and refuse permission for the issue of local bonds or the levy of
taxes of types not provided in the law. Of course those control and command system
measures from central government have a double-edged effect by balancing a
certain level of administration and service all over the country, as Akizuki Kengo
(2001) pointed out. No one can deny that local government’s autonomy is limited by
central direction and control.
97
Therefore, the current drive of decentralization that
was started from the time of the financial crisis in both national and local
governments and in response to the corruption of central bureaucrats aimed to
rearrange central-local relations by focusing on the abolishment of Agency-
Delegated Functions (ADFs) and establishing rule of central interference on local
affairs.
98
In doing so, the reformists were concerned about resistance from
bureaucrats and zoku politicians in the central ministries and agencies which had
checked the advance of decentralization in postwar Japan.
99

96
Refer to the previous chapter. See Steiner, et al. (1965); Muramatsu (1997).
97
Akizuki (1995).
98
Some 80% of affairs at the prefectural level and 50% at the local level have been acquired by
delegation from central government (Kisa, 1991).
99
Nishio, ibid.
172
he
inistrations
and

ter the establishment of the Administrative Reform Council
under t
y

As such, bureaucrats and zoku politicians - including related interest groups-
were an insurmountable barrier to decentralization reform. However, the turbulent
political-economic changes of the early 1990s brought about change in the attitude
of central bureaucrats, who recognized and accepted the inevitability of reform. The
public’s distrust of government (bureaucrats) stemming from several political events
and corruption scandals made any possible effort to obstruct reforms far less
workable. In several reform attempts in this period, the bureaucrats endeavored to
find a ‘safety zone’ for minimizing the damage such reforms might cause, instead of
neutralizing threats.
100
In addition, the strong leadership of reformist politicians
such as Hosokawa, Murayama, and Hashimoto to some extent succeeded in
preventing bureaucrats and zoku politicians from attempting to make their own
arguments on reform. The LDP’s coalition partners - e.g., Sakigake and the
Democratic Party – asserted a “politics-superior policymaking system over the
bureaucracy” in their ideological platforms.
101
Even in the 1996 general election, t
reorganization of the national bureaucracy, which had failed in past adm
(in particular, during the 1984 Rincho), was one of the main electoral pledge,
ruling parties staked their political life on this pledge.
102
In this context of lowered
demands by the central ministries, important bills and governmental plans for
decentralization could be issued by reformist politicians and passed in the Diet.
However, af
he Hashimoto administration and the LDP’s return to power in the 1996
election, bureaucratic resistance increased. As Schwartz observed, Japan’s polic

100
Mishima, ibid, p.271.
101
Jin (2003), p.27.
102
Masujima (1999), p.225.
173
se
he
ig
ack as a
mmittee for
e then,
ister’s
ly

deliberation councils were supposed to be manipulated by the bureaucrats in the
secretariat from central ministries having interests.
103
Unlike those typical Japane
consultative organizations, Prime Minister Hashimoto established the ARC in order
to restrict the central ministries’ subtle tampering with reform items that were not
beneficial to themselves. By directly giving directions to the ARC rather than via t
secretariat and being a chairman of the council by himself, Hashimoto wanted to
finish several reforms on his terms.
104
Yet, the establishment of the ARC and the b
loss of the Social Democratic Party Japan in the 1996 election provided an
opportunity for the rebirth of bureaucratic resistance. When the LDP came b
single ruling party in 1996, the Cabinet’s control for the promotion of
decentralization became weaker. In addition, when the chairman of Co
the Promotion of Decentralization (CPD) Ken Moroi and other members visited
Hashimoto to explain the detailed plan of the promotion of decentralization in
November 1996, he asked the CPD to prepare ‘feasible’ recommendations for
decentralization so that major reforms would be completed in his term.
105
Sinc
bureaucrats in the central ministries and zoku politicians interpreted Hashimoto’s
comment in a way that was favorable to them. They thought the Prime Min
word meant that the CPD’s ambitious and somewhat idealistic decentralization plan
must be mitigated through negotiation with them.
106
Therefore, they direct
contacted members of the CPD by calling on each member individually and
explaining their position in detail.
107
Unlike the series of reforms in the past, the

103
Schwartz (1993, 1998).
104
Mishima (1998).
ed ‘quasi-coercive lectures’ (gosetsumei), and this was the favored tactic of
s to ‘brainwash’ the reformers in their favor as well as to educate the core of policy issues
105
See Takagi (1998).
106
ibid.
107
This is what are call
bureaucrat
174
of intensive
Table 4.3: Ministerial Responses to the Abolishment of ADF
Initial Recom
By the
f the
ation
influence of bureaucrats was generally limited in this most recent decentralization
effort. However, the CPD had to whittle down its original plan because
‘gosetumei’ (quasi-coercive lectures) by bureaucrats.
108

mendations
CPD
Ministerial Responses
(Selected Ministries)
Final Form o
Recommend
The complete abolition of
the Age
•
managem al
agric
mayo
e
• wn
from its
F)
s
ADF.
nd
ncy-Delegated
Functions (ADF)
MOC: National-level
ent is required for nation
highways, rivers, and urban plan
and the management through ADF ha
been functioned well.
• MOAFF: ADF like the
permission for diversion of
ning,
d
ultural
e to
creation of Entrusted Functions (E
to soothe down central ministrie
(public works ministries), instead of
completely abolish the ADF
• Central ministries became
flexible to the abolishment of land to other purpose is susceptibl
local interest group politics, if the
permission is transferred.
• MOHW: if social welfare
functions were transferred,

rs and
y
considerable number of ADFs a
classify the remnant to EFs.
governors would abuse their authorit
for reelection. Such functions as
approval of medicine and foods cannot
be local autonomous affairs becaus
those require national standards.
The CPD backed do
original opinion: the
• The CPD-Ministries
halfheartedly agreed to abolish
Source: The CPD (I i (2001); Nishio (1999); Takagi (1998).
Note: MOAFF (Min OC (Ministry of Construction), MOHW
s Table 4.3 shows, one of the top priorities of the CPD was to abolish the
ADF completely. Yet, the central ministries resisted for several reasons. First, the
nterim – Final Report); Masujima and Kobayash
istry of Agriculture, Forestry, and Fishery), M
(Ministry of Health and Welfare).

A

to the committee members. See Nishio (1999) and Mishima (1998).
108
Mishima (1998); Nishio (1999); Takagi (1998). According to Nishio (1999) says, “if the
committee members did not agree to central ministries’ coercive lectures, they sometimes forewarned
us by saying that they were going to mobilize zoku politicians…central ministries sent their staffs
wherever the committee members lived…” According to him, public works-related ministries – in
particular, the Ministry of Agriculture, Forestry, and Fishery, Ministry of Construction, and Ministry
of Health and Welfare – were the strongest opponents of the CPD’s reform efforts. See Nishio (1999),
chapter 3.
175
ADFs f

level
i
t press
l
ween the Ministry of Home Affairs and other central ministries.
Central

unctioned very well in the period of industrialization and there was no clear
reason to abolish them all. The malfunction of the ADFs could be fixed, instead of
entirely abolishing them. Second, for some functions like citizen registration
(Ministry of Justice), the approval of medicine and foods (Ministry of Health and
Welfare), and the issuance of passports (Ministry of Foreign Affairs) national-
standards are needed to maintain a certain level of public services or resolve
emergencies. When the CPD announced its Interim Report in 1996, Chairman Moro
made a resolution never to yield to unfair challenges from central ministries a
conferences.
109
Facing strong resistance from the ministries and agencies, however,
the CPD had no choice but to contact each ministry directly to discuss individual
ADFs, and negotiate with them.
110
Therefore, Nishio Masaru, who was a former
member and scholarly leader of the CPD states that “every single item of the
recommendations was the result of direct negotiation between the CPD and centra
ministries.”
111

Another important issue in pursuing the decentralization project was the
relationship bet
ministries feared that decentralization would only serve to strengthen the
status of the Ministry of Home Affairs (MOHA, now Ministry of Internal Affairs
and Communications since 2001), which was in charge of reforming central-local
relations.
112
Kenji Takagi mentioned that the MOHA, which was a pro-

109
Mainichi Shinbum, March 16
th
, 1996.
Report, many newspapers expected strong opposition
eir
02), p.30-1; Nishio, ibid, Ch.3.
110
After the announcement of the Interim
from the bureaucracy. The headlines of many newspapers were like “Ministries will not transfer th
authorities (Yomiuri Shinbum, March 16
th
, 1996),” “Strong Resistance of Bureaucracy and Room for
Central Interference (Sankei Shinbum, March 16
th
, 1996),” “Bureaucrats’ stubborn resistance,
Revealed Seiji-kan Pressure (Asahi Shinbum, March 16
th
, 1996).”
111
Nishio, ibid.
112
Furukawa (20
176
centralists in the CPD. Some of the LDP politicians
(zoku m d
he
s)

al
oups -, however, the overall
process
decentralization ministry and had a close relationship with the CPD, was kept in
check by other ministries.
113

Zoku politicians in the LDP and even interest groups were mobilized by
central ministries to pressure de
embers) who prevailed over public works-related ministries pressured an
persuaded the CPD and the ARC members to implement the decentralization
projects perfunctorily.
114
Such ministries as the Ministry of Health and Welfare
(MOHA) mobilized interest groups to pressure the CPD. For example, when t
CPD recommended the abolition of hitchikisei (regulations on local organization
in its second recommendation, the MOHA mobilized the National Association for
Doctors, associations for pharmacists, associations for dentists, and associations for
the directors of public health centers to hold back the abolition of rules on the
qualification of director of public health centers.
115

Despite skepticism about decentralization and the resistance from centr
ministries and zoku politicians - including interest gr
of decentralization proceeded smoothly, and the CPD’s recommendations
were, in general, faithfully reflected in the major legislations. As Koichi Nakano
mentioned and I discussed earlier, the CPD faced resistance from the central
ministries when the direction of economic policy changed from neo-liberalism to

113
In particular, the MOHA was challenged by the Management and Cooperation Agency
(sōmuch ō), which was in charge of administrative reform because the MCA valued negotiation with
other ministries (Takagi, 1998).
114
According to Nishio (1999), the Ministry of Agriculture, Forestry and Fishery, and the Ministry
of Construction most activelylobbied zoku politicians to pressure the CPD members.
115
ibid. There was a regulation that the director of local public health centers must be a doctor, but
the CPD members thought such a regulation was not necessary because it hindered the autonomous
organizational authority of local governments. Therefore the CPD attempted to abolish the regulation
by changing the prescription to “director of public health center is not necessarily a doctor.” However,
the MOHA mobilized associations for doctors by letting them demonstrate, send letters, fax, etc.
177
nal
e
tic

if I
e n
ans, the government, in general, faithfully responded to our suggestions, and
mostly reflected in their plan. In reality, ministries not only materialize
The Ca
he case of Korea shows a somewhat similar pattern to that of Japan in that
make a
good-fa
ess
e

economic boosterism under the Obuchi government.
116
In doing so, the ideatio
leader of decentralization, Masaru Nishio, resigned from the CPD. Nevertheless, h
favorably assessed the result of the incredibly painstaking and lengthy process of
direct bargaining and co-authoring of the recommendations with the central
bureaucrats. In conclusion, although the political leadership and bureaucratic
assistance for the promotion of decentralization were somewhat weaker in
comparative perspective, the placement of reform-minded leaders in bureaucra
and political positions provided the foundation for decentralists to put forth
decentralization as an important national issue.
117
Masaru Nishio states:

Despite concern and doubt of the bureaucrats’ attitude toward decentralization…
compare our recommendations and the governm nt’s decentralization promotio
pl
those were
our plan, but also added something we missed.
118

se of Korea: Internal Resistance and Marginalized Politicians
T
powerful central ministries as well as sectoral interests were reluctant to
ith effort to comply in the process of decentralization. However, the
difference between the case of Japan and Korea is that politicians in Korea were l
interested in the issue of decentralization, and were marginalized in the whol
process of reform. The following analysis will show with few exceptions, the

116
Nakano (2003), p.232-3.
117
Nakano (2003: 233-4) mentioned that the supporting political structure for decentralization (such
as politics in the Diet and bureaucratic organizations) were relatively weak in Japan than that of
France. He deplored the fact that decentralization was left in the hands of a consultative body like the
CPD. Unlike his opinion, however, current reactions to decentralization from central ministries and
politicians are substantially different from those of the past administrations (Nishio, 1999; Jang-
Kwon Kim, 2003).
118
Nishio, ibid, p.186.
178
d to president, bureaucrats in MOGAHA, and the CGID were the key actors who ha
deal with resistance from other central bureaucracies and politicians.
Dealing with Internal Resistances:
As stated above, bureaucrats in the MOGAHA were desperate to negotiate
eir pursuit of decentralization reform. In doing
so, the

the
er and street-level bureaucrats in the MOGAHA itself.
Accord
held in
ould
the

with other powerful ministries in th
top political leader’s will and command as well as the efforts of motivated
MOGAHA bureaucrats contributed to the somewhat successful negotiation with
those members in other ministries. Under the unusual political-economic situation,
bureaucrats in the central ministries had few options, and so reluctantly agreed to
decentralization reform.
In addition to resistance from powerful ministries, there was internal
opposition from mid-care
ing to Korean Economy Newspaper, there was a somewhat organized
movement that opposed the transfer of functions, human resources, and
organizations to local governments.
119
In a National Affairs Discussion Panel
August 2
nd
, 2003, President Roh re-emphasized that central ministries sh
restructure their organization and reduce their size. For example, The Presidential
Office recommended for the Ministry of Planning and Budget (MPB) to delegate
authority of compiling the budget to individual ministries and agencies. As the
purpose of the Presidential Office focused more on the reorganization of central
affairs, the functions of the MOGAHA were expected to be abolished or to be
demoted to small agencies if the decentralization project were to be fully
implemented. Because most local government-related affairs, including public

119
Korean Economy Newspaper (August 6
th
, 2003).
179
s, are on
ost
job
of the resistance may not reflect simple inertia. As one senior
interviewee in the ministry put it to me, “since the hierarchical order in government
organiz ould at
nto action. An
e Union

e
or
he

safety (police), which is the biggest part of the MOGAHA’s responsibilitie
the list of the decentralization project, the fate of the MOGAHA is to delegate m
of its organization, function, and human resources as well as its budget to local
governments. Accordingly, as the Korean Economy Newspaper reported, there were
signs of upheaval among many of the MOGAHA bureaucrats anxious over their
security,
120

Part
ation is praised and advocated by bureaucrats in the ministry, they w
last follow the Presidential Office’s recommendation on the plan of
decentralization.”
121
However, the presidential discourse on ministerial
reorganization and decentralization spurred MOGAHA bureaucrats i
interviewee who is the current leader of the National Public Worker’s Trad
(NPWTU) and who was the former leader of the Employee Association of the
MOGAHA mentioned that there was an organized opposition from street and
manager-level civil servants in the MOGAHA as well as other ministries.
122
In
August 2
nd
, 2003, the leaders and managerial level bureaucrats in the Employe
Association of the MOGAHA decided to make an organization, namely A Team f
Keeping MOGAHA (Haengjabu Jikimi Gihoekdan) to systematically respond to t
delegation of MOGAHA functions. As the representative of the public worker’s

120
Many bureaucrats in the MOGAHA worried about their position because it was expected that
they would be sent off to local governments or other ministries when the reorganization and
decentralization process was completed.
121
Interview, a senior bureaucrat in MOGAHA (October 12
th
, 2005).
122
Interview, a bureaucrat in MOGAHA (October 18
th
, 2005).
180

l
is concerted internal resistance, the MOGAHA could
maintai its current size and organization by gaining new functions such as e-
govern ey

s to
ause of
use
27
In

union, he had contact with other ministries’ employee associations on a regular basis,
and cooperated with them in opposing decentralization.
123
He also had a persona
interview with the president, the leaders of both ruling and opposition parties, and
the minister, so he could lodge a strong protest with them against rapid and
significant change.
124

As a result of th
n
ment, immigrant policy and government innovation, in place of what th
delegated local government-related affairs.
125
There are a variety of sources of
ministerial resistance against reform programs, and undeniably the egoistic
characteristics of public agencies and bureaucrats were one of main impediment
reform as argued by classical bureaucratic theorists.
126
Not surprisingly, bec
those bureaucratic politics during the process of decentralization, however, the
MOGAHA bureaucrats who stand high in other stakeholders’ accounts of the
bureaucratic attitude toward decentralization also show much concern for the ab
of local government power if decentralization were to be fully accomplished.
1
addition, ‘sunk costs’ from adopting new functions and discarding old ones might be

123
Interview, ibid.
124
Interview, ibid.
orean Economy Newspaper, August 6, 2003.
skanen (1971); Interview, ibid. The interviewee acknowledged the egoistic
entioned there are more reasons
bureaucrats distrust the capacity and moral rectitude of local

ernment

125
Interview, ibid; K
126
For example, Ni
asp
(to be explained in the next section).
127
As revealed in interviews with MOGAHA bureaucrats, one of the immediate causes of delayed
decentralization is the fact that central
ect of bureaucratic resistance regarding decentralization, but he m
governments. According to survey research conducted by the Korea Institute of Public
Administration (KIPA), “A 2002 Survey Research on the Intergovernmental Relations (IGR),” about
60% of central bureaucrats think that they have a superior capacity for dealing with gov
affairs than local bureaucrats (KIPA, 2002: 27).
181
ir
organiz
e

required,
128
but the MOGAHA bureaucrats had run up against all of these problems
and made an effort to overhaul the possibility of decentralization of their affairs.
In sum, it is hard to deny that bureaucratic resistance over maintaining the
ation, power, and position mostly comes from the consideration of the self-
interest of bureaucrats themselves. Yet, the decentralist ministers – for example,
Doo-kwan Kim and Sung-kwan Heo, as mentioned before – and the president
played an important role in managing and coordinating those complaints and th
resistance. In addition, despite the internal conflict over the fate of governmental
reorganization, bureaucrats in the MOGAHA were not sabotaged in their efforts to
carry out decentralization-related projects.
Marginalized Politicians:
In Japan, the politics of the current decentralization drive were initiated and
upheld
r,
ns
.
g
Uri Party and the Grand Nation Party (GNP) by holding conferences and meetings,
by some of the key decentralist politicians and reformers who gained
political power at the end of the LDP’s dominance in the early 1990s. Howeve
political parties and politicians at the center have not been easily observed in the
process of decentralization. The detailed list of decentralization functions and the
general guidelines were mostly prepared by bureaucrats in the MOGAH and
advisory committees such as the CGID. With few exceptions, central politicia
were less interested in and not directly involved in the process of decentralization
Surprisingly, unlike the case of Japan, decentralist political figures appointed by
President Roh did not come from the professional political world.
129
Although
MOGAHA bureaucrats and the CGID attempted to cooperate with both the rulin

128
See Warwick (1978).
129
Mostly they came from professional bureaucrats or professor groups at universities.
182
sition
ard
s
entral government through their
casewo
ey
l
ive-

those party leaders and politicians in fact remained simply ‘indifferent’ to the
process of decentralization.
130
Except for some activist politicians who organized
assemblymen’s study groups for decentralization and self-governance in the
National Assembly
131
and who cooperated with some civic activist groups to
successfully pass the SLDP,
132
most politicians did not show their clear oppo
or support for the decentralization. The origin of their ‘indifferent’ attitude tow
the issue of decentralization can be divided into two: a) their competitive and
cooperative relationship with local governments, and b) their political image as a
reformer and relationship with constituents.
First, locally elected National Assemblymen have served as policy channel
to deliver local requests and concerns to the c
rks, pork barreling, and lawmaking. Moreover, they have carried
considerable clout over local personnel and budget implementation, because th
have been the only ‘elected’ officials who could directly access the centra
policymaking process before the enactment of Local Autonomy Act (1994).
133

However, full-fledged local elections since 1995 and the tradition of execut
superiority changed the status of assemblymen as ‘imperial politicians’ in local
society because governors and mayors had became powerful political figures in

130
Interview, MOGAHA bureaucrats (October 12
th
and October 18
th
, 2005). The MOGOHA
dispatched bureaucrats to the National Assemblymen and each party leader to inform them of the
content of the SLDP and to bring about cooperation from them, but those politicians did not show
strong opposition or support.
131
Some of the assemblymen organized research groups such as the Research Group for the
Development of Self-Governance (chair Assemblymen Jae-Deok Shim) established in 2004 and the
Research Group for Administrative and Local Autonomy (chair Assemblymen In-Ki Choi), yet only
few members were involved (interview with a policy staff to the Assemblyman, October 19
th
, 2005).
132
Some of the assemblymen, such as Chul-Hyun Kwon, co-sponsored several hearings and official
conferences to discuss the issues of decentralization with civic organizations and local government
associations.
133
Ki-Seok Ahn (2001), “Inside Story of the Proposal for the Appointment of Headmen of Basic-
level Local Governments.” Sin Dong-A, January 2001.
183
r)
,

s
ntrast, none of those politicians at the center publicly raised an
objection to the passage of the legislation for the completion of decentralization
becaus

local society.
134
There is a cooperative relationship between the mayor (governo
and assemblymen in most places where their party affiliation is the same one,
135
yet
at the same time, the relationship between local executives and national assembly
men are contentious over many local issues. In the issue of decentralization, for
example, it has been expected that the empowered local mayor and governor would
exercise the strongest authority over most local policymaking if decentralization
projects were to be completed. In contrast, the influence of assemblymen would be
limited. Therefore, in the process of the passage of SLDP in December 2003, few
assemblymen actively participated in the deliberation process. Furthermore, many
politicians went as far as to propose the abolishment of local elections for basic-
level local government headmen (si, gun, gu), and to limit the three-consecutive-
terms of local mayors and councilmen in the early 2000s. They claimed that this
would prevent corruption among local mayors.
136
In addition, by nominating
candidates for local government, political parties attempted to put local politician
under their control.

Second, in co
e they did not want to be seen as an anti-decentralist or as ‘old-fashioned’
conservative politicians to their constituents in the age of globalization and

134
Park (2000); Bae and Sellers (2007). Because of growing governor and mayoral power, it is not
uncommon for many assemblymen to run for governor or a big city mayor. Among the incumbent 16
big city mayors and governors, 44% of them were former assemblymen and politicians.
135
These phenomena can be easily observed in Cholla and Kyeong Sang Provinces where the
influence of regionalism is very strong in modern Korean politics (Kee-Don Kwon, 2004).
136
Sin Dong-A, ibid. Forty-two assemblymen proposed the revision of the Local Autonomy Act of
1994 abolishing basic-level local elections in November 29 of 2000, but the bill was not passed.
184
s for
oppose the
delegation of central affairs and the strengthening of local politicians (mayors and
council lves as
y.
na
of dele

ic
ell as

decentralization. Because of the experience of political democratization and
economic crisis in the 1990s, Korean voters valued the politician who promoted
himself as a ‘reformer’ or ‘progressive politician’. It was politically dangerou
politicians to take a stand against the wave of political reform.
137
Therefore,
assemblymen and central politicians concerned about their re-election in the next
term could not publicly oppose the decentralization projects.
138

To summarize, it is quite natural for central politicians to
men). At the same time they must also take care of to promote themse
a reformer or progressive to avoid criticism from their constituents and the mass
media. As a result, the ‘inactive’ attitude to the issues of decentralization became
their best strategy to reconcile their conflicting interests and motivations - i.e.
maintaining their vested interests in local politics versus enhancing local democrac
In conclusion, the politics of decentralization at the central political are
under the Roh administration resulted in a somewhat ‘limited and delayed package’
gation of central affairs, though the passage of the SLDP and the follow-up
reform efforts are still meaningful in the history of central-local relations in Korea.
Empowered decentralists could overcome resistance from other powerful ministries
and indifferent central politicians through repeated negotiations. In contrast,
politicians in Japan posed obstacles to the reform effort because of their self-
interests and unsupportive attitude. However, given the context of the econom
crisis, regional imbalance, democratization, and various political scandals as w

137
Kihl (2005).
138
Interview, a policy staff member to the National Assemblymen, ibid.
185

growth of the current decentralization effort occurred in
parallel ith the evolution of domestic and global political-economic structures and
the exp
usion
e
there were several obstacles to the promotion of decentralization, the
leaders
he reform
to a
the globalizing economy, those politicians and sectoral bureaucrats in powerful
ministries could not publicly take a stand against decentralization reform.

4.3. CONCLUSION
The emergence and
w
ansion of opportunities for reformist politicians. For countries like Japan and
Korea where domestic political structures – i.e., a highly centralized system – and
state policies have presented obstacles to the promotion of decentralization,
reformist politicians and bureaucrats have benefited from the rapidly changing
global economy and economic slowness. Over time and with the greater incl
and promotion of decentralists in governmental organizations, neo-liberal ideas
reshaped the process of decentralization reform and gave top politicians (prime
minister and president) and bureaucrats incentives to be more enthusiastic about the
transformation of central-local relations as one aspect of the larger picture of stat
restructuring.
Several interesting findings emerge from cases presented in this chapter.
First, although
hip of top political leaders gave an impetus for the formation of
decentralization programs; in particular, those leaders armed with the idea of
neoliberal reform in order to overcome the crisis of national economy. T
idea (neoliberalism) provided the direction for state restructuring for adjusting
rapidly changing global economy, and decentralization came up among the top
political leaders in both countries. In doing so, reform-minded political leaders
186

the placement of decentralists (reformers) in critical positions on
governmental organizations provided top political leaders with a powerful political
opportu
,
to
ea spread and influenced
the suc
e

ion

could effectively mobilize policy staff and pro-decentralist bureaucrats to achieve
decentralization.

Secondly,
nity for action and support. At these moments, opposition from powerful
ministries – mainly finance-related ministries – and sectoral politicians still persisted
yet the power of amplified decentralists in a critical spot of the decision making
process helped to advance the issue of decentralization.
Finally, the diffusion of neoliberal ideas through decentralists was critical
the promotion of decentralization, and how the reform id
cess of decentralization reform in both countries is an important factor in
explaining decentralization in Japan and Korea. Although top political leaders,
policy specialists, and some reformist central bureaucrats gradually emerged in th
process of decentralization, the indifference of central politicians in Korea make
Korean decentralization distinctive from the decentralization process and outcomes
in Japan. Compared to Japan, the limited diffusion of neo-liberal ideas in Korea
resulted in more restricted policies toward decentralization. Instead of politicians
taking the initiative, scholarly groups from universities contributed to the promot
of decentralization by directly participating in consultative committees such as the
CGID in Korea or by presenting ideas through scholarly journals.
187

CHAPTER 5
THE POLITICS OF DECENTRALIZATION FROM BELOW: THE
GROWTH AND IMPACT OF LOCAL AND CIVIL SOCIETY

The rise and growth of decentralization movements from local governments,
civic communities, scholarly groups and businesses are viewed by many observers
as one of the most important and spectacular trends in contemporary Japanese and
Korean politics of central-local relations.
1
As a matter of fact, based on their
experiences and the widespread knowledge of the expected effects of
decentralization, – for example, the effects on democracy and economic
development – the general public within localities, civil society, and so forth
recognizes the necessity of the transformation of central-local relationship. John
Campbell called this ‘public sentiment,’ which is defined as broadly shared values,
norms, or concepts with regard to social issues and problems.
2
When
decentralization is broadly supported by the general public, and the broadly shared
value is perceived by decision makers – reformers in this context – through various
forms of feedback such as surveys, public sentiment can influence the
decentralization debate and possible range of policy options.
3
In this vein, the
attitudes, values, or concepts regarding decentralization shared by stakeholders from
below may influence the relative success of decentralization. There is a consensus in
Japanese and Korean society that decentralization reforms are needed, particularly
for better public services, economic development, to improve national
competitiveness; these issues will be discussed further below. The bottom line is that,

1
Jang-kwon Kim (2000).
2
Campbell (2004).
3
ibid, p.159-160.
188
as I discussed earlier, the process of decentralization in both countries were initiated
and dominated by central government stakeholders, yet the input and support from
below for the promotion of decentralization at critical junctures have resulted in the
different degrees of changes from a comparative perspective.
In the following section, my analysis focuses on the role of consultative
committees, local governments (local government associations), civic activist
groups, and businesses. As stated above, consultative committees – i.e., the
Committee for the Promotion of Decentralization (CPD) in Japan and the
Presidential Committee on Government Innovation and Decentralization (CGID) in
Korea – were established in central government organization. Yet, I put them in this
chapter because the committees’ mission was to coordinate the conflicting issues
regarding decentralization between the central and local governments. A significant
number of their members also came from localities, scholarly groups, and
businesses embraced a pro-decentralization ideology. Secondly, the gradual increase
of local governments through local government associations regarding the
decentralization policy was noteworthy. Instead of individual activities,
collaborative efforts through coalitions were able to negotiate with policy makers.
Thirdly, the issue of decentralization was extolled publicly by civic activists writing
journals, scholarly works, and other popular publications as well as through their
direct participation in decentralization movements. Finally, I analyze the role and
interests of businesses in decentralization, which was not found in Korean cases. To
summarize, the decentralization committees in both countries faithfully
implemented their mission by effectively collecting and digesting opinions and
suggestions from various groups and contributed to the diffusion of ideas, though
they faced bureaucratic disturbance in the process. Although the influence of local
189

government associations, civic organizations, and businesses were not powerful
enough to reverse the decision of central governments on decentralization, their
concerns helped policy makers to consider specific policy alternatives to map out a
new central-local relationship, and the distribution of idea-bearers (decentralists)
among them – particularly in Japan – became critical to the success of
decentralization.

5.1. DECENTRALIZATION COMMITTEES: DISSEMINATION OF IDEA

The Case of Japan: The Committee for the Promotion of Decentralization
In the process of the current decentralization effort, the establishment of an
independent institution dealing with broad issues of decentralization, the Committee
for the Promotion of Decentralization (CPD) was epoch-making because it created a
launching pad for decentralization in Japan. The mission for the committee was to
setup guiding principles for the promotion of decentralization by investigating and
deliberating on basic matters that were related to general issues of decentralization,
and to suggest specific policy recommendations to the Prime Minister (the
Cabinet).
4
To achieve this purpose, authorities of the CPD were somewhat different
from other general consultative councils as described in Frank Schwartz’s research.
5

For example, the CPD had an authority to request materials and data directly to the
heads of central ministries and local governments, and the Prime Minister who
received the recommendations from the committee was obligated to take them
seriously into account and report to the Diet. The committee was also authorized to

4
Decentralization Promotion Law (1995), Article 10.
5
See Schwartz (1998), p.52-3.
190

monitor the actual process of decentralization and report the evaluations to the
Prime Minister.
6
With given authority, the CPD became a core institution in the
process of decentralization by coordinating different concerns and perspectives
among various stakeholders. When the Cabinet formulated ‘general principles for
the promotion of decentralization,’ which contained the creation of the CPD in
December 25
th
of 1994, the central ministries which had enjoyed a highly
centralized power over advisory councils by sending their bureaucrats to the
councils – in particular, public works-related ministries such as Ministry of
Construction, Ministry of Agriculture and Ministry of Health and Welfare – strongly
opposed the establishment of an independent committee for decentralization reform.
Central ministries even mobilized zoku politicians to block the establishment of the
CPD.
7
Yet, Prime Minister Murayama, advised by decentralists such as K ōz ō
Igarashi (the Secretary of the Cabinet) decided to push forward the establishment of
an independent organization dealing with decentralization project despite challenges
from bureaucrats.
8

As Figure 5.1 indicates, the CPD was created under the direct influence of
the Prime Minister’s Office, not central ministries, and its distinguished
organizational characteristic is, first of all, its authority to make ‘policy
recommendations’ directly to the prime minister. Most of the advisory or
consultative committees dealing with administrative or decentralization reforms in
past administrations were simply allowed to give their opinions to the government,

6
Nishio (1999).
7
Mainichi Shimbum, December 26
th
, 1994.
8
Nihon Keizai Shimbum, December 23
rd
, 1994. Following the passage of the Decentralization
Promotion Law (DPL, 1995), the establishment of the CPD under the Prime Minister’s Office was
approved by the Cabinet (June 16
th
, 1995).
which did not require legally compulsive action. By law, however, the CPD was
granted an authority to recommend (kankoku) specific suggestions on
decentralization, and the Prime Minister was obligated to take those seriously in
making actual policies and report the details of recommendations to the Diet.
9

Figure 5.1: The Organizational Structure of the CPD
The Prime Minister’s Office
The Committee for the
Promotion of Decentralization
Secretariat
Bureaucrats
in Ministries

Bureaucrats
in Local Govts

Businesses

Labor Groups
Committee Members:
Business (1), Scholars (3)
Governor and Mayors (3)
Subcommittees
Working Groups

Source: Murakami (2003); Masujima and Kobayashi (2001)

In addition to having substantive authority, the activities of the CPD were
somewhat independent from the influence of the central ministries. In the cases of
the past reform councils or advisory committees, central ministries used to send
their bureaucrats to consist of secretariats, who were not only responsible for the
implementation of the activities of the committees, but attempted to steer the reform
agendas in ways that minimized their costs.
10
However, it became difficult that
191

9
Murakami (2003).
10
Masujima and Kobayashi (2003).
192
ureaucratic
tence of an independent committee ensured the continuity of the
issue o
d
e
nd

d
embers.
Unlike

central ministries closeted themselves with each other and influence over the
committee. When the secretariat was created in the CPD, ministries dispatched a lot
of bureaucrats who outnumbered other groups; this was typical of ‘Japanese
bureaucratic politics,’
11
yet the CPD could secure relative independence from the
secretariat by recruiting a number of staff members of the secretariat from other
groups as well.
12
Moreover, the committee members who distrusted the b
secretariat took initiative to check the bureaucratic dominance of the secretariat.
13

The exis
f decentralization reform even in the turbulent political world of the late
1990s, albeit characterized by pork-barrel politics among powerful ministries an
conservative politicians (Furukawa, 2002). For example, after the resignation of th
decentralist Prime Minister Murayama in 1996, his successors - e.g. Ryutaro
Hashimoto and Keiz0 Obuchi – were not as enthusiastic as their predecessor, a
zoku politicians and bureaucrats gradually opposed decentralization after their
inaugurations.
14
Under this changing political situation, the activity of the CPD
contributed to maintain the decentralization as one of top governmental issues an
consolidate their recommendation into the cabinet’s decentralization plan.
Another critical feature is the organizational structure of the CPD m
the past reform councils, which were dominated by central ministries, the
CPD consisted of a more balanced membership in favor of decentralization. After

11
Schwartz (1993), p.228-9.
12
For example, among 30 members of the secretariat, 15 members came from pro-decentralization
groups (local government: 5, Ministry of Home Affairs: 7, private sector: 2, local government trade
unions: 1).
13
Masaru Nishio’s testimony in Masujima and Kobayashi (2001). He mentioned that the committee
members asked for more secretarial assistance from local governments instead of central ministries.
14
Shindo (1999); a Commentary in Nishio (1999).
193
sisted

andidate

(the

the intense discussion with various interest groups including political parties,
businesses, labor groups, and central ministries, Prime Minister Murayama, as
by the Chief Cabinet Secretary Igarashi, finally decided on seven full-time
committee members. Despite opposition from business groups and the Sakigake
Party, a businessman, Ken Moroi, who was regarded as a moderate decentralist
headed the committee.
15
In addition, Kusuji Nagasu, who was the former
progressive governor of Kanagawa Prefecture and considered as a strong c
of the CPD chairman was known for his strong advocacy of decentralization.
16
The
two members from local governments (Keiichi Kuwahara and S ōichir ō Yamamoto)
had experience in both local and national governments, and thus they recognized the
necessity of decentralization reform.
17
Kuwahara was the former president of the
National Association of Mayors, which was one of the strongest supporters of
decentralization. Among the remaining three scholar members, Masaru Nishio
former professor of Law at the University of Tokyo) stood out as the key expert in
the issues of decentralization, and led the commission by providing ideas, and
leading debates and discussion sections.
18
Based on his experiences in the
government (Local Decentralization Section of the government) and local

15
Ken Moroi was the chairman of the Taiheiyo Cement Co. and the former vice-chairman of the
Japanese Employers’ Association (Nikkeiren). Sakigake was not in favor of him because he opposed
the complete abolition of agency-delegated affairs (kikan inin jimu) when he was a member of the 3
rd

Rincho (Sankei Shimbum, Jun 9
th
, 1995). Business groups supported Mr. Inamori who was the
chairman of Ky ōsera. But Moroi was considered as a moderate decentralist and had political
leadership. Masaru Nishio, the former member of the CPD, evaluated Mr. Moroi’s leadership
favorably (Masujima and Kobayashi, 2003), and in reality, his leadership and decisions were critical
in the activities of the CPD (Sankei Shimbum, July 4
th
, 1995).
16
The Socialist Party supported him as chairman, but other parties and central ministries resisted
because he was considered to be a radical decentralist (Takagi, 1998).
17
Kuwahara was a former administrative vice-minister of the Ministry of Labor before he became
mayor of Fukuoka. Yamamoto was a former bureaucrat of the Ministry of Home Affairs before he
became governor of Miyagi Prefecture.
18
Masujima and Kobayashi (2003); Nakano (2003).
194
ciations
e
he
ured
sed on this broad pro-decentralization structure, the CPD held over two
hundre
CPD
lan

governments (a member of the Decentralization Commission of the six asso
of local governments), he was committed to the abolition of agency-delegated
functions as well as other decentralization agendas. As a professor of Law at th
University of Tokyo, he had close ties with the Ministry of Home Affairs because
participated in various decentralization commissions as a policy expert and had a lot
of former students in the central ministries.
19
In sum, although there was still a
possibility that some of the committee members could be co-opted by central
ministries’ lobbying, the placement of many decentralists in the committee ens
that Japan’s effort to decentralize the structure of governments was alive in the late
1990s.
20

Ba
d meetings and a considerable number of hearings with representatives of
central ministries, local government associations, and other groups including
businesses from 1995 to 1999. As shown in the earlier part of this chapter, the
produced an Interim Report and six policy recommendations that were submitted to
the Prime Minister. Most recommendations made by the CPD were negotiated and
coordinated through the process of hearings and meetings with various actors, and
legislated in the Diet. Table 4.3 shows that the main concern of the CPD was to
formulate rules for a new central-local relationship through the abolishment of
agency-delegated functions (ADFs). At the earlier stage, as seen in “Tentative P
for Decentralization” (December 22, 1995), the activities of the CPD focused on the
formulation of principles limiting the interference of central government on local
affairs. Because it was difficult to negotiate with individual ministries about the

19
Nakano, ibid, p.195.
20
Takagi, ibid.
195
o

.
21

T 5.1: Outlines of Interim Reports and Recommendations by the CPD
Recom
thousands of ADFs with which ministries were in charge, the CPD, at first, aimed t
abolish all ADFs, and the reclassify the rest of the functions, which were not
classified into ‘autonomous functions’ (in Interim, 1-2 recommendations). At the
later stage, the CPD attempted to reform finance and taxation problems. Chairman
Moroi and other members were firm in their goal to change the vertical
intergovernmental relationship to a more cooperative and horizontal one

able
mendation Submission
Date
Recommended Reform Items
Interim Report March 29,
1995
• Declared the ted Functions
• Committed to re ffairs
abolishment of Agency-Delega
classify national and local a
• Limit central government’s interference on local affairs
The First
Recommendation
Dec. 20,
1996
• Recommended the abolition of ADFs
• Setup new rule of central interference (technical interfere

nce,
legal base)
• Classification of autonomous and entrusted functions
The Second
Recommendation
Jul 97 y 8, 19 • Setup a standard operational procedure for central interference
• Clarification of the role of local governments
• Local governments’ autonomous personnel (abolition of
hitchikisei)
• Creation of conflict mediating institutions
ion of national subsidies and transfer of local ta • Rationalizat x
articipation • Revitalization of local council and citizen p
The Third
Recommendation
Sep. 2, 1997 • Reconsideration of ‘local administrators’ in social insurance and

job security related affairs
• Classification of affairs related to the status of US-Army in
Japan
The Fourth
Recommendation
Oct. 9, 1997 • Revision of individual legislations to support the abolition of
ADFs
• Reconfirm the rules when central government interfere
r of authorities to the basic level of local governments • Transfe
The Fifth Report Nov. 19,
1998
• Reconsideration of central government-led public works
• Suggest Practical principles for transfer of authority among

levels local governments
• Creation of comprehensive national subsidy
The Final Report J
2001
une 14, • Summarized major achievement in decentralization reform
• Unfinished Reform: proposed local finance re

form
• Monitoring decentralization process
Source: The Committee f 98, 2001)

or the Promotion of Decentralization (1995, 1996, 1997a, 1997b, 1997c, 19

21
Nishio (1999) recalled that many members of the CPD and local governments thought the 1990s
decentralization drive was the last chance to change the intergovernmental relationship in Japan.
196
ome commentators devalue the contribution of the CPD, because the
original
nce
f and
and
d
f

m
he

S
intention of it was blunted in the process of negotiations with central
ministries. In particular, after the LDP came back to the power in 1996, resista
from zoku politicians and related central ministries became stronger. For example,
when the former Prime Minister Hashimoto established the Administrative Reform
Council (ARC, Gyosei Kaikaku Kaigi) under the Prime Minister’s Office in 1996,
the CPD’s radical decentralization programs took a step back from its original
intention because the ARC was structured to compromise on various policy
alternatives raised by central bureaucrats and politicians as well as the
decentralists.
22
Almost all central ministries and agencies sent their staf
bureaucrats to the individual committee members to explain their standpoints
attempt to reflect their interests on decentralization programs. Even some central
ministries mobilized LDP zoku politicians and interest groups.
23
As a result, a
number of points were not included in the final package of recommendations an
crucial details of the decentralization reform proposals were left to the outcomes o
direct negotiations between decentralists and central bureaucrats.
24
Nevertheless, the
contributions of the CPD were significant, and different from previous efforts. First
of all, those recommendations on decentralization in Table 5.1 mostly materialized
in the historic Omnibus Law for Decentralization (1999) and the Trinity Refor
Package (2003), despite slight changes from the CPD’s original suggestions. T
best that decentralist reformists in the committee could do was to ensure that
decentralization was placed on one of the top legislative agendas. In doing so,

22
Takagi, ibid.
23
See Nishio, ibid, Chapter 3.
24
Nakano, ibid, p.196; Numao (2002);
197
ans
The Case of Korea: Presidential Committee for Government Innovation and
sultative committee in government (shingikai) played a crucial
role in re
ious

as

political opponents of decentralization - i.e., central bureaucrats and zoku politici
– could no longer ‘publicly’ express their objection to reform in principle.

Decentralization
As the con
decentralization, many special committees (wiwonhoe, in Korean), which a
usually established under the Office of President or the Office of Prime Minister,
have become popular in reform politics in Korea as well. Cooperating with the
Ministry of Government Innovation and Home Affairs (MOGAHA), among var
presidential advisory committees, the Presidential Committee on Government
Innovation and Decentralization (CGID) was the key organization in achieving
success in the politics of decentralization and government innovation. When it w
established in April 2003, the mission of the institution was to provide ‘advice’ to
the president on government reform issues and tasks.
25
Unlike other independent
regulatory governmental commissions, it did not have the substantive authority to
carry out policies or decide important tasks.
26
Therefore, as it may seem, the CGID
was one of the consultative committees to advise the president on the reform issues
from the perspective of private pressure groups.
27

25
The CGID was established based on the SLDP, Article 17 (2003).
pical advisory council or
ing

id, p.52-53. The CGID specialists have diverse backgrounds such as professors at

26
As Schwartz (1998: 52-3) clarifies, this type of organization is a ty
consultative body, which deliberates policies and tasks at a relatively early stage of the policymak
process. Unlike consultative bodies, examining bodies have administrative and regulatory authorities
over government agencies and ministries, and sometimes independently and directly participate in
the administrative decision-making process to constrain bureaucracies. Nadel and Rourke (1975)
mentioned that the role of committee is indispensable for rational decision-making in bureaucratic
organizations.
27
Schwartz, ib
universities, former and current bureaucrats in central ministries, CEOs in private corporations, and
civic organization leaders.
198

e on
y,

Regardless of its characteristics as an advisory presidential committee,
however, the CGID exercised great power in coordinating different opinions from
central ministries in the process of decentralization. The constant support and
encouragement from the President empowered the CGID.
28
The former and current
chairmen of the committee, Byoung-joon Kim and Sung-sig Yoon who were
originally members of the Presidential Transition Committee (PTC) from December
2002 to February 2003 for President Roh, had strong backgrounds in government
innovation and decentralization. As briefly stated in the previous chapter, Byoung-
joon Kim served in numerous governmental institutions and advisory committees,
and provided his knowledge and experiences on government reform and
decentralization to President Roh. When Moo-hyun Roh established a private
research institute, the Center for Local Autonomy (Jibangjachi Silmuyeonguso) in
1993, Kim was hired as a scholarly expert and worked with Roh for over ten
years.
29
Under the Roh administration, he served as the Chairman of the CGID
(2003-2004), the Head of Policy Office of the Blue House (2004-2005), and the
Vice Prime Minister of Education and Human Resources (2006-2006). The former
chairman of the CGID, Sung-sig Yoon, had served in the Presidential Committe
Policy Planning and the CGID as a specialist of government innovation, productivit
and the local tax system since the late 1990s. They were originally the members of

28
Interview, a senior bureaucrat in MOGAHA (October 12
th
, 2005). He mentions, “Advisory
committees are supposed to focus on ‘advice’ to the president, and thus do not have decisional or
executive power. However, because it was established by the pledge of the president, the CGID was
powerful enough to take initiative in the decentralization and administrative reform.”
29
The institute was established when Roh was the vice-President of the Democratic Party. The
institute published several books regarding decentralization such as The Success or Failure of Local
Autonomy Decides the Destiny of the Country. In these books, Roh made his point on the issue of
local autonomy.
199
3, the Presidential Transition Committee (PTC) from December 2002 to February 200
and the designers of the new government’s vision for decentralization and
innovation under increasing economic difficulty and inefficiency. As such, by
placing people closely affiliated with the president, the Roh government could
empower the CGID as a core institution in promoting decentralization reform.
30

Those who were influenced by neoliberal idea and backed by the president
contributed to the diffusion of the decentralization reform agenda across the country.

Table 5.2: Background of the CGID members (2006)
Backgrounds Former
Bureaucrats
Scholarly
Groups
(University)
Business Local
Government
Leaders
Ministers
(Incumbent)
Numbers 2 13 2 4 6
Source: CGID website, http://www.innovation.go.kr/intro/member.htm.
Note: 1) Local government leaders represent four local government associations. 2) Incumbent
ministers include central ministries involved in reform programs such as Ministry of Finance and
Economy and the MOGAHA.

Moreover, by appointing policy experts from outside of governmental
organizations, the CGID developed a diverse set of decentralization strategies, tasks
and rules, and mandated central ministries to carry out those affairs.
31
As Table 5.2
shows, about 50% of CGID members came from university-level research
institutions, and they contributed to put pressure on central ministries to delegate
their functions and renovate their organizations.
32
Four local government

30
Yoon testified that President Roh maximized the capacity of the CGID by showing strong
intention and leadership. Interview with Yoon (October 19
th
, 2005).
31
More specific areas are: a) policy advertisement, b) administrative reform, c) personnel system
reform, d) decentralization, e) finance and taxation, f) E-government, g) innovation management, and
h) innovation evaluation. See the CGID website, http://www.innovation.go.kr/eng/intro/history.htm.
32
Including the two former chairmen, scholars in CGID are trained in public administration,
economics, or business administration, which are closely related to neoliberal reform.
200
associations sent their representatives so that their interests could be represented in
the decentralization process. Incumbent ministers automatically become members of
the CGID by law, yet they are usually reformist ministers who are closely affiliated
with the president. As such, generally speaking, the CGID is composed of reform-
minded experts who have been working on government innovation and
decentralization related affairs or research.
Through many activities, the CGID put various interests together. For
example, it supported several academic conferences on government innovation and
decentralization, and sent its representatives – usually the chairman – to
international symposiums or forums such as the Regional Forum on Reinventing
Government in Asia (September 2006) for ideas on reform. The chairman frequently
gave special lectures or invited presentations to civil servants in governmental
organizations including public enterprises. Making the rounds of discussions across
the country, various interests participated and helped to diffuse the ideas and goals
of decentralization reform. Other important tools and activities that contributed to
this diffusion of decentralization as an idea were the publication of various reports
and books on successful cases of government reforms, and press conferences.
Highly motivated committee members, by cooperating with the MOGAHA and
other ministries, prepared a comprehensive list of central affairs to be delegated,
developed a roadmap for decentralization, and contributed to the passage of the
SLDP in 2003.
In addition, to push reform measures through the National Assembly, the
CGID attempted to elicit cooperation from central political actors. They sent officers
to the National Assembly and held explanatory seminars and meetings for the
assemblymen – especially for the opposition party members – and members of the
201

Subcommittee on Administrative Autonomy and Subcommittee on Legislation and
Judiciary, which were in charge of the passage of the law.
33
At the same time, the
CGID members attempted to negotiate with other central ministries and civic
organizations by arguing that the decentralization bills would be difficult to pass in
the National Assembly if the bill stipulated somewhat sensitive issues that would
cause conflicts among stakeholders.
34

In general, the activities of the CGID were noteworthy and effective in
pursuing decentralization and government innovation in the Roh government.
However, the CGID faced several challenges and problems, as noted earlier. First, it
was hard to coordinate diverse opinions and suggestions from central bureaucrats,
civic activist, and politicians, despite repeated negotiations, conferences,
publications, and so forth. Except for the MOGAHA, other powerful ministries were
uncooperative in transferring their authorities and budgets to local governments.
Civic groups and local government associations asked for more autonomy and
financial resources. They complained about the limitedness of the government’s bill
on decentralization. The CGID should have decided the basic principles and
directions of decentralization reform, and then instructed bureaucrats to flesh out
their proposals. Yet, due to organizational resistance and complaints from both
central ministries and local governments, it was difficult for the CGID to determine
which policies or tasks must be listed in the bill and roadmap. As a result, although
the CGID did not become completely subservient to bureaucratic institutions as
many advisory committees have and it would be a clear mistake to downplay the

33
Interview, a senior bureaucrat in the MOGAHA (October 12
th
, 2005). Because the CGID and
MOGAHA had regular meetings with the policy staff in the ruling party similar to the Japanese style
of party-bureaucracy relations, their target of persuasion and negotiation in the National Assembly
was with the opposition party members.
34
Kim et al. (2004).
202

expertise of qualified outside specialists vis-à-vis tenured bureaucrats, resolving
conflicts between the CGID-MOGAHA coalition and other central ministries needs
an umpire who was in charge with top positions in the overall reform projects.
35

Second, unlike Japan, only a small number of businessmen were engaged in the
activities of the CGID, and their participation was a just formality.
36
Although the
CGID tried to reflect the various opinions about the decentralization bill (SLDP),
the low level of participation of other social groups – in particular, business and
mass media – prevented comprehensive legislation on decentralization from
materializing. As a result of this failure to coordinate diverse opinions and the
politics among ministries and the CGID, the SLDP was treated ambiguously in the
final draft of the bill as noted earlier.
37
Despite these drawbacks, however, the
activities and achievements of the CGID brought one giant leap for the promotion of
decentralization, compared to the committees of past administrations. Closely linked
to the intention of the top political leader, the CGID accomplished an important
advancement in decentralization reform.
In sum, in both countries, specialized committees for decentralization reform
played a crucial role in carrying out the projects by integrating various groups of
social forces. Well-educated and reform-minded specialists in the committees
provided innovative ideas to the government reform projects, and contributed to
developing the blueprints for decentralization and innovation. The appointment of
decentralists in the CGID as well as other positions in the Roh government

35
Interview, Yoon, ibid. As a specialist in government innovation, he mentioned that the most
important thing in pursuing decentralization reform was the will of the president just as many
scholarly works on this issue emphasize. See also Warwick (1978).
36
Interview, Yoon, ibid.
37
ibid.
203
contributed to the rise of decentralization as an issue in governmental organizations,
as it had happened in Japan in the mid-1990s. Key decentralist officials and
politicians proposed a radical strategy in their roadmaps and bills. In addition, given
the context for decentralization reform, such as economic shock, distrust in
government, regional disparity, and a globalizing economy, the activities of the
CGID, through various types of repeated negotiation and persuasion, forced
reluctant central bureaucrats and politicians to go along with reform. Yet, the limited
range and number of participants in the committee, and the overall decentralization
process in Korea – i.e., the lack of business interests and limited civil society –
resulted in somewhat restricted reform packages compared to the Japanese case.

5.2. THE RISE OF DECENTRALIZATION MOVEMENTS FROM BELOW:
LOCAL GOVERNMENTS ASSOCIATIONS, CIVIL SOCIETY AND
BUSINESS

With occasional exceptions, conventional perspectives on the development
of decentralization mainly argue that the politics of decentralization in countries
traditionally regarded as “strong states” are dominated by central political actors. To
some extent, the explanation was true for Japanese and Korean decentralization
reform efforts in the 1990-2000s. As analyzed in previous chapters, the preparation
of detailed lists of transferable items, principles, and financial resources were
dominated by central institutions and actors. However, the laws for decentralization
that materialized in the legislative branches of both countries in the late 1990s and
early 2000s would not exist if there were no input from local government and civil
204

society. The following analysis focuses on how non-central government actors such
as local governments (local government associations), civic activist groups, and
businesses influenced the promotion of decentralization and the limited extent of
their activities.

Overview
The orthodox interpretation of postwar central-local relations in Japan is that
local governments are subordinate to the central government because of the
centralized legal and financial structure.
38
The conventional wisdom is that
bureaucrats-politicians-interest groups pose barriers to decentralization reform. In
contrast, the second generation of local governments scholars emphasizes a more
autonomous and active role of Japan’s local governments by highlighting their
spontaneous nature.
39
According to this revisionist view, local governments spend
two thirds of the national budget and deliver various services demanded by residents
under the vertically structured intergovernmental system, and frequently take
initiative for introducing new policies and programs like free medical service for the
elderly (Tokyo Metropolitan Government), which were accepted by the national
government.
40
In addition, the experience of the progressive movement in the 1960-
70s, which was born between local political movements and local governments who
had expertise and knowledge of social problems such as welfare and the
environment, provided an opportunity for local governments to expand their base of
services (Steiner, Krauss and Flanagan, 1980).
41
As such, the issue of

38
Steiner (1965).
39
For example, Muramatsu (1997); Reed (1986); Samuels (1983).
40
Akizuki (1995).
41
Steiner, Krauss, and Flanagan (1980).
205

decentralization as experienced from below is concerned with meeting the
preferences of local citizens. It is thought that the sense of immediacy and reality
that citizens experience at the local level leads to their support for the transfer of
central authority to the local level.
42

In this vein, it is not appropriate to rule out the role of local governments and
civil society in the decentralization movement of the 1990s in Japan. In particular,
the six local government associations, which are the association of governors,
mayors, and assemblymen, individual local governments’ decentralization-related
research institutes, civic activist groups, and business associations were deeply
involved in the entire process of decentralization. They provided important ideas
and alternatives to the central political world. Therefore, to fully understand how
major legislation regarding decentralization was formulated in the 1990-2000s, it is
necessary to investigate this from a bottom-up perspective.
In Korea, as seen in Chapter Three, the government made attempts to
introduce genuine local autonomy by revising the constitution or by legal decree in
the early years after democratization, but it faced resistance from administrative and
political elites at the center. Because of the long tradition of state-led development
and centralism, few scholars highlight the importance of local governments and civil
society in the process of decentralization projects.
43
Yet, as time passed and the
practice of local democracy consolidated, the concern of local residents, civic
activist groups, and democratically elected local politicians become stronger, and
they played a crucial role in resolving many local governance issues.
44
Though their

42
Takao (1998).
43
Jang-kwon Kim (2000).
44
Bae and Sellers (2007).
206
alysis
nts were

power and influence on decentralization is still limited, the growing concerns for
decentralized governance from below became a strong political resource for
decentralists in promoting the reform in the current administration, as pointed out by
Yoon, the former chairman of the CGID.
45

Since the late 1990s, numerous voluntary civic organizations in Korea have
deeply engaged in the politics of decentralization and administrative reform.
Through various activities such as participating in public hearings and conferences,
providing alternative decentralization policies, making protests against central
ministries, and so forth, they have attempted to influence the passage of
decentralization-related bills and monitor the process of reform. At the same time,
local governments have expressed their opinions and suggestions with regard to the
contents of decentralization through the activities of four local government
associations which were established in the late 1990s and early 2000s.
46
As Lester
Salamon (1994) noted, the ‘associational revolution’ in Korea has begun to alter the
relationship not only between the state and its citizens, but also central and local
governments.

In comparative perspective, however, regardless of the proliferation of civic
organizations and the growing power of local government in Korea, they were
limited in sustaining their influence over the decentralization process.
47
The an
below describes how civic organizations and associations of local governme

45
Yoon, ibid.
46
National Association of Governors, National Association of Mayors, Association of Metropolitan
and Provincial Council Chairs, and National Council Association of Chairs. The establishmentof
these associations are prescribed in the Local Autonomy Act, Article 142-148. Japan has six local
government associations as mentioned earlier.
47
Jang-kwon Kim (2003).
207
involved, and why the movement had a limited impact on the decentralization
agenda in the 2000s.

Local Government Associations
The Case of Japan:
A growing body of literature on Japanese central-local relations is revealing
the hidden power of local governments in public policy. Hitherto, the dominant
model of governance has been of traditional machine politics among governors,
mayors, and LDP Diet members to obtain public works funding from the central
government in Tokyo for revitalizing the local economy, rewarding local supporters
like construction companies, and winning re-elections.
48
Yet, it is of popular o
today that central and local governments are strategically interdependent and local
governments are not hollowed out.
pinion
h
local
,

49
In addition to the growing role of local
governments in delivering public services, several factors contributed to the growt
of decentralization as an issue: first of all, decentralization is required because
discretion strengthened by local referendum, freedom of information, and the
ombudsman system, became circumvented by several national regulations and rules
which may not be appropriate for solving local problems.
50
Empowered
independent governors seeking to transform Japan by changing local governance in
their prefectures refuse to get benefits from the traditional centralized ‘pipe-line’
politics based on public works and pork-barrel politics.
51
Furthermore, there is an

48
Er (2005) called it a ‘pipeline politics’ from localities to the center.
49
See Hill and Fujita (2000); Muramatsu (1997).
50
Takao (1998).
51
See Er (2005), 71-89. These independent governors include S. Ishihara (Tokyo), A. Domoto
(Chiba), T. Yasuo (Nagano), S. Matsuzawa (Kanagawa), and so forth.
208

increasing role of subnational government in implementing affairs and
responsibilities that national government cannot effectively carry out today. For
example, Purnendra Jain (2005), explores the increasing interdependency in
handling international affairs such as trade, diplomatic issues, and environmental
issues that require cooperation among sub-national bodies.
52
As such, local
governments in Japan are no longer dutiful policy-compliant or subservient
followers of national policies, and they play an important role in the current
decentralization drive.
With this background, six local government associations (LGAs), which are
nationally organized associations representing local opinions, played a crucial role
in pursuing decentralization reform in the 1990s-2000s.
53
In particular, the LGAs
established ‘the Office for the Promotion of Decentralization’ under their
consultative council in 1995 by launching a campaign with the slogan, “push ahead
with decentralization for local governments to autonomously and independently
carry out what local residents want.”
54
This institution paid attention to and
surveyed local leaders’ opinion and local difficulties, and provided raw resources
related to decentralization issues to the Administrative Reform Council and the
Committee for the Promotion of Decentralization at the center.
55
It also monitored
the overall process of implementation of devolution and supported local government
to make local bylaws for independent decision-making. For those purposes, it held

52
Jain (2005).
53
The six local government associations include: National Association of Governors, National
Association of Mayors, National Association of Prefecture Councilmen, National Association of City
Councilmen, National Association of Cho·Son, and theNational Association of Cho·Son Council.
54
August 10
th
, 1995.
55
Nishio (1999: 7) mentioned that the LGAs’ suggestions became an important basis of discussion
at the central institutions dealing with decentralization issues.
209

several seminars and conferences to provide decentralization ideas to the central
government and politicians by hiring experts in decentralization and local
governments such as Masaru Nishio and former Prime Minister Hosokawa.
56
In
addition, the six local government associations conducted research on the benefits of
decentralization through their research centers and experts in their offices; and
published a collection of cases enumerating the baneful influence of over-
centralization on local governance.
57

Some local governments, such as Kanagawa Prefecture, organized their own
task force to conduct research on decentralization issues. In reality, many to, do, fu,
and ken governments suggested various policies and ideas to the central ministries
and the CPD. For example, the Kanagawa prefectural government established the
Survey Research Center for the Promotion of Decentralization (Chiho Bunken Suisin
kenkyukai) under its Planning Department, and produced several reports and
discussion papers on decentralization reform.
58
In addition, various progressive
movements from localities challenged the ideology of state-led development. The
movements focused on various social concerns common to post-industrial societies
such as the environment, education, and an aging society - and asked for a
‘consumer-centered’ public service delivery. The movements were considered to be
part of the ‘progressive government’ movement that began in the 1960s. The
‘making better community’ movement (machi tsukuri) still exists despite the decline

56
Nishio (1999), p.5-7. Chairman of each local government association, scholars, and editorial
writers of newspapers participated in this institution. The institution held seminars and conferences
from December 1993 to September 1994 to write out recommendations for decentralization (‘The
Opinion of Six Local Government Associations, September 26
th
, 1994).
57
See Takagi (1998), Chapter 2. This two hundred sixty page collection of cases covered a wide
range of local governance including urban and land-use planning, water management, forestry,
fishery, environment, education, welfare, and local finance.
58
Jang-kwon Kim (2003), p.238.
210

in progressivism. The demands for social services from below were reflected in
gubernational elections in the 1990s, which produced several independent governors,
and became an important basis of support for decentralization.
59

The improving status of local government and increase in well-informed
local residents contributed placing decentralization on the national agenda. However,
except for the earlier stage of implementation, the overall process of decentralization
was dominated by central actors: the central ministries, politicians, and the CPD. As
Nishio (1999) noted, the opinions and input from local governments were important
to the decentralization plan, yet several reasons restricted the greater role of local
governments in decentralization: first of all, there was conflicting opinion over the
transfer of central authority among local governments.
60
For example, rural
governments, which depended too much on central subsidies, including public
works, had limited taxation resources and were opposed to reforming local taxation
and subsidies. In addition, there was a conflicting perspective with regard to which
level of local government would receive decentralized functions. So to speak,
gubernational governments feared that their status would be ambiguous if most of
the agency-delegated functions (ADFs) were transferred to basic-level local
governments (shi, cho, and son) because many prefectural functions were already
delegated to the basic-level, and the 1990s decentralization drive mainly focused on
strengthening the shi, cho, and son through the transfer of functions and authorities.
Thus, many commentators argued that the introduction of new central-local relations
- abolishing the existing prefecture system and merging shi, cho, and son into 300

59
Er (2005).
60
For example, there were conflicting viewpoints between gubernational government versus basic-
level local governments, and urban versus rural government. See S ōga (2000).
211
upper-medium-level cities - must be ahead of the transfer of authority.
61
Yet,
politicians in both prefectures and basic-level local governments were sensitive to
the issue of a new central-local system. As a result of these volatile issues among
local governments, local government, which had taken the lead in the overall
process of decentralization in the 1990s were limited in their influence.
62
Although
the rise of local governments contributed to setting decentralization agenda, their
enthusiasm was limited in pushing the decentralization drive forward.
The Case of Korea:
Before the 1990s, Korean local government contributed to national politics
by doing a minimum of work on local agendas, and local residents were supposed to
devote all of their attention to problems of national importance—not to their own
community problems as Japanese local residents had during their progressive era in
the1960s.
63
As Korean localities rapidly urbanized and local democratic polities
consolidated after the 1990s, however, local governments were expected to play a
crucial role, with its maximum efforts going to the construction of decent and
competitive urban communities by promoting decentralization. The growth of local
governments and local political figures has become crucial in national politics as
well as that of local communities,
64
and there has been growing criticism of the
central government’s excessive control of local governments.
65
As Mark Turner

61
This is what is so called ukezararon (theory on which system can sustain new central-local
relationship). For example, Ichiro Ozawa and Morihiro Hosokawa insisted the establishment of new
large cities, instead of prefecture system (Haikenchihan). Other political leaders argued the
introduction of U.S.-style federal system. Nishio also worried that this conflicting perspective would
deter the process of decentralization discussion. See Nishio (1999), Chapter 1.
62
Jang-kwon Kim (2000).
63
For Japanese case, refer to Muramatsu (1975).
64
Park (2000); Seong (2000).
65
According to KIPA survey (2002), 72.7% of civil servants in metropolitan and provincial
governments, and 82.8% in basic-level local governments (si, gun, gu) answer that local governments
212

mentions, decentralization is not a one-way process, local government leaders and
societal actors are likely to participate in debates and decisions that shape the form
and degree of decentralization.
66
Local governments promoted decentralization in
the 2000s by: a) lobbying and cooperating with civic organizations and b)
participating in political discourses. As with Japan, four local government
associations in Korea played a key role in representing the interests of localities.
First, through various lobbying activities, local governments called for a
holistic approach to the division of powers within the nation. This strategy entails an
integrated approach to decentralization so that major decisions on political,
administrative, and fiscal decentralization will be adopted as a single package.
67

Local government associations refused the central government’s strategy, which
called for a sequenced approach to implementing decentralization in small and
incremental steps. Instead, they insisted on the “decentralize first and make up later”
principle.
68
To achieve this purpose, the four local government associations
organized an executive committee for negotiation with the central government, and
prepared their own bill for the promotion of decentralization by cooperating with
civic activist groups such as the Civic Movement for Decentralization (CMD) and
the Citizen’s Coalition for Economic Justice (CCEJ) to develop alternative
decentralization bills. In doing so, they could submit alternative decentralization

are under central government’s excessive control.
66
Turner (1999).
67
Shah and Thompson (2004) called this integrated approach the ‘big bang’ approach to
decentralization.
68
Interview, Ju, Yong-hak, a specialist in the National Association of Mayors (October 21
st
, 2005).
The principle ensured that all the pieces of the puzzle fit together – that is, the desired balance in
autonomy and accountability is achieved while providing incentives for cost efficiency. This is
because the decentralization discussions of previous governments failed to balance those aspects, and
eventually resulted in unbalanced decentralization, which requires more accountability without much
fiscal resources (Ju, ibid).
213

proposals against bills that were prepared by central ministries, and visit each
assemblyman to encourage the passage of the SLDP bill in 2004. In addition to
regularly documented recommendations to policymakers at the center,
69
they
frequently held meeting with ministers and vice-ministers of the cabinet. Some
mayors and governors became designated as members of the CGID and CNBD
(Presidential Committee on National Balanced Development) to represent local
voices. As a result of these efforts, local governments could represent their views on
the SLDP and other reform agendas to some extent, although there were still
limitations.

Second, political discourse from somewhat powerful local politicians
became very influential in the decentralization. As local electoral politics grew to be
politically critical in party politics, candidates running for big city mayors and
governors were nominated from the pool of powerful political figures in national
politics instead of local leaders.
70
The former and current big city mayors and
governors pressured candidates for the Presidency in recent elections to carry out
decentralization reform as well. Based on this empowered position, some of the
nationally recognized local politicians issued press statements regarding the central
government’s decentralization policy. For example, criticizing the delayed
decentralization, the former mayor of Seoul, Myeong-Bak Lee, as the chairman of

69
Unlike other associations, the National Association of Governors (NAOG) has an official
authority to propose public policies to central government (Daejeongbu jeongchaek geonuigwon).
70
For example, Soon Cho, the first elected Seoul mayor was the former Vice Prime Minister of the
Economic Planning Bureau, and the 2
nd
mayor of Seoul, Gun Koh, was the former Prime Minister.
The current mayor, Myeong-Bak Lee, was the former Hyundai Construction Co. CEO. All of them
ran or are running for the presidency.
214

National Association of Governors pressured the central government to implement
comprehensive and speedy implementation of the decentralization roadmap.
71

As such, despite the inherently restricted system of local autonomy, there
was an unprecedented local decentralization movement, which had developed from
the growth of local governance and local society since the late 1990s. Many local
governments challenged the central government either individually or collectively.
72

In particular, membership in local government associations was the key to moving
the central government toward decentralization. In addition, specialists armed with
decentralism, and hired by local governments and their associations, were important
to offering alternative policies to the centrally designed decentralization policies. Yet,
vibrant local efforts resulted in only piecemeal and limited decentralization.
There are several reasons why local governments’ efforts were not successful.
First, because of the unsuccessful decentralization reforms in past administrations,
local governments were anxious about the political process at the central level,
which has not favored the promotion of decentralization. That is, they have worried
that much of the responsibility would be delegated without transfer of sufficient
resources and autonomy.
73
In a natural way, local government associations preferred
the ‘big bang’ approach that central functions and authorities would be
comprehensively delegated with consideration of local governments’ fiscal capacity.
However, as it would be expected, their request for such an ideal type of
decentralization including autonomy over educational policy, local policing, and
fiscal matters could not be accepted by central political actors.

71
August 29
th
, 2004. National Association of Governors, website, http://www.gaok.or.kr/eng/.
72
Seong (2000).
73
Interview, S. Kim a policy specialist in National Association of Governors (October 25
th
, 2005).
215

Second, there were few official routes for local governments to reflect their
concerns and perspectives on the decentralization policies that were designed by
central actors. The CGID and MOGAHA reflected local governments’ position
seriously in the first place through several conferences and public hearings about
decentralization projects, yet most local governments, unlike big cities and
provinces, did not have official policy channels to communicate with central
bureaucrats and politicians.
74
Limited access to the central political world restricted
the possibility of a powerful decentralization movement from below.
Third, in the cases of North America and Northern Europe, bottom-up
approaches to decentralization entailed that resident voters would organize in
Tiebout-type communities declaring ‘home rule’ for local public services and asking
higher level governments to be supportive of these efforts.
75
Yet, in the Korean case,
top-down processes initiated by the national government often have more to do with
short-term political and bureaucratic imperatives. Unlike Japan where local
progressive movements mobilized over the values of a ‘living environment,’ Korean
local governments did not raise issues as a matter of values for their residents, and
thus local residents were less interested in decentralization.
76
In addition, for the
most part, except some local newspapers, mass media did not give much coverage to
decentralization.
77
Because of this lower level of mobilization from the grassroots,
the interests that would benefit from decentralization, were rarely organized enough
to defend itself against reversals, as in many developing countries.
78

74
ibid; Ju, ibid.
75
See Tiebout (1956).
76
Jang-kwon Kim (2003).
77
Interview, Yoon, ibid. According to Do-bin Im (1997), only about 10% of local residents
subscribe to local newspapers.
78
Shah and Thompson (1999); World Bank (2005).
216
Finally, conflicting interests among local governments – i.e. big versus small
cities – blocked further cooperation among them. Big cities and provincial
governments enjoying relatively sufficient economic resources and power acted
passively in asking for resources and authorities. In contrast, small cities and
counties under the control of central and higher governments were more aggressive
in their insistence of a ‘big bang’ approach to decentralization.
79
In addition, big
cities opposed to the central government’s decentralization policy, which would be
accompanied by a ‘de-concentration’ policy requiring the transfer of governmental
branches, resources, and public enterprises to small and regional cities.
In sum, as a result of these limitations in local governments’ efforts to
achieve decentralization through the activities of local government associations, the
reform under the Roh government was limited and only partially successful. From
the local perspective, decentralization reform would eventually bring an increase of
national competitiveness by downsizing central government and increasing
efficiency as well as local developments. Yet limited access to the power center for
local governments resulted in the lack of follow-up implementation and monitoring
during the decentralization process in the 2000s.
Civil Society and Business
The Case of Japan:
Local governments in the 1940s-1950s in Japan certainly lacked the eligible
human and financial resources to shoulder greater responsibility and functions, yet
this is no longer the case in Japan. Japan is one of the fastest graying societies in the
world due to its increased life expectancy and decreased birth rate.
80
Therefore, the

79
Ju, Yong-Hak, ibid.
80
Over one-sixth of Japan’s population is aged 65 or over, and in some rural regions, those in that
217

growing number of elderly has meant that local governments face an increasing
social welfare burden, because welfare services for those aged people have been
provided by municipal governments. However, emphasis on a neoliberal-style small
government – small number of bureaucrats, and small size of government – since
the 1980s pressured local governments to share their functions with non-profit
organization in their localities.
81
In addition to welfare services, the provision of
various social and public services for local residents are dependent upon grass-root
civic organizations.
82

Decentralization originated from the level of civil society during the
emergence of the progressive movement in the 1960s-1970s, and the main theme of
the movement was ‘quality of life.’ As von Wolferen (1990) mentioned, Japan was
considered to be an economically prosperous country, yet in terms of its quality of
life, it was a much less developed one. Thus, the direction of civic activism for
decentralization focused on the improvement of social welfare and the quality of
life.
83

Among various civic organizations, activities of some civic organizations
were notable in the process of decentralization reform in the 1990s. For example, a
famous public commentator and management consultant, Kenichi Ohmae, founded a
citizen’s social-political movement organization called the ‘Reform of Heisei’

age bracket represent more than 40% of their population (Tamura, 2002: 162).
81
See Lee (2005), p.50. According to the EPA (Economic Planning Agency) report on the activities
of civic organizations, 37.5% of grass-root civic organizations were working on social welfare
services (the aged, childcare, disability care, etc.), 16.9% were local social activities (machi tsukuri,
disaster-related activities, traffic safety, anti-criminality, and travel promotion), 16.8% were
education/culture/sports related, and 10% were environmental protection activities. EPA (1997), The
Report on Civic Activities: Basic Survey on the Activities of Civic Organizations, cited in Lee (2005),
p.51.
82
Tamura (2002).
83
Jang-kwon Kim (2000), p.172.
218
dition,
made

(Heisei Kaikaku no Kai, November 25
th
, 1992). Through various publications and
activities, Kenichi has been argued that the traditional concept of a nation-state is
inefficient to control for the changes in communications, corporations, customers,
currencies, and commodities in the globalizing economy. Instead of the nation-state,
he suggested the concept of ‘region state’ with 5 to 20 million affluent residents that
could theoretically control of the wave of globalization. According to him, central
governments should decentralize authority and power to subnational regions, and
serve as a catalyst for supporting the growth of regional states.
84
Another civic
organization, the Provisional Civilian Council for Politics (Minkanseijirincho),
announced their “Urgent Proposal with regard to Decentralization” (January 4
th
,
1993) and insisted for the enactment of a basic law on decentralization.
85
In ad
many civic organizations like the People’s Council for Administrative Reform
(Gy ōkakukokumin-gikai, 1983) and Local Government Labor Union (Jichir ō)
valuable efforts to the decentralization movement.
86

These civic organizations continuously insisted on the value of amenity and
the quality of life, and made an effort to realize their ideal of decentralization.
87
A
group of intellectuals from universities and research centers actively participated in
decentralization-related research committees or governmental councils, and
provided ideas and policy alternatives to central actors. Through various activities
including publishing policy recommendations and participating in the CPD’s daily

84
See Ohame, Kenichi’s, The End of Nation State: The Rise of Regional Economies (Touchstone,
1996). He pointed out the ‘Tokyo problem’ that all wealth and power were over-centralized around
Tokyo.
85
Minkanseijirincho,1993. Nihonhenkaku no bijon (Vision for Japanese Transformation). Tokyo:
Kodansha.
86
Jang-kwon Kim (2003).
87
ibid, p.172.
219

hearings, their support for decentralization became an important component of the
decentralization drive in the 1990s.
In the decentralization drive of the 1990s-2000s, many researchers
recognized business groups as one of the most impressive actors to wield influence
over decentralization reform.
88
Indeed, business interest groups such as Keidanren
(Japan Federation of Economic Organizations) have played a crucial role in reform
politics since the Nakasone administration of 1980s. Since then, business groups
took initiative in raising the issues of educational, economic, and administrative
problems, and strongly encouraged various reform programs including de-regulation,
privatization, and electoral reform to rehabilitate the Japanese economy, which has
experienced pressure from a globalizing economy, its low birth rate, an aging society,
and so forth.
89

The goal and interest of business groups in decentralization reform was to
make more service-oriented, market-friendly, and efficient local government that
provides them high quality and low cost services. They recognized that several
Japanese socio-economic and political problems such as the Tokyo uni-polar
concentration and inefficient public services deterred the growth of the market and
business in a globalizing economy. Through regularly announced public statements
and publications, they proposed to solve the ‘Tokyo problem’ by reducing the role of
states in the market economy, and by strengthening the capacity of localities.
90
The
ideological background of the business groups was based on neo-liberalism, and

88
Nishio, ibid; Takagi, ibid.
89
Keidanren (2001), Creating a Vibrant Private Sector-led Economy through Structural Reform
(May 25
th
, 2001), retrieved October 31
st
, 2006 from http://www.keidanren.or.jp/english/policy/
2001/026.htm.
90
Keidanren (2000), Keidanren Ikensho: Chihogyozaiseikaikakuhe no Shintanatotsukumi (New
Intention for Local Financial Reform), December 19
th
, 2000.
220

they expected to obtain a more efficient and streamlined state system that could
serve the prosperity of localities and businesses.
91

The intention of business groups to achieve decentralization has been
expressed in many different ways. First of all, former or incumbent top business
executives occupied several top posts of governmental committees dealing with
various reforms, and they were deeply involved in the reform-related decision-
making process. For example, the chairman of the Committee for the Promotion of
Decentralization, which was the most important institution in decentralization
reform was Ken Moroi, who was the former vice-chairman of Nikkeiren (Japan
Federation of Employers’ Association). Also, two top business leaders served on two
very important positions on reform councils under Hashimoto. Toyoda, the former
chairman of Keidanren became the chairman of the Economic Council, and Uno, the
former advisor to the Kansai Economic Association, was appointed as the chairman
of the Survey Council on the Relocation of the Capital. According to Professor
Masaru Nishio’s testimony, the chairman Moroi had strong political leadership with
a broader point of view on general decentralization issues.
92
In particular, their
decisive leadership led to the abolishment of agency-delegated functions when other
stakeholders (central ministries and local politicians) were hesitant to completely
abolish those functions.
93

91
Nishio (1999), p.42.
92
That is to say, reform council members coming from business groups, in general, were not
captured by specific interests, and were free from pork-barrel politics unlike central ministries and
local politicians. Masaru Nishio says, “Only businessmen can demonstrate such a strong leadership
in reform process” (Masujima and Kobayashi, 2001).
93
Growing opinion inside the bureaucracy was that ADFs functioned very well in the era of
industrialization and their malfunction could be just revised. However, Uno and Moroi, who were
well aware the defect of ADFs strongly insisted on the complete abolition of ADFs and their
leaderships molded public opinion (Takagi, 1998).
221

Many businessmen as well as other intellectuals insisted that the introduction
of a new central-local relationship was necessary to precede the discussion of
decentralization and the transfer of central authority. As briefly stated above, there
was a conflicting perspective among local governments on which system should be
adopted in a newly decentralized Japan, and many people if the current
decentralization drive would be hindered because of the Ukezararon. It was the
major opinion among businessmen that the introduction of the Do-Shu system
(province or state system) was necessary to guarantee a more perfect local autonomy,
yet business members in governmental reform councils decided to maintain the
current central-local system because the current to-do-fu-ken and shi-cho-son system
were already deeply rooted in Japanese daily life. As Nishio (1999) emphasizes, this
was the big decision to continue the current decentralization reform efforts, which
could be a target for pork-barrel politics among various stakeholders.
94
As such,
concerns from business groups were valued in reform programs in the 1990-2000s.
In addition to direct participation in governmental decision-making, business
groups continuously express their opinions through publications and public
statements. For example, Keidanren suggests – or requests – various reform
programs through the form of ‘policy proposals,’ or executive’s comments on socio-
economic or political problems including decentralization issues.
95
The Japanese
Chambers of Commerce and Industry (JCCI) proposed to decentralize the authority
of land-use regulation to local governments, and the Kansai Economic Association

94
For decision-makers, ukezararon was the most important concern to be resolved for successful
completion of decentralizatio, because it included various difficult issues such as Constitutional
amendment, and the abolition of prefectures and the merger of small towns and cities, which seemed
difficult issues to be resolved (Nishio, 1999).
95
See Keidanren website, http://www.keidanren.or.jp. There are about 800 documents related to
decentralization on their website.
222
requested to resolve regional disparity problems (Tokyo problems) by asking for
more power to their localities.
However, the opinion from business with regard to the promotion of
decentralization is often contradictory to the ideal of decentralized governance. That
is to say, business groups continuously request decentralization reform in the same
vein of deregulation and small government, yet decentralization is not necessarily
liked to the issue of small government. For example, if national affairs were to be
transferred to sub-national units, the number of officers at the local governments
would be increased to accommodate these new functions.
96
Furthermore,
decentralization does not necessarily bring up deregulation. Decentralized
governance allows ‘diverse’ modes of administration, and thus there is a possibility
that some local governments may need to impose more strict regulations on some
issues. The JCCI announced in their 1994 proposal, requests to decentralize land-use
planning authority from the center to localities, and they also desired relatively
uniform regulations in other policy issues. As such, there was a gap between the
business’ perspective and the ideal of decentralization. Masaru Nishio worries
whether support for decentralization promotion from business groups can be
continued if those contradictory factors come into the open.
97

The Case of Korea:
As discussed earlier, the tradition of democratization movements in the late
1980s became an advocacy movement since the 1990s, and the number and power
of civic organizations has tremendously increased in diverse policy areas.
98
Similar

96
See Nishio (1999), p.42.
97
Nishio (1999), p.43.
98
Kihl (2005); Sunhyuk Kim (2000).
223

to Japan where civic activism contributed to the construction of ‘progressive local
governments,’ diverse civic organizations have been involved in decentralization
movements in Korea. Big civic organizations such as the People’s Solidarity for
Participatory Democracy (PSPD)
99
and Citizen’s Coalition for Economic Justice
(CCEJ)
100
based on big city areas like Seoul have been involved in diverse policy
areas such as the environment, economic justice, and the anti-chaebol movement as
well a the democratization movement. These groups had separated divisions or
departments dealing with decentralization issues.
101
In addition, some civic groups
composed of private experts in administrative reform were concerned with
decentralization.
102
However, instead of these national-based civic organizations, a
local-based Civic Movement for Decentralization (CMD) was the most active
single-issued civic group for decentralization since the 2000s.
The CMD was composed of professors in regional universities, local
newspaper reporters, local businessmen, and members of local civic organizations
engaged in various issues related to the decentralization.
103
Unlike other ‘general-
purpose’ civic organizations like the CCEJ and PSPD, the CMD started as a locally-
organized civic group in regional cities by mobilizing local elites as well as local
citizens. By putting both decentralization and regional disparity issues on the
forefront of their policy goals, it could mobilize citizens and elites in big regional

99
PSPD is one of the biggest non-government organizations involved in various social issues such
as anti-chaebol, social welfare, and anti-corruption movements. It has 13,000 members and its budget
size is about 1.1 million dollars. http://eng.peoplepower21.org/contents/about.html.
100
CCEJ is one of the biggest non-governmental organizations and it has 35,000 members and
many local branches. See CCEJ website, http://www.ccej.or.kr/English/sub01_01.html.
101
For example, The Decentralization Committee under the CCEJ cooperated with the National
Association of Governors. Interview, S. Kim, ibid.
102
For example, the Citizen’s Coalition for Better Government (CCBG) is composed of
professionals and professor groups engaged in administrative reform.
103
The CMD was established in October 5, 2000.
224

cities such as Taejeon and Taegu, where there was great suffering from the
devastating economic crisis of the late 1990s. At the initial stage of the SLDP
legislation, the activities and concerns of the CMD, as well as other civic
organizations, influenced the governmental bills for decentralization and national
balanced development, as the CGID chairman mentioned.
104
The various activities
of the CMD for promotion of decentralization progressed into two directions: a)
traditional NGO activities mobilization at the grass roots level, and b) direct
participation in political events.
First of all, ‘decentralization-minded’ local intellectuals such as local
university-level professors, local journalists, and local businessmen joined the CMD
and deeply engaged in the movements. In September 3 of 2001, about three
thousand intellectuals and CMD members held a mass meeting, namely the
‘National Intellectual’s Declaration for Decentralization’ in front of the National
Assembly,
105
and they announced the ‘local charter’ in March 22 of the same year.
In addition, to mobilize at the grass roots level on decentralization issues, the CMD
organized several intellectual meetings, workshops, and conferences in cooperation
with local governments and the association of local governments. As well as these
activities, professor groups in the organization conducted scholarly research about
the promotion of decentralization and made their own ‘Decentralization Promotion
Bill’ and ‘National Balanced Development Bill’ which contributed to the
formulation of earlier versions of the government bills in July 2003.
Second, they attempted to influence politicians and bureaucrats both directly
and indirectly involved in the political world. In particular, the CMD invited three

104
Interview, Yoon, ibid.
105
Yonhap News, September 3, 2001.
225

major presidential candidates right before the 2002 presidential election, and let
them publicly make an agreement to enthusiastically pursue a decentralization
policy if they were elected.
106
Moreover, some of the CMD leaders, such as Hyung-
Ki Kim, who was the founder of the organization, were directly involved in
government organizations and presidential committees like the Presidential
Transition Committee (PTC), the CGID, and the CNBD as outside experts or
consultants.
107
By using personal ties, at the same time, the CMD members
personally have lobbied for support by national assemblymen to propose the
decentralization promotion bill.
108

Through these various activities and events to mobilize public attention and
to influence the governmental bills on decentralization and balanced development,
the vague concept of decentralization solidified into a firm request to the central
government and political world. To some degree, the strong opinion from below was
reflected in the final version of the government bills.
109
Although the SLDP and the
following reform bills did not meet the request of civil society, the dramatic rise of
civic power in the decentralization movement, as well as other policy areas, became
critical in setting governmental agendas.
110

Despite the rapid and dramatic growth of civil society, however, there were a
considerable number of constraints working against the further pursuit of

106
Interview, the representative of the CMD (October 10
th
, 2005). Grand Nation Party candidate
Hoe-Change Lee (December 6, 2002 in Taejeon), the ruling New Millennium Democratic Party
candidate Moo-Hyun Roh (December 8, 2002 in Taegu) and Democratic Labor Party candidate
Young-Gil Kwon (December 11, 2002 in Jeju Island) were invited.
107
Many civic organization leaders directly participated in the presidential committees. Interview, a
civic activist in the Citizen’s Coalition for Better Government (CCBG), October 28, 2005.
108
Interview, the representative of the CMD, ibid.
109
Kim et al. (2004); Lee (2004).
110
Jung and Kim (2001).
226
ass

decentralization movements. First, as interviewees in civic organizations have
commonly pointed out, the proliferation of NGO activities for the promotion of
decentralization faced strong resistance from ‘state-superiority’ minded bureaucrats
and politicians who have authorities of implementation and monitoring. The
interests of civic organizations were somewhat well reflected in the initial stage of
decentralization promotion, but they were completely excluded from the
implementation and monitoring processes.
111

Second, another fundamental problem is the lack of voluntary action and the
indifferent attitude of the mass media toward the decentralization movement. This
lower level of public awareness, citizen participation, and mass media coverage
diminished the potential influence of civic organizations on governmental bills. The
CGID chairman, Yoon, even mentioned that the lower level of public attention to
decentralization was one of the most serious obstacles to the successful creation of a
decentralized state.
112
In addition, the relatively little attention from the central m
media, which dominates over 70% of the Korean market resulted in the lower-level
of mass mobilization over the decentralization issue.
113

Third, there was not an effective mechanism for cooperation among civic
organizations in the decentralization movement, although loose ties among them
have existed. The CCBG cooperated with over ten civic organizations in the
movement, and the CCEJ, PSPD, YMCA, and other civic organizations worked
together, but that cooperation was not effective. For example, the PSPD consisted of
somewhat progressive activists who had focused more on ‘participation’ issues, but

111
Interview, ibid. He mentioned that there is no channel to check bureaucrats and politicians who
were not supportive of decentralization.
112
Interview, Yoon, ibid.
113
Interview, the representative of the CMD, ibid.
227

the other major organization, the CCEJ, emphasized ‘policy’ issues.
114
In addition,
the local-based CMD had not effectively communicated with big civic organizations
at the center.
To summarize: the tremendous growth and development of civil society
(civic organizations) in both size and influence did not automatically bring about
policy change in the central-local relationship in Korea. Indeed, the opinion from
civic organizations, which were made public through their various activities were
seriously considered and adopted by the CGID and MOGAHA bureaucrats in the
agenda-setting state for the promotion of decentralization. This is because the CGID
and MOGAHA members wanted to adopt information and proposals that were
closer to the real situation of localities, and did not want to be blamed for the ‘closed
decision-making processes’ of decentralization reform.
115
The lack of stable
networks connected to the power center at the national level, and the weak local
mass media produced the limited extent of participation in the implementation and
monitoring processes of decentralization. As a result, when the original bills for
decentralization that were developed by decentralists were changed through political
debates at the National Assembly, civil society could not influence the legislative
process.
116

114
Interview, the chairman of the Decentralization Committee at the CCEJ (October 26
th
, 2005).
115
Interview, Yoon, ibid.
116
Interview, the representatives of the CMD and CCBG, ibid.
228
5.3. CONCLUSION

The political debates regarding the issues of decentralization in both
countries were mainly held in the central political arena, yet this chapter shows that
growing concerns from civil society, businesses, and local governments contributed
to framing those political discourses at the center. Broadly shared values and
perceptions on the necessity of decentralized governance among various actors from
below mobilized intellectuals, activists, and local politicians for the pursuit of
decentralization reform. In doing so, the decentralization-related consultative
committees, which are directly linked to the top political leaders of the country and
have members of reform-minded decentralists, played a crucial role in connecting
local and social concerns to the central political arena. In the current
decentralization drive, central bureaucrats and sectoral politicians were still not
supportive, yet the inputs and pressure from below were reflected to a large extent in
the final version of decentralization legislation. In this chapter, I found several
interesting factors in explaining the promotion of decentralization in Japan and
Korea from a comparative perspective.
First, specialized committees in both countries were one of the most
important institutions in the diffusion of decentralization as an idea. By hiring non-
governmental experts as advisory or executive members, the committees contributed
to developing the detailed lists of tasks to be accomplished and coordinated diverse
opinions on reform. From a comparative perspective, while the activities of the
Japanese CPD were dominated by strong leaders, who mainly came from the
business world, in Korea, scholars working in the field of reform-related research
took the initiative in pursuing decentralization. The top leaders of Japanese
229
government strategically appointed economists or businessmen as the chairmen or
top executives of the consultative committees in order to secure neutrality and
continuity of decentralization, as well as with other neo-liberal reforms. Instead,
Korean presidents depended upon scholarly groups in developing new reform ideas
and projects, and thus some prominent scholars became core political figures in the
government.
Second, local governments in Korea mobilized to affect the substance of the
decentralization reform through local government associations to achieve more
genuine local autonomy. The limited but empowered activities and discourses of
these associations compared to those of past administrative reforms contributed to
making decentralization an important issue for the national agenda. They also
provided ideas and experiences to decentralists in core reform agencies. Despite this
partial success at the earlier stage of decentralization, the influence of local
government associations became more restricted in the implementation and
monitoring process because of the lack of stable and diverse policy channels to the
power center. Unlike the Korean case, inputs from local governments cannot be
ignored in the process of Japanese decentralization. Although the process was
dominated by central level actors, local governments and their representatives
(associations) continuously proposed decentralization alternatives and provided
ideas to the central discussions. Although the decentralization subject did not really
engage the public’s attention, those efforts from local governments contributed to
the continuation of decentralization reform at the center.
Third, the growth of civic organizations was a striking feature of the current
decentralization drive in both countries. By loosely forming a coalition for
decentralization movement with local government associations, civic organizations
230

made decentralists at the center bear up against sectoral interests and bureaucratic
resistance in both countries. However, despite their proliferation in the 1990s-2000s,
civic organizations in Korea failed to get widespread attention from residents and
the mass media, while Japanese civic movements for decentralization started from a
grass-roots level of mobilization since the 1970s.
Finally, this chapter shows the active role of business groups in the
decentralization movement in Japan. Top political leaders preferred to appoint
business leaders in the top executive or chairman positions of consultative
committees to relieve the resistance from bureaucratic organizations and pursue
decentralization reform. In addition, concerns from business associations about
decentralization became both support for the promotion of decentralization reform
and pressure for delayed implementation. In contrast, despite the appointment of a
small number of businessmen in reform committees or consultative organizations in
Korea, their concern or interests in decentralization were very limited. Big
businesses (chaebol), which benefited from their status and location in a highly-
centralized Seoul metropolitan, preferred to stay in the central region closer to the
central government.
117

It must be noted that discourse on decentralization reform in the 1990s-
2000s was discussed and carried out within the broader framework of national
competitiveness. As discussed in this and the previous chapters, the main objective
of current the decentralization effort is to achieve strong and efficient government to
effectively respond to a globalizing economy. Although pork-barrel politics
persisted in the negotiations for the transfer of authorities and functions and fiscal

117
Hyoung-ki Kim (2002). “How to Resolve Decentralization?” (Tae-gu Ilbo, January 1
st
, 2002).
231
resources, those calculations fell under a much broader discursive framework.
This framework was based on the creation of a more competitive nation, and framed
by ‘public sentiments’ and the influence of ‘decentralists.’

232
CHAPTER 6
CONCLUSION:
DECENTRALIZATION, STATE RESTRUCTURING, AND IDEAS

The principal theme of this dissertation has been its insistence that we must
consider the flow of internationally adopted ideas within the broader context of
domestic and global political-economic arrangements if we are to understand why
nations pursue certain types of decentralization policies, and why those policies
change. Conventional explanations of the causes for the variation in decentralization
across countries mainly focus on modernization factors, electoral politics, or other
institutional elements, yet those accounts are not sufficient. My ideational approach
is designed to extend an approach to the analysis of politics that stresses the way in
which ideas structure central-local relations, and the direction of regional policy. It
has also important implications for conventional political analysis by showing how
ideas frame political discourses, and how they can restrict or foster the politics of
interests among political actors.
In the past decade, it has become common to refer to local autonomy or
local democracy as a zero-sum relationship between central and local governments.
That is to say, some might argue that the practice of local democracy and local
power become stronger as the power of central governments, which exercised strong
control over local governments during the industrialization era, gradually or rapidly
declined. Implied in most of these discussions of local democratization is a story of
local government rising and central government pulling back. It is difficult to deny
that to some extent central governments are losing their superior status to localities,
and that the wave of local democracy has become popular across countries. In Japan
and Korea, indeed, since the postwar period and during democratization, local
233
governments gained unprecedented autonomous authority, and were influenced by
local society over governance issues directly related to daily life. However, often
missing from these accounts of the rise of local governments is the complex nature
of central-local relations and the domestic-global context in shaping the evolution of
the intergovernmental relationship. Despite the relatively rapid growth of local
governments and social forces from below, Japanese and Korean central
governments did not lose their strength in their relationship with local governments,
and central bureaucrats and sectoral politicians prevailed. In addition, the process of
decentralization was dominated by central actors instead of local actors. Therefore,
this dissertation set out to answer the question of why central bureaucrats and
politicians, who have been considered to pose the most serious obstacles to the
success of decentralization reforms in past decades, decided to reform central-local
relations.
With the cases of Japan and Korea, the ideational framework suggests that
sets of structural variables will be important for the course of a nation’s
decentralization by creating momentum for the diffusion of the idea of
decentralization: a) the structural position of the country within the global economy,
effect of economic crisis, and effect of a domestic political realignment, b) the
emergence of reformist top political leaders and their practice of leadership, c)
placement of decentralists in government organizations, and d) networks between
the central and local political system. Variations of these structural variables might
cause difficulties of comparison, yet the cases of Japan and Korea suggest that a few
variables could capture the full range of factors affecting the differences in their
policies, while the underlining structural arrangements are similar. To conclude this
study, this chapter will summarize the basic themes and issues that have emerged in
234
the chapters and relate them to the empirical findings while paying special attention
to the role of ideas.

Two Level of Explanation: How International Ideas and the Domestic Political
Economic Context Interact

Despite the statutes of postwar constitutions in Japan and Korea, the
development of central-local relations were suspended or delayed. To transform this
central government supremacy, several reform programs were enacted and
implemented throughout the postwar period, yet central governments in both
countries commanded and controlled local governments by using various tools. For
example, the existence of agency-delegated-functions (ADFs) in Japan, in spite of
positive assessments of them, restricted autonomous decision-making and policy
implementation of local governments by allowing central ministries’ direct
commands and directives. Several important functions such as local policing,
education, urban planning and so forth that were indispensable for autonomous local
governance were controlled by the rules of central government until recently. Even
central ministries could enforce local governments to carry out some compulsory
affairs or cuts in local government arbitrarily. In addition to the interference of
making local government organizations (hitchikisei) and the delayed functional
transfer, the relatively lower level of local fiscal autonomy put limitations on the
capacity of local governments to implement locally-friendly projects and manage
local finance flexibly. Since the establishment of the postwar Constitution of 1946,
the Japanese government attempted to remove these obstacles to achieving more
genuine local autonomy through the activities of several reform councils such as
235
Rincho and the Provisional Council for the Promotion of Administrative Reform.
However, except for a few successful cases of privatization, there were little changes
to the central-local relationship. In Korea, the constitutional guarantee on the legal
status of local governments was far earlier than other newly independent countries
from the colonial period, yet the practice of local democracy was suspended or
sacrificed in the name of rapid industrialization, modernization, insufficient finance,
or national security. In doing so, local governance was totally under the control of
authoritarian regimes up until the late 1980s. Although the power of local
governments has rapidly increased since the enactment of direct local elections in
1991 and 1995, there have been a lot of central regulations and restrictions for local
governments to carry out autonomous decision-making. Only a limited number of
central affairs have been transferred, and the further delegation of functions has been
delayed. Authorities on local public safety (police) and education policy are still
vested in the central government, and central government operates numerous local
branch offices of ministries whose functions are redundant with local government
divisions. Above all things, despite the steady increase of resources, the local
financial situation remained vulnerable throughout the postwar period. Local
revenue has been heavily dependent upon central grants-in-aid and allocation taxes.
Most depictions of the failure of the past decentralization reforms in the
political science literature emphasized aspects of pork-barrel politics or bureaucratic
resistance to attempts to transform the intergovernmental relationship in both
countries. Indeed, finance-related or construction-related central ministries have
sabotaged in the current decentralization reform effort, and some sectoral politicians
did not support or were indifferent to reform. True as such accounts may be, what
they do not explore are the factors that resulted in the series of decentralization
236
reforms, such as the Omnibus Law for Decentralization (1999) and the Trinity
Reform Package (2003) in Japan, and the Special Law for Decentralization
Promotion (2003) in Korea, which aimed to achieve a much more advanced level of
local democracy by abolishing central controls and regulations.
Unlike most accounts of pork-barrel politics regarding decentralization
reform or modernization theory, this study focused on the role of ideas, the global
and domestic structural condition, and the interactions among political actors in
shaping a new intergovernmental relationship through decentralization reforms in
Japan and Korea. My core argument is that the decentralization idea, which was
defined as a shared value and perspective of neo-liberal reform in this thesis, pushed
various political actors at the central and local governments to rethink their relative
positions under a rapidly changing global economy and domestic political
realignment. That is to say, struggles among domestic political actors calculating the
costs and benefits of the status quo under the situation of international economic
pressure, domestic regional disparity, political distrust, and political realignment
resulted in a system that would maintain the existing central political power as well
as accommodate the growing concerns of local society. In doing so, this neo-liberal
idea framed the political discourse in a way that put decentralization on the
government’s reform agenda, and challenged the sectoral politics and political
gridlock in both countries. From a comparative perspective, in Japan, where the neo-
liberal idea was deeply rooted in the discursive background of the current
decentralization reform, there was an increase in local democracy, in spite of several
limitations. In Korea, the effort to decentralize and create more local democracy was
less successful because the dissemination of the idea through organizational and
institutional mechanisms was weaker. As a result, under these similar political-
237
economic backgrounds, the diffusion mechanism for the idea of decentralization was
intertwined with domestic political struggles in Japan and Korea, and resulted in
different patterns of reforms for local democracy. The following section summarizes
the core components of my ideational framework in explaining decentralization in
Japan and Korea.
Domestic and Global Context and the Role of Idea:
Globalization and the decentralization of authority within a nation state are
one of the most popular trends in the contemporary world and in the field of
comparative politics. In particular, the economic slump and foreign exchange crisis
that Japan and Korea experienced since the 1980s and 1990s transformed the image
of the effective, strong, and centralized power of states during the period of
industrialization to one of a more volatile, non-responsive, and inefficient
governance system in the age of globalization. The pressure for economic openness
from international society provides momentum for the promotion of decentralization
reform in both countries in two ways. First, from a somewhat materialistic
perspective, the globalizing economy raised questions about the effectiveness of
centralized power, which had been a successful strategy for growth during the
period of industrialization. Second, in an ideological sense, the flow of neo-
liberalism as an internationally adopted reform ideology gave incentives to top
policymakers and reformists in both countries to pursue decentralization.
Under the context of economic liberalization, which resulted in the
weakening of the domestic market, an increase in the competition among companies,
and the growth of multi-national corporations, policy makers experienced a
substantial reduction in the number of policy tools available to them in governing
the economy. For example, Japan experienced a massive loss in the value of assets,
238
a division between the more internationally competitive and non-competitive sectors,
and the overloading of financial institutions under the pressure of international
markets. In Korea, the drastic fall of foreign reserves in late 1997 caused a foreign
exchange crisis that imposed the substantial restructuring of the centralized
governance system. This economic slump stemming from a globalizing economy
provided the momentum for two countries to launch various economic liberalization
programs, whether the programs were compulsory or not, and empowered reformist
politicians such as Morihiro Hosokawa and Dae-jung Kim to purse state
restructuring programs.

Second, from an ideological perspective, as Simmons, Dobbin and Garrett
(2006) argue, policies and political changes are heavily influenced by external actors
such as international organizations, other governments, or communities of experts.
Under the pressure and great uncertainty arising from a globalizing economy, neo-
liberalism is very attractive for top policy makers because it embraces new reform
agendas and issues. The neo-liberal idea, which came from the pressures exerted by
other governments like the United States (Japan) or international organizations such
as the International Monetary Fund (Korea), framed the discursive background of
political struggles so that political stakeholders had to pursue their interests at least
within the boundary of decentralization reform as a neo-liberal paradigm. In
addition, as western democracies had adopted Keynesianism to overcome economic
recession, decentralization itself became an alternative program for policymakers.
Finally, as scholars such as Frank Dobbin, Peter Katzenstein, and John Campbell
argue, public opinion, values, or broadly shared norms among the general public
influenced the policy options available to decision makers. In Japan and Korea,
239
public sentiment and attention to decentralization reform and distrust in central
government were important to mobilizing support for decentralization movements.
In sum, the wide diffusion of this neoliberal idea throughout the country is
critical for explaining how decentralization reform suddenly emerged in Japan and
Korea; two countries with long traditions of strong central government control. Top
Japanese and Korean leaders, who had suffered from political corruption scandals,
rapid political realignment, regional disparity problems, and declining national
competitiveness, declared their current economic slumps as ‘crises,’ and the old
model of the East Asian economic miracle fell under great uncertainty. Therefore,
they recognized and justified the need for a new approach or strategy to overcome
the crisis. As one of possible reform proposal, decentralization was an attractive
strategy for resolving the regional disparity problem and the inefficiencies of the
central government resulting from over-centralization. As a result, the great
uncertainty of the globalizing economy motivated top reformist leaders to put
decentralization on the national agenda. However, the link between neo-liberal ideas
and decentralization was further complicated by existing political institutions,
stakeholders, and the political process. To understand the complex dynamics of
institutional change, Chapter Four and Five of this study called attention to the
political process of current decentralization reform in Japan and Korea.
Political Leadership:
As Campbell (2004) mentioned, top political leaders – i.e., the prime
minister in Japan and the president in Korea – were the most important actors to
affect the decision making process by embracing neoliberal programs and
incorporating them into the governmental policymaking process. Above all, when
the bills for decentralization reform faced strong resistance from sectoral politicians
240
and bureaucrats in central ministries, top political leaders in both countries mediated
the conflicts between reformists and them. In Japan, under the unstable eight party
coalition governments, Prime Minister Morihiro Hosokawa, proposed several
neoliberal and political reform programs such as decentralization, deregulation, and
electoral reform. Based on his personal experience in local governments and reform
councils, he wanted to resolve so called ‘Japanese problems by launching neoliberal
reform programs and placing decentralists in key positions. Then, Prime Minister
Tomiichi Murayama, who was supported by the local government workers union
(Jichir ō) became dedicated to the promotion of decentralization by establishing his
spearhead institution, the Committee for the Promotion of Decentralization in 1995.
In Korea, the incumbent President Moo-hyun Roh, based on his personal experience
and policy staff recommendations, became committed to resolving the regional
disparity problem and supported decentralization. Since the Presidential Transition
Committee (2002-2003), he recruited several scholars from universities who were
trained in the field of public administration and public policy and favored neo-
liberal ideas. President Roh established several reform committees such as the
Presidential Committee on Government Innovation and Decentralization in 2003,
and promoted his reformist staff to responsible posts to pursue decentralization and
de-concentration as well as other administrative reform programs. As a result,
President Roh, by being directly or indirectly involved in the process of
decentralization reform, provided the direction for state restructuring through the
transformation of central-local reform. Therefore, as seen in the case of Japan and
Korea, the will of top political leaders was critical to the success of decentralization,
and contributed to the mediation of conflicting stakeholders over the issue of
decentralization within the broad paradigm of neoliberal reform.
241
Decentralists in Governmental Organizations:
The existence of idea-bearers in government organizations helped to put
forth the decentralization reform by providing themes or deriving specific reform
programs to the decision makers. These reformers were often hired from intellectual
groups, scholarly groups (university professors), campaign managers (political
assistants), or business consultants (economists). The foregoing discussion of
decentralization that affected the policymaking and institutional change in central-
local relations was heavily dependent upon actors who were strategically positioned
within the government’s apparatus in ways that put them directly under top policy
makers. In particular, political appointees in advisory reform councils were usually
placed under the office of top political leaders, and transmitted the idea of reform to
political leaders. For example, in Japan, with the passage of the Decentralization
Promotion Law (DPL, 1995) Prime Minister Murayama established the Committee
for the Promotion of Decentralization and recruited several reformists from business
(e.g., the chairman Ken Moroi) and universities (e.g., Masaru Nishio) who were the
brokers of decentralization reform. While they provided advice, ideas, and new
strategies to the Prime Minister, they also repeated negotiations and persuaded
sectoral politicians and bureaucrats in central ministries. In Korea, President Roh
appointed decentralists who were ideologically connected to him as leaders of
decentralization reform. As the Presidential Committee on Government Innovation
and Decentralization was established in 2004, President Roh recruited Byoung-joon
Kim and Sung-sig Yoon; both worked for the Presidential Transition Committee and
presented their ideas on decentralization reform through several scholarly articles
and books. The committee members developed a detailed list of tasks to be
transferred or reorganized, and gave advice to public organizations and ministries.
242
As a matter of fact, those reform committees in Japan and Korea were only
consultative committees which did not have substantive decisional authority, yet the
connection with the top political leaders strengthened the status of the committees in
the pursuit of decentralization reform. In addition to these specialized committees,
some bureaucrats in central ministries which were in charge with decentralization-
related affairs – i.e., Ministry of Internal Affairs and Communications in Japan and
Ministry of Government and Home Affairs – were motivated by the idea of
decentralization, and contributed to the promotion of decentralization. From a
comparative perspective, ideologically motivated politicians and bureaucrats in
Japan’s central government, who were influenced by neo-liberalism, were critical to
overcoming resistance from central ministries. In Korea, the limited diffusion of the
neo-liberal idea throughout the government organization resulted in a less developed
central-local relationship.
The Rise of Local Governments, Civil Society and Business:
Shared perspectives, values, norms and identity can constrain available
options to policy makers. These collective identities are in general held by the larger
population and are perceived by policy makers through various types of feedback,
such as opinion polls, lobbying, or through direct involvement in politics. These
shared values are often in the background of on-going policy debates, and constrain
the range of solutions that policy makers view as acceptable. Although the political
process of decentralization was mainly initiated and dominated by central political
actors, the perspective and value behind the public sentiments played an important
role in the politics of decentralization. In the case of Japan and Korea, ideologically
motivated civic activists, businesses, and local governments were mobilized to
influence the substance of decentralization reform in order to achieve local
243
democracy as well as to raise the efficiency of governments. Public sentiments
toward inefficient, incompetent, and unresponsive central government justified
reformists’ actions to transform the central-local relationship.
Compared to the decentralization politics in the past administrations in two
countries, empowered local governments and civic organizations provided activities
and discourses and contributed to the decentralization policies by suggesting reform
ideas and experiences to policy makers in the core reform agencies. Local
governments in both countries used collective entities, local government
associations, developed reform ideas and programs, and negotiated with central
governments in the process of decentralization. However, the lack of consistent and
diverse communication channels to decision makers restricted their power over
decentralization policies, though their inputs were still important ideological
influences for decentralist politicians. Many engaged in civic activities, armed with
the decentralization idea mobilized civil society for the decentralization movement
in both countries. Nevertheless, while civic organizations in Korea, which were
dedicated to decentralization reform in the 1990-2000s were not successful in
representing their concerns during the decentralization process, Japanese civic
movements had more consolidated and stable networks from the grass-roots level.
Finally, in Japan, the business world actively presented their opinions about
decentralization and other regulatory reforms through their associational activities,
presentations, research activities, and direct involvement in public organizations.
Korean business groups’ participation, however, was just a formality. Top Japanese
political leaders preferred to recruit business leaders as core members of
administrative reform committees to combat resistance from central bureaucrats, and
they were somewhat successful. Yet, Korean big business conglomerates, which
244
benefited from the highly centralized political-economic system in Seoul preferred
to keep the centralized decision-making system.

Table 6.1: Summary of Decentralization Politics
Sources of Decentralization Japan Korea
Global Factors
(Global Economy and Idea)
• Economic recession, national banking system crisis, economic
policy failure, and international pressure to open the domestic
market (Japan)
• Foreign exchange crisis (1997), IMF bailout system, decreasing
national competitiveness (Korea)
• Sources of Idea: Neoliberalism (from other countries’ experience,
coercive condition for financial aid (IMF, Korea)
Domestic Factors • Failure of economic policy failure: increasing the rate of distrust in
government.
• Series of corruption scandals and governmental mishaps
• Political realignment (electoral reform (Japan), democratization
(Korea))
Political Leadership • Emergence of reformist top political leaders (neoliberal ideology):
Morihiro Hosokawa, Tomiichi Murayama (Japan), Dae-jung Kim,
Roh Moo-hyun (Korea)
• Strong support for decentralization as well as other state
restructuring policies
Reformists in Government The members of the Committee for the
Promotion of Decentralization
Appointed Cabinet members in Central
Ministries (decentralists): Former
opposition party leaders, businessmen
The members of the Presidential
Committee of Government
Innovation and Decentralization:
former professors at universities
Mobilization from Below Limited but empowered mobilization
Consolidated networks at grass-root
Local government associations
Civic organizations
Business associations
Empowered but quite limited
Influence in the initial stage
Local government associations
Civic organizations
No business
Sectoral Interests Zoku politics persists
Some politicians were supportive
Central bureaucrats in powerful
ministries resist
Sectoral interests
Central bureaucrats resist
(organized resistance)
Few politicians were supportive
Policy Outcome Successful but follow-up reform is
necessary
Substantive follow-up reform
efforts are required

By examining the case of Japan and Korea from a comparative perspective,
this dissertation showed how the decentralization idea was adopted under the rapidly
changing domestic and global context. As Table 6.1 summarizes, without global
245
economic pressure and a series of domestic political events and scandals, the
decentralization reform would have followed the same fate as previous reform
efforts. The contextual factors provided momentum for the promotion of
decentralization. This dissertation shows that globalization factors in the
materialistic (economy) and ideological form shape the overall and specific
discursive background of decentralization reform, and are not just nuanced one as
some scholars have argued. In addition, I argue that the placement of idea-bearers
(decentralists) in critical government positions who are directly linked to a reformist
executive results in the diffusion of decentralization reform across a nation, even
when the organizational characteristics of the positions are only advisory or
consultative in nature. In doing so, the activities of local governments, civic
organizations, and businesses buttress the overall process of decentralization reform
within the boundary of a neo-liberal ideology. Within this ideological range and
organizational positions, traditional stakeholders in Japanese and Korean politics –
i.e., central bureaucrats and sectoral politicians – have limited options to choose, and
thus they show compliance as a matter of unpleasant necessity, or attempt to
negotiate with reformists on and behind the scenes.
In conclusion, although the politics of decentralization emerged under
similar contexts of global economic change and domestic institutional
rearrangements in both countries, the different combination of the diffusion of the
idea and the nature of the institutional arrangement constrained the full-range of
possible changes to central-local relations. Japan had a wider range with its idea-
diffusion-mechanism, so it was much easier to persuade opponents to reform than in
Korea. There are many pathways to local democracy, the widespread diffusion of
ideas throughout society mobilized support for decentralization reform, and played a
246

crucial role in developing specific strategies for negotiating with opponents of
reform.

Ideas, Interest, and Institutions: Implications for Further Research
Since the 1980s, discussions of the role of ideas became popular among
political economists in explaining the difference in outcomes from the adoption of
similar economic policies. Recently, the diffusion of the ideational approach has
gained acceptance among political scientists, sociologists, and economists who are
interested in the worldwide diffusion of economic liberalization and democratization
ideas around world.
1
Some scholars are interested in the role of ideas in creating
institutional change
2
, and others focus on the casual mechanism that explains a
nation’s choice of specific policies.
3
The core of these arguments is that
globalization and domestic policy choices are interdependent. A purely domestic
political model or one based only on international politics are limited for explaining
the current wave of political and economic liberalization around the world. An
ideational approach focuses on the causal mechanism of how a prevailing idea
influences the set of domestic policy choices. Simmons et al. (2006) suggest the
concept of ‘altered material payoffs’ and ‘altered reputational payoffs,’ which mean
the interdependent influence of a nation’s economic choice on other counties’
economy, and the pressure of global ideas and practices on domestic governments.
That is to say, incentives and motivations for political-economic liberalization
across countries are mainly based on the other countries’ policy choices, coercive

1
Simmons, Dobbin, and Garrett (2006).
2
For example, Hall (1986) and Campbell (2004).
3
Simmons, Dobbin, and Garrett, ibid; Yee (1996).
247

reform packages attached to loans by international organizations like IMF, or
voluntary learning process.
This dissertation attempts to test these hypotheses by applying the
framework to the case of decentralization reform in Japan and Korea. The ideational
approach has mainly been applied to economic policies, yet there are few studies
with of the diffusion of ideas on other policies areas around the world.
Decentralization is a good example in that most advanced and developing countries
completed or are carrying out such reforms (with occasional exceptions). Therefore,
dissertation tries to expand the area of research based on ideational frameworks.
This is important because the practice of many policies such as government
downsizing,
4
regulatory reform,
5
information disclosure, and so forth are subject to
the decisions of other countries and the wave of globalization.
Second, as Campbell (2004) pointed out in his conclusion chapter,
researches based on an ideational approach pays attention to the exogenous and
endogenous sources of institutional change, yet to understand the causal mechanism
through the endogenous process is far from adequate. He argues that it is necessary
to carefully investigate the ideological background of decision makers or actors who
are responsible for the institutional change. In this research, I paid attention to the
ideational origin of decentralists such as the reformist prime ministers and president,
decentralists in the committees for the decentralization, and civic activists who
played a crucial role in launching decentralization programs in both countries. In
doing so, I shed light on domestic factors, such as political leadership and the

4
See the most recent article about the diffusion of global ideas in public-sector downsizing by Lee
and Strang (2006), p.883-909.
5
For example, Vogel (2005).
248
appointment of decentralists in government organizations, which were one of the
most important mechanisms for the diffusion of this idea.
Finally, Simmons et al. (2006) emphasize the flow of ideas from the global
arena in various modes and ways: coercive flow from powerful countries or
international organizations, competition with other countries, as a learning process,
and as an emulation process. These modes for the flow of ideas were true in the
cases of Japanese and Korean decentralization. However, more work needs to be
done to understand the mechanisms through which changes in domestic political
structures isomorphism occur in limiting the degree of idea diffusion. By examining
the domestic political context for decentralization and by tracing the process of idea
adoption to policy changes in specific domestic institutions including local and civil
society, this study provides insights into these issues.
249
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Abstract (if available)

Abstract The objective of this dissertation is to provide a holistic explanation for recent response to globalizing economy through decentralization in Japan and Korea. The research question suggested in this dissertation is why Japan and Korea suddenly passed the decentralization laws that contain massive migration of central authorities and fiscal resources to subnational governments in the late 1990s and the early 2000s. What caused various modes and degrees of decentralization, despite similar backgrounds of two countries?

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Asset Metadata

Creator Bae, Yooil (author)

Core Title State restructuring and pathways to local democracy: idea and politics of decentralization in Japan and Korea

School College of Letters, Arts and Sciences

Degree Doctor of Philosophy

Degree Program Political Science

Publication Date 10/11/2007

Defense Date 08/24/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag decentralization,east Asian government,idea,intergovernmental relations,Japan,Korea,neoliberal reform,Northeast Asia,OAI-PMH Harvest

Place Name Asia (continents), Japan (countries), Korea (countries)

Language English

Advisor Sellers, Jefferey M. (committee chair), Shipper, Apichai W. (committee member), Tang, Shui Yan (committee member)

Creator Email ybae@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m853

Unique identifier UC1126619

Identifier etd-Bae-20071011 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-586672 (legacy record id),usctheses-m853 (legacy record id)

Legacy Identifier etd-Bae-20071011.pdf

Dmrecord 586672

Document Type Dissertation

Rights Bae, Yooil

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu