Recently, concerns have been raised about local governments’ indiscriminate investments in a wide variety of projects. Accordingly, the central government has directly intervened in the local government investment appraisal system and strengthened control.
However, strengthening the central government’s intervention in local government budgeting weakens the autonomy and accountability of local governments. It also causes various other problems, such as delaying investment and halving the efficiency of the projects.
According to the above problems, it is necessary to improve the local government investment appraisal system in a way that can expand the autonomy and accountability of local finances and enhance the vitality of local economies.
In this study, the characteristics of the local government investment appraisal system were investigated and a feasibility study on the Local Finance Act was carried out. The analysis focused on the case of Seoul Metropolitan City where the problems of each system were reviewed by dividing them into three areas: Administrative management, Legal system, and Operational efficiency. The opinions presented are supported by reviewing legislation, analysing investment review cases and feasibility studies in Seoul, as well as conducting expert surveys.
Since then, the government has sought ways to improve the autonomy and accountability of local governments, investigated the purpose of legislation under the Local Finance Act, and implemented institutional equity. Also, specific improvement measures and the timing of their introduction were reviewed.
These improvements are expected to improve the efficiency of local investment projects by improving the capacity of local governments to manage their projects over the long term.