This study examines the need to reform the Capital Region Management Zone System(CRMZ System) from the perspective of Seoul’s urban growth management, in light of evolving demographic, industrial, and spatial dynamics in the Seoul Capital Region(SCR). Since the 1994 revision of the Capital Region Readjustment Planning Act, the entirety of Seoul has remained designated as an Overconcentration Control Zone(OCZ). However, this framework was developed under the assumption that Seoul was the primary locus of overconcentration—an assumption that no longer reflects current conditions. Today, growth in population and industry has increasingly shifted toward southern Gyeonggi Province, while Seoul faces new challenges such as population decline, industrial restructuring, intra-urban disparities, and changing housing demand.
The study reviews the evolution of the CRMZ System and identifies key issues associated with Seoul’s OCZ designation. It finds that the most consequential constraints stem from deliberation by the Capital Region Planning Committee, congestion charges, and indirect restrictions embedded in related policy areas such as taxation and housing supply. These overlapping regulatory mechanisms impose significant constraints on Seoul’s urban growth management, particularly in advancing strategic priorities including the development of international business and high-tech industry hubs, the expansion of housing supply in central urban areas, and the fostering of new growth centers in relatively underdeveloped areas.
The study also assesses the effectiveness of the CRMZ System. While the system has contributed to some degree of population and industrial redistribution within the capital region—most notably the relocation of manufacturing activities from the OCZ to the Growth Management Zone—it has been less effective in reducing overall concentration or advancing balanced national development. High-value service sectors and innovation functions remain heavily concentrated in Seoul and the OCZ, and concentration in the SCR has intensified through a self-reinforcing dynamic linking population inflows, corporate headquarters, R&D capacity, skilled labor, fiscal resources, and infrastructure.
These findings suggest that the CRMZ System can no longer be sustained as a framework primarily aimed at suppressing capital region growth. Instead, it should be reoriented toward a model of selective and strategic growth management that better supports national competitiveness. To this end, the study proposes three broad directions for reform: redefining the system’s role to focus on managing internal restructuring and functional reorganization within the SCR; clarifying the division of roles between the central government and metropolitan governments; and transitioning from uniform controls to more targeted and differentiated regulatory approaches.
Building on these principles, the study outlines five key policy tasks: redesigning the system to prioritize internal restructuring within the capital region while pursuing balanced national development through separate policy instruments; reassessing Seoul’s blanket OCZ designation and introducing more differentiated management; streamlining procedural regulations; improving alignment with housing policy in response to changing household structures; and expanding exceptions and incentives for strategically important sectors, including advanced industries and international business functions.