Capital Management and Budgeting Practices in Republic of Korea

Capital Management and Budgeting Practices in Republic of Korea

Jiseul Kim (University of Nebraska at Omaha, USA)
Copyright: © 2019 |Pages: 22
DOI: 10.4018/978-1-5225-7329-6.ch011

Abstract

The author aims to provide a comprehensive understanding about the current capital management and budgeting practices (CMBP) in the Republic of Korea (hereafter Korea). The book chapter starts with description of the importance of public capital assets and several issues of the current infrastructure system. It then provides the background of Korea's public infrastructure, political regime, and government institutions. Based on the suggested normative framework, the author specifically describes the four major components of CMBP: capital planning, capital budgeting and financial management, centralized execution and project management, infrastructure maintenance. Following the analysis of the current CMBP practices, some of reform ideas are discussed in the conclusion.
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Background

Korea is a small peninsula in East Asia with a population of 51.75 million. According to the National Assembly Budget Office [NABO], capital expenditures were 30 trillion KRW in 2017, which is about 7.49 percent of total expenditures. Capital expenditures include construction costs ranging from designing and planning costs, equipment costs, supervision costs, purchase inventories, land purchase, and capital transfer (e.g. to local government). By 2013, Korea’s total paved road length exceeded 87,000 km, which included more than 4,100 km of inter-city expressways. The quality of water and sewer systems has improved by 4.5 percent annually in recent years. By 2015, 5,742 electric vehicle charging infrastructures have been established. Korea has experienced rapid economic growth and industrial development during the last few decades, which has taken it from developing to a high-income country. The rapid economic expansion has been accompanied by the government’s major infrastructure investments.

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