The exodus of Korea’s population from the countryside to the capital Seoul and its suburbs, known in Korea as the sudokwon and referred to in this paper as the Seoul Capital Area (SCA), continues unabated to this day, particularly among the youth. The resulting increase in the population density in the SCA threatens to undermine the region’s competitiveness, while other regions are left to struggle with a supply-demand mismatch in the job market and stagnating economic growth, all of which accelerate local extinction. Local extinction has also begun to spill out of rural communities over into the suburban and exurban areas outside the SCA, exacerbating the spatial Matthew effect of sorts between the populous SCA and the rest of the country.

Hiroya Masuda’s regional extinction theory is built around the ratio of women aged 20 to 39 to seniors of both genders aged 65 or older in any given community, and emerges naturally from natural human reproduction rates. In South Korea’s case, however, local extinction is more a result of social factors involving population movements out of provincial areas rather than dwindling fertility. And so Masuda’s theory is not directly applicable in Korea’s case without some modification. Migration between regions closely reflects the presence and absence of mechanisms sustaining a virtuous economic cycle, such as income and jobs. And so the composition of any given community’s population is generally a result of whether or not such mechanisms are present.

In this report, we define the virtuous cycle mechanism of local (real) economies that attract population growth as one of innovation, advanced industrialization, the clustering of high-value-added businesses, and local economic growth. And using this definition, we introduce the Korean Local Extinction Index (K-LEI), which is designed to capture the reality facing local economies in South Korea. We first verify the validity of indicators comprising the index, and compare it to Masuda’s local extinction index and the Depopulation Index published by the Korean Ministry of Public Administration and Safety (MOPAS). Finally, we propose a series of policy measures aimed at halting and reversing local extinction. These measures include the following: Incentives for businesses at different stages of local extinction, support for high-value-added industries to help strengthen industrial diversity based on existing (traditional) industrial infrastructure, and support for strengthening local colleges and universities and their functions in slowing local extinction.1)