An Assessment of Financial Risk and the Development of Effective Financial Management of Korean Special Case Cities

Abstract

This study aims to diagnose financial risk factors and propose alternatives in response to various constraints surrounding major local cities, called Special Case Cities in South Korea. We have analyzed the financial conditions of Special Case Cities and tried to accurately understand the financial status. To do so, we compared the financial conditions of Special Case Cities in similar conditions in order to identify both the risk factors and strengths of the Korean local governments. Financial pressure factors that Special Case Cities should consider are dependency issues and weakened autonomy due to intergovernmental fiscal relationships. In addition, there are expected increases in administrative demands and appropriations, plus an increased fiscal burden due to new promised projects. There is a need to internalize the medium-term local financial plan to clarify and transparently disclose the available financial resources that are the basis for establishing projects. Special Case Cities need to overcome the problems by achieving fiscal democracy through citizen participation and connectivity. The extent of Special Case Cities' own efforts should be reflected in its finances.