The pros and cons of capital flight

The pros and cons of capital flight

Aug 13th 2004
From The Economist Global Agenda

 

South Korea is the latest country to decide that it needs to build a new capital city. It has some good reasons for doing so, but history suggests it may not be such a great idea

SHIFTING a country’s capital city sounds like an act of pharaonic extravagance. And, indeed, it may have been the pharaoh Akhenaton who, 33 centuries ago, started the trend by moving ancient Egypt’s capital from Thebes to a newly built city called Akhetaton. As with so many subsequent grand schemes to relocate the seat of a nation’s government, the pharaoh’s project proved unpopular. His successor, Smenkhkare, wasted little time in shifting the royal court back to Thebes.

 

Though he is a much more modest fellow than the pharaohs, South Korea’s President Roh Moo-hyun made the relocation of the country’s capital from Seoul a key pledge in his 2002 election campaign. The idea has been talked about since the 1970s and seems, in many ways, sensible. The greater Seoul metropolis is cramped?almost half of the country’s 48m people are squeezed in there?and its dominant size is widely seen as hindering the development of the rest of the country. Besides, it is worryingly close to the border with hostile North Korea. If the North ever invaded, its large army might soon overrun the South’s seat of government.

 

Nothing came of earlier debates on shifting the government out of Seoul, which has been the capital since the 14th century, and thus little attention was paid to Mr Roh’s election pledge at the time. However, a blueprint for the move was approved by parliament last year. And on Wednesday August 11th the government said it was going ahead with the plan, which involves building the new capital from scratch on a 7,100-hectare greenfield site in the middle of the country.

 

Mr Roh is facing strong objections to his plans. Opposition leaders are threatening to block budget votes in parliament and civic groups have launched a legal challenge. one reason for the opposition is the project’s enormous cost. It is budgeted at a whopping $45 billion, but history shows that schemes to build new capitals tend to overrun their budgets wildly. Construction is due to start in 2007, just as Mr Roh’s term of office ends, with government departments due to move in from 2012. But again, history shows that purpose-built capitals often take far longer than anticipated to finish.

 

To give a few examples: the small Central American state of Belize was further impoverished by the construction of a new capital, Belmopan, in the 1960s-1970s, whose cost spiralled to four times its original estimate. Before that, the new-born United States of America waited for ten years for the White House and the Capitol to be built, only to see both destoyed by the British in the war of 1812. Likewise, Australia’s project to construct Canberra, launched in 1911, dragged on into the 1980s. Brazil’s concrete bureaucropolis, Brasilia, was thrown together in just three frantic years in the late 1950s?but its huge cost added to the country’s crippling debts. And in the 1990s, the huge cost of building Malaysia’s new capital, Putrajaya, added to the country’s economic crisis, forcing the then prime minister, Mahathir Mohamad, to scale back his extravagant plans for a futuristic “multimedia” city.

 

South Korea, like its “Asian tiger” neighbours, has grown quickly thanks largely to grand, state-directed projects, so there ought to be less scepticism than there would be in Europe or North America about a scheme to relocate the entire government administration to the middle of nowhere. However, there are good reasons to doubt that the move will succeed in its aim of boosting the development of South Korea’s provinces. Abuja, the massive, unfinished folly of a capital that Nigeria began building in 1981, has failed to boost the country’s under-inhabited interior. And while the population and agricultural output of Brazil’s vast interior have soared since the capital was moved there, this would most likely have happened even if Brasilia had never been built.

Seoul-less

 

For all the plans to end Seoul’s domination of the rest of the country, it seems unlikely that South Korea’s big industrial and financial firms will decamp to the new capital. So the move will probably not sound the death knell for Seoul, as some fear. Economically, Johannesburg dominates South Africa, just as Sao Paulo does Brazil, despite neither being their country’s seat of government.

 

As with Canberra, a competition will be held for the best design for South Korea’s as-yet unnamed new capital. History shows that the architects given the job of designing new capitals tend to get carried away with grandiose ideas that ignore both the geography and climate of the chosen site, and the needs of the people who will eventually live there.

 

The occupants of Kazakhstan’s new capital, Astana, have had to endure the frequent dust storms that blow off the steppes surrounding the city, as well as icy winters. Brasilia has become a grotesque caricature of Brazilian inequality: the rich elite live in the mansions and fancy apartments in the architect-designed centre?whose broad, multi-lane highways make it a dream for drivers but a nightmare for pedestrians?while the servant underclass lives in the squalid periphery.

 

 

Purpose-built capitals also struggle to create a cultural life of their own, especially since the politicians and their flunkeys tend to fly back to their constituencies at the end of each week’s parliamentary sessions, leaving the city half-deserted. on seeing the young Canberra, a reporter from Britain’s Punch magazine quipped: “Londoners may be all too aware of the disadvantages of living in a city without a plan, but these cannot be compared with the rival disadvantages of living in a plan without a city.”

 

One of the odd exceptions is perhaps St Petersburg. Establishing it took the forcible relocation of Russian noblemen and merchants, and cost the lives of many serfs and foreign slaves who were worked to death building it. Yet, though it is no longer Russia’s political capital, it is unquestionably one of the world’s great cultural centres.