The commodification of land and housing: the case of South Korea

The developmentalist state in South East Asia has played an important role in guiding and promoting economic growth. Although an implicit theme of much of the discourse is the role of the state in controlling the factors of production, this is not located within the decommodification/commodification debate. Proceeding from the premise that underlies much of economic theory, namely that land values at a time reflect the residual (or surplus) of economic activity that requires land as a factor input, the purpose of this paper is to assess the extent to which the Korean state has managed the commodification of urban development and the distributional effects of this process. In spite of private land ownership the state has had a major impact on the processes by which land has become commodified, using extensive land expropriation and land‐use planning powers. The Korean state used different strategies to manage trends to commodification at different times: land readjustment projects were used from the 1950s to the 1970s and Public Management Development projects were the main mechanism of urban development from the 1980s. The urban development system was feasible because of the state's extensive control over access to housing finance (decommodified money). In the mid‐1990s there was a shift towards greater private sector involvement in urban development. The distributional effects of the urban development process have been highly inequitable. Subsidised home ownership for middle‐income families has been favoured over provision of public rental housing for low‐income families, driven in major part by cash flow considerations of the developmentalist state. Further, the basis of selecting beneficiaries has been very arbitrary. The system has promoted significant land concentration and land speculation particularly by private companies, including the large chaebol (corporations).