Current Issue

South Korea’s population peaked at 51.84 million in 2020, since when the population has declined as deaths outnumbered births. In 2023, the total fertility rate was 0.72, the lowest globally, while aging of the population progressed rapidly (Statistics Korea, 2024k). Population decline and aging are expected to accelerate, especially in regional cities, from which younger generations are migrating to the capital (Government Agencies Joint, 2023). This demographic shift in regional cities may lead to labor shortages and increased financial burdens, raising concerns about the insufficiency of essential social overhead capital (SOC) facilities, including hospitals and daycare centers. In response to these demographic changes, in 2023, the South Korean government introduced the First Basic Plan for Responding to Population Decline Areas (제1차 인구감소지역대응 기본계획), which explicitly mentions the compact city as an adaptive strategy, acknowledging and responding to population decline from an urban-planning perspective.

The compact city concept originally emerged as a strategy to prevent suburban sprawl in large metropolitan areas experiencing population growth, but in recent years it has also gained attention as a means to address various urban challenges in regions experiencing population decline. For example, a compact urban structure can improve residents’ access to essential SOC facilities, thereby enhancing quality of life, and is also expected to reduce the fiscal burden of infrastructure maintenance and management (Kachi et al., 2006; Kutsuzawa, 2016).

While the compact city concept has been widely discussed in South Korea, an institutional framework to support its implementation has yet to be established. To realize a compact city, it is important to have a clear understanding of regional characteristics and to apply effective strategies accordingly. Although various foundational studies have been conducted to identify such characteristics in relation to compact city development (Ha and Kang, 2022; Kamata and Nam, 2024), few have directly linked them to specific strategic approaches.

A representative example of a compact city policy in the context of a population-declining society is Japan’s Location Optimization Plan (立地適正化計画, LOP). In Japan, where population decline began in 2008—earlier than in South Korea—and regional cities face similar issues of decline, the government amended the “Act on Special Measures for Urban Regeneration” in 2014 and established the LOP system.

The LOP aims to create an urban structure centered around compact urban areas connected by public transportation, guided by the concept of a “compact city and network”. The plan is formulated by local municipalities (市町村) with independent jurisdiction, and as of the end of March 2024, 568 out of 1,718 municipalities in Japan have developed and published their LOPs (Ministry of Land, Infrastructure, Transport and Tourism of Japan (MLIT), 2024c). The plan designates urban functional zones (都市機能誘導区域) to concentrate urban functions and residential inducement zones (居住誘導区域) that are accessible by public transportation. To promote the concentration of residential settlements and urban functions within these designated areas, municipalities can apply various inducement measures (誘導施策) supported by the national government.

The most common inducement measures involve providing economic incentives for development and housing acquisition within the designated zones. In addition to these direct economic inducements, municipalities implement various compact city measures under the LOP, combining initiatives within inducement zones, such as economic revitalization through industrial promotion; environmental improvements like sidewalk development; housing supply, including municipal housing; and more efficient land use through the reorganization of public facilities, the relaxation of floor area ratios, and the effective utilization of vacant houses and land. The MLIT also encourages the suppression of development outside the inducement zones. Strengthening public transportation networks by integrating regional public transport plans is another key strategy for promoting compact city formation.

The MLIT emphasizes that to realize a compact city a thorough understanding of regional characteristics is essential for formulating an LOP, including selection of appropriate inducement measures. Accordingly, analyzing inducement measures based on urban typology makes it possible to identify the strategies needed for different types of cities in realizing compact city formation.

This study aimed to derive compact city strategies suitable for urban characteristics by classifying domestic cities based on indicators representing those characteristics and presenting directions for compact city strategies by type, drawing on cases from Japan’s LOP. To this end, the study first focuses on the inducement measures of Japan’s LOPs and analyzes the types of strategies adopted according to urban characteristics—both quantitatively and qualitatively through case studies (Figure 1). Next, focusing on the Busan-Ulsan-Gyeongnam (BUG) region in South Korea, where population decline is progressing at a metropolitan scale, the study classifies cities based on indicators representing demographic characteristics, urban compactness, and urban issues associated with population decline. Finally, drawing on the findings from Japan’s LOP analysis, the study explores compact city strategies tailored to the urban characteristics of each city type in the BUG region.

Figure 1. 
Study flow

It is important to note that this study does not aim to apply the inducement measures of the LOP directly to South Korean cities. Rather, by examining LOPs, the study sought to identify trends in the types of inducement measures adopted by municipalities with different urban characteristics. The ultimate goal is to suggest possible directions for compact city strategies in South Korea, based on an understanding of what kinds of measures may be appropriate for cities with specific traits. This study contributes to the development of localized compact city strategies in response to demographic decline, offering empirical insights grounded in both Japanese and Korean contexts.

Numerous foundational studies have been conducted that measured urban compactness in South Korean cities (Ha and Kang, 2022; Kamata and Nam, 2024) and evaluated the effects of compact cities (Shin and Woo, 2021).

Recently, as population decline has progressed, studies have begun to explore concrete methods for realizing compact cities, with several focusing on Japan’s LOP system as a benchmark for developing Korean-style strategies. Yoon and Kurose (2019) examined the LOP system and derived implications for its adoption in South Korea. Yun et al. (2023) proposed methods for designating residential inducement zones in local small and medium-sized cities. Kwon et al. (2022) reviewed methods for establishing urban hubs when applying the LOP system to rural areas in South Korea. Nam et al. (2020) classified cities in Gyeonggi Province based on indicators representing regional characteristics to promote urban compactness around station areas, with the goal of revitalizing transit-oriented development. Choi and Yoon (2025) developed indicators for understanding urban structure in regional cities in South Korea that are at risk of population decline, based on the “Handbook for the Evaluation of Urban Structure” published by Japan’s MLIT. They then classified small cities with populations under 100,000 in Gyeongsangbuk-do and provided suggestions for compact city formation tailored to each city type.

Meanwhile, Tamura and Kwon (2019) offered critical insights on the LOP system and presented implications for compact city policies in South Korea. Based on case studies of compact city strategies in Toyama and Aomori, this research highlighted the need for broader regional compact city planning through cooperation with neighboring municipalities, and emphasized the importance of implementing sufficient suburban development controls along-side inducement measures under LOPs. Furthermore, noting that Japan’s cities typically have structures centered around railway stations, while Korean cities tend to have more dispersed urban cores due to large-scale suburban development, the study argued that careful deliberation is required when defining urban centers if LOPs are to be introduced in Korea.

Since the introduction of the LOP, various studies have been conducted in Japan. These include research that identi-fied institutional issues based on surveys of municipal officials (Asano and Ueda, 2017; Hashimoto et al., 2021), as well as studies that developed methods for designating inducement zones (Miyauchi et al., 2019; Sakurai and Ogawa, 2023). Studies have also been conducted to evaluate the effectiveness of the LOP (Asano and Ariga, 2022).

Research on inducement measures guiding urban functions and residential areas into designated zones has been conducted by Miyazaki et al. (2019), but their study was limited to classification of such measures. Musha (2021) extracted policy guidelines related to inducement measures from the LOPs of 275 cities and classified them into 11 categories. The study also categorized the cities into four groups based on population size and their proximity to major metropolitan areas, and analyzed the inducement policies adopted by each group. The results reveal that smaller cities tended to focus more heavily on facility placement measures, leading to the conclusion that technical support for plan development is needed, particularly for small municipalities. Nozawa et al. (2019) conducted a survey of local governments regarding inducement measures and found that while many municipalities focused solely on improvements within the designated inducement zones, a small number had also attempted to revise land-use regulations in areas outside these zones.

Research on the LOP has identified numerous issues—such as opposition from residents living outside the inducement zones (Hashimoto et al., 2021) and the use of the system for development-oriented purposes within the zones (Musha, 2021). There has also been criticism regarding the effectiveness of the LOP in promoting compact city formation. Asano and Ariga (2022) concluded that the impact of the LOP has been limited to date; they also suggested improvements, such as strengthening inducement incentives and enhancing public awareness. Nevertheless, it has also been reported that, as of 2023, about two-thirds of the municipalities evaluated LOPs as effective in promoting compact city formation (MLIT, 2024a). In any case, since the national adoption of LOPs is a long-term plan with a 20-year horizon, it is still premature to assess its effectiveness at this stage. It is essential to continue efforts toward realizing compact cities that can sustain residents’ quality of life—even in regions facing the risk of depopulation—while improving the identified institutional issues.

Previous studies have highlighted compact city strategies as a potential solution to urban issues arising from population decline in South Korea, with Japan’s LOP often cited as a practical model. However, there is a lack of research presenting concrete methods for addressing the question of how to realize a compact city.

While this study shares similarities with the work of Choi and Yoon (2025) and Nam et al. (2020), who classified regional cities using indicator-based typologies, its originality lies in linking this classification with an analysis of Japan’s LOP experience. By doing so, it presents more concrete strategies for compact city formation.

Furthermore, this study investigates representative LOP cases based on population size and growth characteristics, organizing the urban challenges and specific compact city strategies. LOP structures vary by municipality, but this study examines the sections in which specific measures for guiding development into inducement zones are outlined. Urban challenges are extracted from the LOP summaries. At this stage, the compact city strategies include not only the independent inducement measures but also other common strategies. The compact city strategies of each municipality are considered identifiable through the policies adopted by each municipality.

Mihara City (Hiroshima Prefecture), Oji Town (Nara Prefecture), Kitakyushu City (Fukuoka Prefecture), and Kumamoto City (Kumamoto Prefecture) were selected as case studies representing the SD, SG, LD, and LG types, respectively. As shown in <Table 3>, the urban challenges and compact city measures described in each city’s LOP are summarized.

As confirmed in the previous section, Kitakyushu City, which falls under the LD category and has been the most proactive in formulating an LOP, faces challenges in providing public transportation and maintaining urban infrastructure due to rapid population decline and the geographical features of the urban areas in recent years. The city has comprehensively implemented compact city measures across all categories. Notably, initiatives such as rent subsidies for municipal rental housing targeting young people employed locally and financial support and consultation offices to promote migration from the Tokyo metropolitan area stand out as measures aimed at encouraging inflow of residents into the inducement zones from external regions.

In contrast, although Kumamoto City, a government-designated city (政令指定都市) located in Kyushu, was experiencing population growth as of 2015, maintenance of bus routes remained a significant challenge. As part of its compact city strategies, the city is implementing measures such as bus route reorganization to improve efficiency, promoting barrier-free environments, and raising awareness to encourage public transportation use. Additionally, stricter development regulations in urbanization control areas have been enforced, indicating concerns about increasing development pressure in suburban areas.

Mihara City in Hiroshima Prefecture has experienced population decline since 1985, and an excessive supply and aging of public facilities have become challenges due to the burden of maintenance and management. It is evident that the city is combining various measures, such as reorganization through consolidation and integration of public facilities and effective use of sites resulting from this reorganization. Additionally, the city is actively promoting compact city formation by designating “Residential Adjustment Areas” and restricting development outside these designated zones.

Ōji Town, classified as SG—the least proactive category in formulating LOPs—was experiencing population growth as of 2015. However, typical social issues associated with population-declining regions, such as reduced tax revenue due to aging and insufficient public transportation, have emerged. The compact city strategies outlined in its LOP are limited, focused on subsidies for housing acquisition within inducement zones for multi-generational households and ¥100 bus tickets for the elderly.

Through organization of the unique municipal initiatives under the LOP system and the relevant case studies, the following points became evident.

First, regardless of the population situations of municipalities, insufficient public transportation emerged as a common regional issue. Strengthening public transportation networks was identified as a shared strategy for compact city formation. Meanwhile, in municipalities experiencing population decline, an oversupply of public facilities and the burden of their maintenance and management posed significant challenges. As a result, the reorganization and consolidation of public facilities were highlighted as a key compact city strategy.

Next, the tendencies of strategies adopted by municipalities were found to differ depending on their demographic characteristics. Notably, municipalities with large populations experiencing population decline were the most proactive in pursuing compact city formation. These municipalities adopted a wide range of initiatives centered on environmental improvements, such as the removal of vacant houses, in addition to providing economic incentives to promote population concentration.

In contrast, municipalities with smaller populations appeared to be somewhat less proactive in compact city formation. Among them, municipalities experiencing population growth primarily adopted limited measures focused on economic incentives to promote migration and the supply of housing. Compared to this, larger municipalities experiencing population growth, such as Kumamoto City, implemented stricter land-use regulations to curb urban sprawl and pursued a more diverse range of initiatives for compact city formation. As pointed out by Musha (2021), smaller municipalities tend to adopt unbalanced measures. This is attributed to a lack of technical capacity and human resources for LOP formulation.

The case study region was set in the BUG metropolitan area (Figure 2), where population decline is progressing at a regional level. The rates of population change from the previous year (2020) show a decline in all areas: Busan −0.7%, Ulsan −0.7%, and Gyeongnam (GN) −0.4%(Statistics Korea, 2024j). The study’s temporal scope was the year 2020.

Figure 2. 
Study area

Busan Metropolitan City covers an area of 770 km² with a population of 3.35 million, consisting of 15 districts (gu) and 1 county (gun) (Statistics Korea, 2024b). Ulsan Metropolitan City has an area of 1,062 km² and a population of 1.14 million, divided into 4 districts and 1 county (Statistics Korea, 2024l). Gyeongsangnam-do (GN) is the largest in area, spanning 10,540 km² with a population of 3.33 million. It comprises 8 cities (si) and 10 counties, including 5 districts within Changwon City (Statistics Korea, 2024e).

The features of each cluster obtained from the cluster analysis of the BUG metropolitan area are shown in <Table 6> and visually depicted in <Figure 3> . The distribution of the types is shown in <Figure 4> .

Figure 3. 
Regional characteristics by type

Figure 4. 
Urban categorization on the map

Type 1 consists of eight municipalities. This type is characterized by being located in the old town areas of Busan and Ulsan, regions experiencing population decline and relatively low urban compactness. Although public transportation is well-developed, there is a significant need for the provision of facilities for the elderly and economic revitalization. Given these characteristics, Type 1 was named as the “declining inner city areas.”

Type 2 includes seven municipalities. This area, located on the western side of GN with a smaller population size, exhibits the lowest compactness. While it has well-developed elderly care facilities and low air pollution, most indicators show the lowest values among all five types. Access to SOC facilities is particularly poor, and public transportation options are insufficient. According to MLIT (2014), these deficiencies limit opportunities for residents to go out, contributing to deteriorating health. The fact that walking activity among residents is the lowest among all types highlights concerns that urban issues driven by population decline may pose health risks to those living in Type 2 areas. Meanwhile, there is an oversupply of educational facilities. These areas are most in need of compact city formation by appropriately allocating urban infrastructure and guiding residential areas. Type 2 was named the “underserved small cities.”

Type 3 comprises nine municipalities. This area includes suburban regions, such as Gijang-gun and Gangseo-gu, where new urban developments are underway, and the population is on the rise. While the gross regional domestic product is high, the financial burden is also significant, and public transportation infrastructure is lacking. Type 3 was named the “suburban growth areas.”

Type 4 encompasses seven municipalities. Distributed in the GN area, this type has the second smallest population size after Type 2. While elderly care facilities are well-established, making it a region where residents walk the most and lead healthy lifestyles, most of the other indicators show relatively low values. Similar to Type 2, this region requires an appropriate allocation of urban functions and residential areas to enhance its overall compactness. Type 4 can be named the “vulnerable local cities.”

Type 5 consists of twelve municipalities. This type includes the city centers of Busan and Ulsan, characterized by the largest population sizes and the highest levels of compactness, despite the ongoing population decline. Overall, the indicator values for this type are favorable, although air quality is poor and there is a shortage of elderly care facilities. Type 5 was named the “compact urban centers.”

A list of municipalities of each type is provided in <Table 7>.

Based on the results described in Sections III and IV, this section examines compact city strategies for each cluster in the BUG area.

According to Kamata and Nam (2023), Type 1 regions are experiencing urban hollowing due to the aging of infrastructure and new suburban developments, leading to population decline. At the same time, the presence of commercial districts offering high-quality jobs results in an increase in the daytime commuting population. Furthermore, Kamata and Nam (2024) noted that although the overall compactness of regions falling under this type is relatively low, population density is relatively high, and population concentration is occurring locally through the redevelopment of low-rise residential areas.

Based on these characteristics and the findings in previous chapters, compact city strategies for Type 1 regions include economic revitalization targeting the abundant number of visitors, improvement of living conditions through renovation of aging urban infrastructure, and the development of efficient elderly care facilities, taking into account the distribution of elderly populations. Regarding the development of elderly care facilities, as seen in the inducement measures of Japan’s LD-type cities, effective utilization of vacant houses and land is considered desirable.

Type 2 represents the area where compact city formation is most urgently needed, and considering its characteristics, priority should be given to the consolidation of urban functions and residential settlements in well-connected central urban areas rather than expanding SOC infrastructure. This point was also emphasized in the study by Choi and Yoon (2025), which highlighted the necessity of establishing regional hubs and promoting urban consolidation in small- and medium-sized cities where living convenience has significantly deteriorated. As Asano and Ueda (2017) argued, in cities with small and declining populations, where development pressure on suburban areas is relatively low, compact city formation can be more effectively achieved through strategies that induce concentration into urban centers rather than by imposing strict land-use regulations.

In light of similar demographic characteristics and challenges, such as the oversupply of public facilities, the strategies observed in Japan’s SD-type cities may provide useful reference points. Accordingly, efficient land use should be promoted by repurposing vacant spaces in urban centers and reorganizing public facilities, including educational ones, to optimize existing resources.

Moreover, since our study observed low health-related indicator values among residents in Type 2 areas, it is necessary to expand public transportation options and support residents leading their daily lives through the use of walking and public transit. However, as Kwon et al. (2022) pointed out, in population-declining areas of South Korea that correspond to Type 2, especially in eup or myeon regions that are not yet urbanized¹⁾, the reality is that public transportation is extremely limited—not only lacking rail-based systems like those in Japan but also having insufficient bus services. As Kwon et al. (2022) suggested, in such areas, guiding residential settlement around community facilities such as gyeongnodang (senior community centers) or maeul hoegwan (village halls) may be a more realistic approach to ensuring that residents have opportunities to go out and participate in daily life.

The compact city strategy for Type 3 should emphasize strengthening the transportation network through the expansion of public transport and promoting urban concentration around these transport hubs, as these measures are essential to achieving compact urban form in newly developing areas. For instance, the planned development of the BuTX hydrogen rail line and the Busan-Yangsan-Ulsan metropolitan railway aims to enhance the regional public transportation network. Since major stations along these lines are expected to serve as regional hubs, applying a transit-oriented development (TOD) approach—concentrating residential, commercial, and public functions around transit nodes—can effectively support compact city formation. Specifically, Nam et al. (2020) highlighted TOD strategies for newly developed areas in Korea, such as the integration of residential, commercial, and business functions through public–private partnerships, and the creation of pedestrian-oriented living zones by introducing multi-layered urban planning. However, as Tamura and Kwon (2019) pointed out, Korean cities have a different urban structure compared to Japan, where development is typically centered around railway stations. Therefore, the development of urban hubs in Korea should be carefully planned, taking into full consideration the existing distribution of urban functions.

Drawing on examples from Japan’s LG-type cities, which face similar challenges, it is important to improve residential environments in urban centers by enhancing green spaces and parks, and to promote fiscal efficiency through the restructuring and maintenance of public facilities. Furthermore, Type 3 should take into account future demographic changes. Therefore, controlling suburban development through land-use regulations is necessary to prevent urban sprawl and maintain urban compactness.

Type 4 municipalities face urban challenges due to population decline, second only to Type 2. Given the urban challenges of population characteristics, oversupply of public facilities, and insufficient public transportation, the compact city strategy for Type 4 can draw insights from Japan’s SD- or LD-type city strategies. The proposed compact city strategy for this type includes guiding policies to allocate SOC living facilities appropriately in concentrated residential areas, alongside expanding public transportation to improve access to these facilities. Additionally, the strategy should focus on promoting mixed-use development in these areas to ensure a balanced urban structure, while also addressing the need for more efficient land-use and infrastructure management.

These areas are also adjacent to Type 3 municipalities, which are experiencing population growth, and Type 5 areas, which have larger populations and more vibrant economies. Given this spatial relationship, strengthening intermunicipal collaboration may offer opportunities for regional economic revitalization (Yang and Nam, 2022).

As with Type 2 municipalities, Musha (2021) pointed out that municipalities with small populations and limited human resources tend to adopt compact city strategies that rely heavily on economic incentives, such as attracting commercial facilities. Therefore, by providing adequate technical and human resource support for urban planning, it becomes possible to develop more balanced and effective compact city strategies.

Finally, while Type 5 corresponds to Japan’s LD type in terms of population factors, it exhibits a relatively well-balanced supply of public transportation and public facilities. According to Kamata and Nam (2024), some areas are experiencing localized population concentration through redevelopment, such as the construction of high-rise buildings in place of low-rise residential areas.

The compact city strategy for Type 5 includes appropriate placement of elderly care facilities and improvements in air quality through the development of parks and green spaces. Given the ongoing population decline, the focus should be on ensuring the proper distribution of SOC facilities rather than expanding their supply. Additionally, in Busan and Ulsan, it is necessary to consider not only compactness at the living sphere level but also compactness at the metropolitan scale (Kamata and Nam, 2024). To achieve a compact city, it can be argued that a compact city strategy targeting wider regions should be developed in collaboration with neighboring municipalities.