KDI - Korea Development Institute - RESEARCH - Research Areas

Summary

Research Monograph KOR Reforms in Primary and Secondary School Administration and Finance Suitable for a Population-Declining Society

Korea faces inevitable policy shifts due to prolonged demographic declines, affecting not just the primary and secondary school age populations but the overall population as well. This report tackles these shifts by exploring issues to formulate more effective and efficient reform strategies for the administration and finance of education in a shrinking society. It emphasizes the importance of strategically allocating the national budget across various sectors to optimally use limited resources. This requires a national interest perspective, moving beyond sector-specific stakeholders’ gains and losses, and seeking alternatives. The report argues for the necessity of system and policy reform, acknowledging the challenge it poses to entrenched interests but highlighting its importance in addressing our country's challenges through flexible budgeting and efficient execution.

We critique the current method of the total budget calculation for primary and secondary education, which is too rigidly tied to tax revenues, and call for significant reforms in funding allocation to schools. They propose a new method that boosts school autonomy and accountability, allowing educational outcomes to play a role in budget decisions. Moreover, they suggest that operational and project funding managed by provincial education offices should be clearly separated from direct school funding, advocating for rigorous performance evaluations to enhance fiscal efficiency in education. The report offers various recommendations for reforming education finance, aiming to improve both the quality of education and the efficiency of its financing, hoping these policy suggestions will be actively considered.

Chapter 2 evaluates the appropriateness of giving precedence to the primary and secondary education budget over other sectors is evaluated, particularly as public spending on education begins to exceed the OECD average. Through international comparisons and empirical analysis of various factors like the school-age population, GDP per capita, and data from the Programme for International Student Assessment (PISA), it investigates these elements' impact on educational budgeting, priorities, and student outcomes, offering policy recommendations for more effective and efficient resource use.

Chapter 3 consists of three parts. First, we analyze the impacts of changing the method of electing the superintendent of education from election by the school management committee to direct election by residents, focusing on students' educational achievement and health using a difference-in-differences method. Second, we examine the impact of per-pupil public education expenditure on academic achievement in South Korea, employing the method of instrumental variables. Third, we assess the impact of per-pupil public education expenditure on academic achievement in the United States using a state-fixed effects model.

The estimation results indicate that in regions where the direct election of superintendents was first implemented, there was a decrease in the proportion of students scoring in the top tier of the College Scholastic Ability Test, and an increase in the proportion of students in the middle and lower tiers, compared to regions where the direct election had not yet been implemented. No significant changes are observed in students’ health. In South Korea, an increase in per-student expenditure positively affects the academic achievement of elementary school students, although the magnitude of this effect is not substantial. No significant, positive effects are found for middle and high school students. In the United States, there is no significant relationship between per-student educational expenditure by state and the academic achievement of students in 4th, 8th, and 12th grades.

The results suggest a need to strengthen accountability for a range of student outcomes among superintendents of education. They also imply a necessity to adjust how education budgets are allocated in response to the declining school-age population and to enhance the allocative efficiency of these budgets.

In Chapter 4, we study the effect of the current institutional features of the education administration and finance system on the structure of local education finance. Specifically, we focus on changes in school budgets when the overall volume of educational finance increases beyond expectations. For recent years, the local education grant has increased unexpectedly, as the national tax revenue increased and large volumes of supplementary budgets were added due to Covid-19. We analyze how this unexpectedly large surplus of educational funding was distributed and executed. In addition, we investigate how the provincial superintendents, elected at the local election, distributed targeted funding to schools.

Our analysis of the budget and balance data of the school and provincial education offices reveals a behavioral response of the education offices to the current institutional characteristics of educational administration and finance. As the total volume of education funding is uncertain at the beginning of the financial year, they first underestimate the total revenue and expend additional revenue through the supplementary budget. A targeted funding, which the superintendent distributes to the schools autonomously, is a good way to expend such extra revenue. Regression analysis using targeted funding distribution data and local election data shows that superintendents distributed a higher amount of funding per school population to schools in a district where the percentage of votes for the superintendent in the last local election was relatively higher. This implies that the distribution of targeted funding is affected by the political interests faced by the superintendent under the current system of the educational administration and finance system.

Chapter 5 discusses how the main issue with the current funding system for education stems from the provincial education offices' lack of incentive to improve financial efficiency, rooted in a system overly reliant on national and local tax revenues without accountability for fund raising. It suggests the need to revise the budget calculation method due to the projected overabundance of funds, following an analysis that shows maintaining 2022 levels of educational infrastructure could lead to increased expenditure per student but not significantly higher total costs. In addition, it is proposed that a hypothetical criteria for integrating schools to enhance financial efficiency. Lastly, it advocates for abolishing the tax revenue-linked budgeting method and introducing a new support system with ten structural elements aimed at improving educational outcomes and addressing regional decline. The report calls for a unified governance structure for education and further research on the necessity of the elected provincial superintendent system.

Summary

KDI Policy Forum Can Artificial Intelligence Improve the Effectiveness of Government Support Policies?

■ Despite high hopes for artificial intelligence (AI) to generate powerful innovations across the public sphere backed by its strong prediction skills, Korea has not fully brought the technologies into the public sector in tasks like identifying policy target groups and managing follow-up tasks in line with its policy objectives.

- Recent cases of AI-applied public services in Korea show limited usage, mainly replacing simple repetitive tasks.

- Few leading countries are trying to apply AI-based analysis to select promising policy target groups to effectively achieve policy goals and follow up on the performance of public projects.

- While the existing management system for policy performance is mostly about ex-post assessment of project outcomes, the application of AI technologies signifies a shift to data-driven decision-making that uses ex-ante forecasts of policy effects.

■ An analysis of AI-applied recipient selection of small and medium enterprise (SME) policy support programs demonstrated the efficiency of AI in predicting the performance of beneficiary firms after the program and AI's potential to significantly improve the effectiveness of public support by providing helpful information in screening out unfit SMEs.

- Using firm-level data, this study applies machine learning to various public financing programs (subsidies or loans for SMEs) funded by the Ministry of SMEs and Startups and finds that AI helps predict the growth of recipient firms in the years following policy support.

- The application of AI in identifying fitting recipients likely to achieve intended objectives may increase project effectiveness.

■ In a KDI survey in 2020, respondents pointed out that what hinders transitioning into a system of AI-applied, data-driven policymaking in the public sector are: 1) incomplete standardization and linkage of policy information between governmental ministries and 2) lack of expertise in technology utilization in the public sector.

■ By developing a strategy to propel a transition into data-driven policymaking in the public sector, coordinated national-level efforts must be made to heighten policy effectiveness across different public fields, including education, health care, public safety, national defense, and business support.

- One way to adopt AI technologies in the public sector is by designing a policy to support technology adoption for competent public institutions. Support measures may cover system, data platform, security, organizational consulting, training, etc.

- Detailed strategies are: 1) unifying existing data management systems into one single platform, 2) reorganizing the way government work gets done to enable efficient exchange of policy information, and 3) building a trust-based public-private partnership.

- By examining the policy cycle from planning and implementation to evaluation, it is important to clarify areas for AI to contribute to policy decision-making. Also, the government needs step-by-step strategies toward data-driven policymaking, such as setting clear project objectives, selecting and sharing data, establishing system and security, and promoting operational transparency.

Summary

KDI FOCUS Public Deliberation in Korean Society: Where It Stands and Should Head toward

□ Public deliberation has demonstrated its potential as a conflict resolution mechanism through deliberative discourses on Shin-Kori nuclear power plant units 5 and 6 and the college admissions reform. However, these deliberative processes revealed some flaws in representativeness, inclusiveness, and the derivation of social consensus building through deliberation. In light of growing efforts to incorporate it into public decision-making, there is also an increasing need for proficiencies in systematic planning, support, and oversight.

- Public deliberation on Shin-Kori NPP (units 5 and 6) in 2017 showed its potential as a new mechanism for conflict resolution.

- In a public survey on the wide use of public deliberation, 75.9% are satisfied while a mere 4.7% remain worried, but still, there are both expectations and concerns.

- Discussions on the pros and cons of public deliberation need to be based on objective evaluations of respective cases.

- Deliberative democracy is a complementary system to representative democracy, and unlike participatory democracy, it undertakes a debate process to check on public opinions and attempts to make decisions based on the confirmed opinion.

- Deliberative democracy gives legitimacy to the decision made by ordinary citizens and their representatives through participation and deliberation.

- Public deliberation can be assessed and evaluated under three frameworks of planning, participation, and deliberation.

- Citizen participants must be able to fully represent and include the general public who will be affected by their collective decisions and policies.

- A proportional extraction of population is not enough to fully ensure the representativeness of deliberative discourses (principle of inclusiveness).

- Preliminary public surveys and deliberation groups showed a statistically meaningful difference regarding conflicting policy issues.

- In terms of the composition of citizen participants, supporters of nuclear phaseout in the Shin-Kori case and those prioritizing school records in the college admissions case were overrepresented.

- Among preliminary survey respondents who had expressed their willingness to participate in public deliberation, citizen participation groups were selected using the stratified extraction method.

- Politically apathetic or conservative citizens tend to be systematically less willing to participate in public deliberation.

- By the criteria of inclusiveness, the final sampling of participants was biased towards amplifying the shortcomings of representativeness.

- The deliberation group for Shin-Kori NPP Units 5 and 6 got more and more right answers in knowledge quizzes with each survey.

- Valuing safety and the environment tipped the scales toward construction suspension, and stressing economic and industrial aspects tilted it to resumption.

- A shift in preference among debate participants most strongly demonstrates reflective deliberation.

- In the deliberative process, 32.7% formed opinions, 7.0% changed viewpoints, and 58.6% maintained initial positions.

- After public deliberation, the Shin-Kori NPP construction transformed from a contest between 29% for suspension vs. 37% for resumption to a debate between 41% vs. 56%.

- Knowledge gain functioning as the primary driver of preference shifts supports that such changes are more likely when the level of understanding improves.

- In the college admissions reform deliberation, the completion rate of online lectures by debate participants surpassed 97%, and the number of correct answers to knowledge questions gradually increased over time throughout the deliberative process.

- A factor analysis narrowed down eight opinion bases into two perspectives: ① fair opportunities in education and ② efficiency of the education system.

- The tendencies became clear to favor Agenda 1 and 4 as more supportive of fair opportunities in education and Agenda 2 and 3 with a higher value on efficiency and safety of the overall education system

- In the college admissions deliberation, twothirds of participants experienced a shift in preference.

- The college admissions reform case also shows that knowledge gain increased the probability of preference shift.

- The factor analysis extracted a single common factor (metaissue) that runs through four agendas.

- In light of the correlation with each agenda, the meta-issue translates as preferences for CSAT.

- Potential preferences for CSAT tend to be more scattered after the deliberative process.

- The deliberative process might have reinforced the divide among participants rather than closing it, and perhaps agendasetting was not properly designed to capture key agenda issues.

- Regarding participation, the criteria of demographic representation were satisfied, but the discourses were neither representative nor inclusive enough.

- As for deliberation, the analysis confirmed that the better participants understand the debate issue, the more likely they form a reasonable opinion.

- However, public deliberation came short of building a social consensus through its process.

- A deeper analysis is necessary as to what caused the dispersion of viewpoints in the case of college admissions reform.

- The design of the admissions reform debate was unnecessarily complex.

- Without a step closer to public opinion formation, public deliberation is just another form of majority rule with some deliberation process.

- Now is the time to build resources, capacities, and institutional mechanisms for more systematically designed and managed public deliberation.

Summary

Research Monograph KOR The Role and Impact of Public Deliberation in Public Decision-making

From public debates over Shin-Kori Power Plant Units 5 and 6 to open discussions on university admissions reform, public deliberation is emerging as a major option in the public decision-making process for not only the central government but also local governments in their resolution of controversial policy issues. However, while many acknowledge the need for public deliberation and share high expectations, there are also those who believe that it can amplify, rather than abate, conflict, and is sometimes misappropriated by policymakers to shift blame or delay decision-making.

Accordingly, this study is based on the recognition that, in addition to a comprehensive understanding of the purpose and process of public deliberation, a rigorous evaluation of past performances must first be acquired to effectively utilize it as a mechanism for conflict resolution.

Led by a theoretical analysis of the roles public deliberation can play in public decision-making, the achievements and limitations of specific cases (as those above) are reviewed to fully examine the applicability of the public deliberation approach. Furthermore, unlike previous studies that focus on qualitative aspects, this study uses quantitative data to empirically analyze how faithful the public deliberation process has been to the original purpose. These are laid out in the following six chapters.

Chapter 1 presents the reasons why this study is needed while Chapter 2 investigates the various forms of public deliberation, starting with 'deliberative democracy,' the theoretical basis, and introduces major cases at both home and abroad. Chapter 3 tackles the theoretical and practical issues surrounding public deliberation, and details the analysis framework which consists of three evaluation criteria―planning, participation, and deliberation―developed from previous studies. Using microdata on the public deliberations for Shin-Kori Power Plant in 2017 and university admissions reform in 2018, Chapter 4 empirically analyzes these cases based on two of the above criteria; participation and deliberation. Indeed, in terms of ‘participation’, the composition of citizen participation groups is assessed to verify whether the standards for representation and inclusiveness are being met, and for ‘deliberation’, an examination is conducted into whether opinions of civic participants are introspectively formed and changed based on sufficient information. Additionally, the effectiveness and problems of the two cases are evaluated from the perspective of formation and confirmation of public opinion, which are the original purposes of public deliberation. Issues related to the third criteria, ‘planning,' were excluded from the empirical analysis due to difficulties in data quantification, but the subsequent sections will provide an outline while presenting the analysis results.

Finally, recognizing that the rapidly growing demand for public deliberation must be met, and that a more systematic approach is needed in terms of planning and management, the last two chapters explore ways in which the public deliberation process can be institutionalized. To that end, Chapter 5 reviews three overseas cases in which the process was established and stabilized as an official system. Comparing the discrepancies and similarities will help create a reference point that can be of great use when designing Korea’s own public deliberation process. Chapter 6 looks into the experiences at home with regards to the legislation of public deliberation, and analyzes the remaining issues and possibility of institutionalization to present policy implications.

Summary

Research Monograph KOR How to Build a Government System for Data-driven Decision Making

Artificial intelligence (AI) or big data analysis are increasingly applied in very diverse fields such as marketing, healthcare, management, manufacturing, economic policy, not to mention professional sports. As available data explodes and AI technologies advance fast, the combination of these two is already transforming businesses and our lives. The goal is to augment human intelligence to be more accurate in detection, prediction, or decision-making. AI technologies offer new possibilities for policy-making and public administration helping the governments become more data-driven. In this respect, the combination of AI technology and government policy is an inevitable option to greatly increase the efficiency and effectiveness of the public service. At this point, the discussions for the successful introduction of AI technology in the public sector and policy-making are very urgent.

In this study, we explore the possible benefits of AI technology in the public sector by clarifying the connections and distinctions between AI technology and the existing evidence-based policy-making process. Besides, we identify the factors that hinder the introduction of the technology and suggest policy recommendations to overcome the challenges. We intend to provide information on how to build a government system for data-driven decision-making.

Chapter 2 argues that to reap the benefits of AI, it is necessary to change the current policy-making process to be more evidence-based. A fundamental transformation must be accompanied in the government system by reviewing the overall decision-making process including practices in collecting, managing, and sharing data. This chapter studies the development and application of evidence-based policies in Korea and other major countries and discusses the role of AI technology. Chapter 2 also deals with the possibilities and constraints when implementing AI technology in public policies especially in selecting policy targets.

Chapter 3 empirically presents the benefit of using AI technology in business support policy. It presents methods and results of applying machine learning, an AI technology, to the actual Korean government’s business support policies. We discuss important issues in the actual implementation of machine learning in policy targeting. The Korean government is implementing hundreds of business support policies to enhance corporate competitiveness and strengthen the overall competitiveness of the industry. The success of a business support policy can largely depend on the selection of a company that meets the purpose of support. This chapter discusses ways to improve the effectiveness of government support programs by comparing the results of selected targets by machine learning with the actual recipients of the programs.

The biggest advantage of AI technology lies in its infinite scalability. The advantage can take place when policy-makers use relevant data and the results from the analysis to improve the policy. The government holds a vast amount of personal and corporate information through administrative data. When the information is combined with private big data, the advantage becomes even greater. Besides the business support policy, AI technology can significantly increase policy effectiveness when it is applied to education, medical care, policing and defense to name a few. Still, we face the gap between the possibility and reality in the AI application. In Chapter 4, we conducted a survey on the perception and actual status of the introduction of artificial intelligence into the policy-making process with public sector workers related to business support policy and business people who are beneficiaries of the policy. The survey results showed that the respondents were recognizing the positive aspect of the application of AI in terms of enhancing fairness and reliability in selecting the policy targets. We identified technical, institutional, and cultural implementation barriers through the survey and suggested recommendations to overcome the barriers and increase the effectiveness of business support policies. The policy recommendations include a suggestion to form an organization that can oversee data management and artificial intelligence-related tasks scattered across various ministries. The organization is necessary to reinforce the strategic management capacity of information assets at the national level.

In conclusion, chapter 5 suggests that the current Korean national strategy for AI should include a data-driven government strategy across the public sector. The data-driven government strategy should prioritize activities in transforming governments’ decision-making process to be data-driven or evidence-based. The chapter ends with a four-step guide to a data-driven organization.

Summary

Research Monograph KOR Enhancing Public-Private Partnerships for Social Innovation

Defined as a new idea that creates a collaborative structure, social innovation is an integrated process that generates substantial and sustainable social impact through new creative approaches and effectively responds to social demands. Until now, the direction of social innovation in Korea has progressed in the form of limited participation under government control and has been limited to specific fields. In other words, despite Korea’s efforts, the pursuit of social innovation does not seem to be as effective as expected.

Given this background, this study presents effective directions for role sharing between the government and private sector in order to promote social innovation. Part 1 discusses ways to promote public-private cooperation to improve regulatory effectiveness by examining ways to institutionally activate Public-Private Partnerships(PPP). In particular, it focuses on regulatory policy by finding areas for more active public-private cooperation. To that end, measures to enhance PPP were reviewed in terms of ① regulatory policy cycles, ② regulatory governance perspective, ③ regulatory methods that are applicable to individual issues and ④ stakeholder consultation. The section concludes by emphasizing the need for measures to actively consider PPP from the regulatory design stage; strengthen the autonomy of the private sector through regulations on output standards and; revitalize private-public cooperation.

Part 2 introduces the new PPP system, Social Impact Bond (SIB), as a new financial model, in order to promote the efficiency of public services. Although PPP is not a common practice in social welfare in Korea, the section discusses practical alternatives to apply to the social welfare field focusing on the concept, characteristics, operating structure and financing model of SIB. Additionally, it analyzes the determinants of SIB participation through survey results. Finally policy implications are presented, centering on the urgent tasks to invigorate SIB at each implementation stage.

Lastly, part 3 discusses ways to improve the public service of SOC public works projects. For the analysis, investment efficiency is examined in order to improve the publicness according to the benefit principle though which a comparative analysis between the government and private alternatives is conducted. Based on the results, the alternatives for maximizing the effect of PPP projects are suggested.

This study focuses on social innovation through PPP among the various social innovation methods to advance our society. In particular, it concentrates on institutional complementation in terms of regulatory policy, introduction of a new public service delivery system and improvement of public awareness centering on SOC. Ultimately, it provides policy implications that can offer practical assistance to our society.

Summary

Research Monograph KOR A Study on Reforming Public Service System

This study started from a very simple observation that the openness of the organization affects the incentive system of the organization. If the organizational openness is high, employment and promotion can not be guaranteed, and so efforts in the job and human capital accumulation should be exerted otherwise low-performing human resources can only be replaced. Therefore, the open organization's performance is likely to be high.

On the other hand, if the organizational openness is low, the employment is guaranteed and the promotion is guaranteed over the period, so promotion or the increase of wages is not an incentive to work and it is difficult to make employees invest in human capital accumulation. Therefore, the closed organization's performance and efficiency are likely to be low.

If the organization is a public organization, it is particularly problematic that policy decisions are unclear for the survival and protection of the organization, public funds are opaque, and even if there is a supervisory body, corruption is rampant and government expenditure is wasted. For this reason, the closedness of the public service system causes social inefficiency. The relationship between the openness of the public service system, the human capacity of the public servants, and the efficiency of the government in this context is as follows.

The capacity of Korean civil servants is somewhat lower than that of Germany and Japan, but is similar to that of OECD countries, and is higher in all ages and genders than in the domestic private sector. The higher the level of mass formal examination for civil servant recruitment, the higher the level of civil servants' capacity. This implies that if the closedness of government organizations increases, the capacity of public officials will increase.

On the other hand, the higher the job security of public officials, the lower the discretionary decisions of public officials in executing their job. High job security means retirement is guaranteed. In this case, a public official is promoted after a certain period of time, so that promotion or wage increase does not attract incentive to work or accumulate human capital. In such a situation, public officials don’t have need or incentive to create a situation where they should be held accountable. This means that they do not exercise their discretion even if they have discretion in their job.

The increase in the openness of public office in one country is analyzed to be linked to the overall efficiency improvement of the government sector. The efficiency improvement was greater in countries with lower levels of public openness than in countries with higher levels of openness. In order to compare the civil servants of the developed countries with those of the civil servants in Korea, we examined the system of public servants of the Netherlands, New Zealand, Singapore, England, Australia, Japan, Germany and France. We examined the centralization of human resource management, the guarantee of retirement, the existence of mass formal examination, the existence of long-term education and training opportunity, and the existence of a separate civil servant pension.

The main characteristic of the Korean civil service system is that due to retirement security, there are more people than the number of people required for the job. This can be confirmed by the fact that the ratio of education, training, dispatch increases as the rank goes up. In addition, some officials say that they do not want a quick promotion. The reason is that if you are promoted too fast, you have to go to senior civil service and in this case you have to retire sooner than the cohorts. What this means is that promotion is not an incentive to accumulate human capital or work hard, and second, it is more advantageous for public officials to fill retirement years than promotion. In such a situation, it will be difficult to expect the public officials to perform their duties properly.

The most important determinants of openness of public office are retirement guarantee and existence of separate civil servant pension, and the former is more critical. This is because through competition in securing human resources with the private sector, promotion in the public sector actually provides incentives to accumulate human capital or to work on the job. It is also possible to expand the openness of public service and improve government performance and public service integrity by introducing a position classification system that allows the introduction of performance-based payments, the dismissal of low-performing workers, effectively abolishing retirement guarantees, and the incorporation of separate civil servant pension into the national pension scheme.

Summary

Research Monograph KOR Comparative Study on the Concept of Trust in Government: Based on Big Data Analysis

In the fall of 2016, Korean people were gripped by a series of corruption scandals which center on a shady relationship between their president and her unknown outside advisor in partnership with the government (in particular, the Blue House). Her presidency in the past four years was found to be fraught with several cases of willful infringement on government system and democratic order. The final unraveling of these political scandals came with a nosedive in the approval rating to the 5% level, pointing to ‘de facto’ zero support. Such low rating or trust in government is ravaging enough to paralyze the operation of national affairs, even setting aside criminal charges against the president and impeachment issues.

Trust in government is a resource of great importance for government to run national affairs. Why is it so important? To answer that, it is necessary to think about the definition and operation of democracy in which regardless of the type of government, sovereignty resides in the people and the people delegate a part of their power to representatives—who could be a political party led by an individual or an alliance of political parties—so that they could operate national affairs and make necessary policy decisions on behalf of the people. At every election, people vote for a group that they think will represent best the interest of its voters. Why to use such representative democracy system may vary but probably it is because general public have no expertise or information on national affairs.

In this context, the principal-agent theory, one of classic themes in economics, can be used to look into the issue of trust in government. As aforementioned, at election, people with sovereign rights—median voters—choose the one (president and the ruling party) they think will work successfully on national affairs on their behalf while failed candidates are left to serve a role as a check on power. The latter can be referred to as potential agents who are opposition parties and provide the public with noteworthy issues such as problems in national affairs run by the ruling party. In the meantime, the ruling party keeps sending out a message to the public emphasizing the appropriateness of their way of operating national affairs.

The proportion of people in agree with the information from the ruling party means the approval rating for then government and this approval rating determines the boundaries of the ruling party’s policy stance. On the other hand, considering the conflicting relationship between the ruling and opposition parties, information from opposition parties may be of little value to the public. What affects public’s judgement most in this process is as follows: whether competent press is present who can compile information from both sides and deliver it to the public in an objective manner and whether the press’ free speech is guaranteed. In short, trust in government is certainly of great importance for a democratic country to operate national affairs, but its ambiguity in concept and definition has defied several attempts for in-depth studies from more objective and scientific perspectives.

Thus, this study conducted big data analysis on Korea and the US (comparison target) to remove such ambiguity. Results were compared to analyze the determinants to trust in government in order to seek institutional basis that could strengthen it. The big data analysis is better effective in identifying diverse discussions with respect to trust in government than the conventional interview survey consisting mostly of closed questions.

Above all, this paper gathered necessary big data by typing in ‘government’ and ‘administration’ for search in online news articles and Twitter messages in the US and Korea. Samples of online news articles were released between 1995 and 2015 and those of Twitter messages between 2009 and 2014: a total 670,000 online news articles and 8,390,000 Twitter messages in Korea’s data sets and 530,000 news articles and 57,680,000 Twitter messages in the US data sets were gathered. After removing unnecessary elements, author extracted words in forms of noun, verb, adjective, adverb and root and these are categorized into three groups (ability, benevolence and integrity) according to the trust model proposed by Mayer et al. (1995).

First, as for Korea’s online news articles, of government-related words, school-related words form a separate community, pointing to Korea’s strong attention to education. Also, there is another large community consisting of ‘the US,’ ‘China,’ ‘Japan’ and North Korea-related words, suggesting that government issues have most to with export-driven economy and North Korea-related security and diplomacy. Korea’s Twitter messages exhibit the largest community of words such as ‘Moon Jae-in,’ ‘Park Geun-hye,’ ‘Lee Myung-bak’ and ‘rigged election,’ meaning that discussions are mostly regarding presidential election. Also, Sewol ferry-related words form a community (group) which contains emotional words such as ‘incompetent,’ ‘anxious’ and ‘furious,’ hinting at public sentiment towards the government’s response to the Sewol ferry sinking.

Then, US’ online news articles exhibit the largest community of ‘tax,’ ‘benefit’ and ‘aid,’ pointing to public’s high interest in government tax programs and benefits. Also, ‘health’ and ‘care’ were commonly mentioned, suggesting that the US government’s healthcare security program is of great significance to the public health insurance system. In US’ Twitter messages, the largest community is found to contain words about diverse themes and emotion.

Next looks into the list of words used as a synonym for the three words related to trust in government—government’s ability, benevolence and integrity aforementioned as three factors affecting trust in government. First, of ability-related words, ‘disappoint’ was mentioned with high similarity to ‘furious’ and ‘angry’ in Korea’s online news articles and ‘wistful’ and ‘expected’ in its Twitter messages while to 'frustrated', 'dissatisfied' and 'discouraged' in US’s online news articles and ‘appalling,’ ‘disgusting’ and ‘shame’ in its Twitter messages. Also, ‘incompetent’ was mentioned with high similarity to ‘self-righteousness’ and ‘immorality’ in Korea’s online news articles and ‘stupidity’ in its Twitter messages while to ‘arrogance’ and ‘corruption’ in both US’ online news articles and Twitter messages.

Above findings imply that the use frequency of words related to ‘disappoint’ and ‘incompetent’ is not very different between the US and Korea. Then, ‘reliable’ was mentioned with high similarity to ‘trust’ and ‘believe’ in Korea’s Twitter messages and ‘respect,’ ‘honorable’ and ‘guardian’ in its online news articles while to ‘accessibility,’ ‘stability’ and ‘safety’ in US’s Twitter messages and ‘sophisticate’ and ‘accurate’ in its online news articles. To put it another way, something ‘reliable’ is depicted in the image of a respected and honorable guardian in Korea’s news articles while the word infers something sophisticate and accurate in US’ news articles.

According to the analysis of words related to benevolence, ‘help’ was used with high similarity to ‘energy,’ ‘driving force’ and ‘influence’ in Korea’s online news articles and ‘support,’ ‘cooperation’ and ‘collaboration’ in its Twitter messages while to ‘reward’ and ‘incentive’ in US news articles and ‘entrepreneur’ and ‘investment’ in its Twitter messages. Thus, it can be said that ‘help’ and ‘support’ are similar in meaning to government-financed support which demands no prior effort from the private sector in Korea but induces efforts from the private sector in the US.

Also, ‘the vested’ was mentioned with high similarity to ‘power to name candidate’ and ‘political power’ in Korea’s news articles and ‘extreme conservative’ and ‘conservatism’ in its Twitter messages while to ‘farm owner’ and ‘ranch owner,’ along with a few names of Republican politicians, in US news articles and ‘corruption’ and ‘egoism’ and money-related words in its Twitter messages. Such stark difference between the US and Korea is probably due to the difference in the understanding of the vested—typified by the top-down candidate recommendation system in Korea whereas by traditional subsidy given to farms or ranches in the US.

The following summarizes the results of analysis on integrity-related words. ‘Transparent’ was used with high similarity to ‘thorough’ and ‘rigid’ in Korea’s news articles and ‘clean,’ ‘righteousness’ and ‘integrity’ in its Twitter messages while to ‘efficiency,’ ‘effectiveness’ and ‘competence’ in US news articles and Twitter messages. This suggests that ‘transparent’ is seen as an antonym for ‘corruptive’ in Korea whereas people in the US associate the word with competence or efficiency through transparent competition. Also, ‘manipulate’ was used with high similarity to ‘poll manipulation’ and ‘concealment’ in Korea’s news articles and to ‘distort’ in US news, too.

The sections above are a brief examination of the big data on trust in government reflected in SNS messages in the US and Korea. The result confirms a certain gap in understanding between two countries caused by their difference in institutional or historical experiences, but most findings in two countries have a lot in common. The analysis in this paper may not be sufficiently rigorous, but it can somewhat verify the universality of the concept of trust in government. However it should be noted that this paper does not preclude the possibility that the composition of concrete contents implied in the concept may vary from country to country.

Next is about determinants to trust in government. No systemic theories have been made so far as to how trust in government is developed. Thus, existing theories show huge differences depending on themes or available resources they apply. As aforementioned, trust in government is created by the public, meaning that it will be influenced by individual’s characteristics, experience and incentive system, society and political system to which the individual belongs, the government as an evaluation target and politicians’ characteristics. Taken all together, this paper analyzed determinants to trust in government and obtained results as follows.

First, an increase in per capital GDP causes a decrease in trust in government, but when the increase exceeds a certain level, the trust is found to rise with increased per capita GDP. A country’s economic growth rate moves in positive proportion to trust in government whereas people’s educational level is in negative proportion to trust in government. This is probably because trust in government tends to strengthen with increased educational level. Disasters or incidents that result in human casualties are found to heighten trust in government, as people grow aware of the necessity of the presence of government. According to the analysis, the more transparent government becomes, the more trust in government people have. The more freedom of speech, the less trust in government.

In the domain of trust in government, Korea is among the lower ranking countries in several surveys. To understand why this happens, look at Korea’s per capita GDP which is situated at the bottom curve of its ‘U-shaped’ relationship between trust in government. Then Korea’s educational level is much higher than other countries whose per capital GDP is similar to Korea’s. Not only that, anti-corruption level is very and Korea ranks lower than advanced countries in the domain of free speech—its ranking has been on a constant decline since 1995. The analysis found the negative correlation between free speech and trust in government, but a positive correlation was observed among countries with guaranteed freedom of speech. This is because trust in government weakens first after free speech exposes corruption of the public sector, but afterwards people will have more trust in government as corruption diminishes with strengthened monitoring by the press.

According to the analysis of online news articles using SNS big data sources in Korea and the US, when it comes to the issue of trust in government, people mention words related to government’s ability, benevolence and integrity—listed in the order of frequency of use. Both countries use emotionally neutral words the most often, followed by positive and then negative words. The proportion of positive words in Korea is relatively higher than in the US. This could mean a weak freedom of speech in Korea considering its lower trust in government than the US’. Taking into account the exposure frequency of news articles, the order of use frequency shows no change in the US but government’s integrity comes first before ability and benevolence in Korea. The result implies that the most significant qualities of government are morality, integrity, anti-corruption and fairness in the eyes of the Korean press.

The findings above are about the analysis of determinants to trust in government through cross-sectional international comparison. Next is about impacts brought to trust in government in the event of social and economic changes, political scandal and incidents or natural disaster that result in human causalities. It is often the case that the exiting administration experiences a fall in trust in government and the new entering administration enjoys an increase. When the global financial crisis occurred in 2008, the use frequency of words related to benevolence and integrity decreased while that of ability-related words increased. Similar tendency is observed during MERS outbreak and North Korea torpedo attacks on Cheonan warship and shell attack on Yeonpyeong Island.

When trust in government weakens, Korean news tend to use words related to integrity and benevolence more frequently whereas US news are found to use ability-related words more often. This implies that the fall in trust in government is understood as corruption-related in Korea but as incompetency-related in the US. If the press covers more corruption-related articles than before, it may be a sign of a fall in trust in government.

In concluding this summary, it will be important to suggest policy recommendations to improve trust in government using the findings obtained. Korea’s trust in government is very low compared to its per capita GDP level. This appears to be because public is highly educated, but the levels of the government’s anti-corruption and the press’ free speech are very low. Of these issues, focus needs to be on anti-corruption and free speech. The basic principles to enhance trust in government are heightening openness, transparency and democratic control of all public organizations. Institutional improvement measures to materialize these principles include the followings: adopting a bottom-up approach to the candidate recommendation system, enhancing openness in the public service recruitment system, transforming the judicial system into a more open and independent one, ensuring a democratic control of intelligence agencies, resolving the issue of government-controlled finance, preventing control over the press and adopting competition system to government-run enterprises and promoting their privatization.

Summary

Research Monograph Participatory Governance and Policy Diffusion in Local Governments in Korea: Implementation of Participatory Budgeting

Government leaders’ attention to participatory governance, public-private partnership, and community empowering has been increased in developing countries as well as developed countries as a way of enhancing public trust in government and overcoming economic and social challenges in governance. Korea is no exception. Especially, the evolution of participatory budgeting (PB) in the Republic of Korea shows very interesting dynamics in the context of democratization and decentralization. PB in Korea is a mandatory citizen participation program in local governments since enacting the Local Finance Act in 2011. The case of PB program in Korea presents an important policy diffusion process from a bottom-up approach to a top-down one concerning intergovernmental relations for implementing a citizen participation program.

As PB has been implemented in all the local governments in Korea, it provides a great opportunity to conduct a nation-wide assessment study of the PB adoption and diffusion, local government capacity for the PB implementation, and the impacts of the PB on public administration and values in local governance. Focusing on local governments’ experiences of PB implementation, “Participatory Governance and Policy Diffusion in Local Governments in Korea: Implementation of Participatory Budgeting,” provides theoretical and practical insights for understanding policy diffusion, implementation capacity, impacts, and challenges. It further elaborates several policy recommendations for enhancing PB implementation capacity given the ongoing challenges of PB implementation, including weak financial independency of local governments, the relation between local government and local council, and the low level of citizen participation in the PB program.

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Policy Study KOR Analysis on the Land Compensation Cost of the Projects subject to PFS

The preliminary feasibility study (PFS) was adopted in 1999 to enhance the objectiveness and transparency of government-run projects under the agenda of fiscal reform. It has received recognition from the World Bank, International Monetary Bank (IMF) and other prominent global organizations for its contribution to the efficient and transparent use of budgets. However, concerns have emerged about certain PFS-related issues attributed to the synchronization of PFS and budget allocation, and due to the growing public attention over PFS results. One notable issue pertains to the adequacy of estimations for land compensation, which accounts for a large share of the cost estimations for analyses on economic value. The competent authorities argue that the costs for land compensation―estimated through PFS―are unrealistically low and thus hinder project execution. The problem may lie within the PFS analysis itself, but it may also be because the gains from development are reflected in the real compensation costs.

As such, this study focused on projects that were subject to PFS in 1999-2012 with available information on project dates and location. It analyzed the movements in land prices according to the project dates to examine whether government-run projects reflect the gains from land development in the compensation and if so, at which point they are reflected. The results were used to draw on the policy implications for land compensation estimations for future government projects. Time-series data was established on the prices of project sites or nearby land (per lot) for 14 government-funded projects from 1996 to 2014. Then, in a panel analysis using the difference-in-difference model, this study showed that the prices of both project sites and nearby land began to surge from a year prior to the initiation of PSF―during which time the competent authorities design a project and prepare for PFS―and continued throughout the PFS, basic design and implementation planning phases. Additionally, the prices of project sites exhibited a higher increase than that of nearby land until the basic design phase. The results indicate that the increase is driven by the fact that information on project design and development planning are made public and expectations are generated over the development gains as the project undergoes PFS. This, in turn, pushes up land prices and, although it can vary from project to project, the development gains during the basic design and implementation phase are reflected. The findings imply that PFS-estimated compensation costs are lower than real compensation costs not because of errors in the PFS estimations, but rather because of the time difference between cost estimation and real compensation, and reflection of the development gains during this period. Furthermore, a separate analysis of ongoing projects that passed PFS and those that did not revealed that the land prices for the project sites of the latter significantly increased far before the project was put forward but declined with the initiation of PFS, recording a lower growth than that of nearby land. However, once a project receives a budget and starts to roll, this pattern is reversed. Given that PFS and budget allocation have become increasingly synchronized, the market’s instant response to PFS results is a sign of a troubling reality.

These findings indicate that to smoothly operate government-funded projects, it is necessary to foster prompt management of the entire process, from establishing the basic plan―including the release of information on project planning, compensation negotiations and project approval―to conducting PFS and developing the basic design. Above all, PFS should ideally take no more than 4-6 months. But, due to the lack of significant proposal contents such as location and the frequent changes in project plans, it can sometimes take 1-2 years before PFS results become available. To avoid this and conduct a prompt and timely study, the system should to be managed to allow only fully completed proposals to be selected as PFS-subject projects by the PFS committee. Also, once submitted, in principle, no changes to the project plan should be allowed. Compensation-related provisions in the PFS guidelines should also be revised to better reflect the current situation. The ratio of assessed values to market values of land has been quite low in Korea, and this is the partial reason behind the rapid hike in project site prices around the time of project establishment and growing gap between compensation costs as projects become delayed. Thus, PFS provisions regarding the land compensation ratio must be updated to reflect at minimum the actual conditions.

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