An Exploratory Study on the Regional Determinants of Economic Growth: Evidence From Basic Local Governments in Gyeonggi Province, South Korea

South Korea faces a growing risk of “local extinction,” understood as the declining viability of local communities driven by population decline, aging, and widening regional disparities. In this study, we aimed to identify the factors influencing regional economic development and to propose solutions for balanced growth and a reduction in regional disparities, with a particular focus on enhancing local government capacity. Using panel data from 31 basic local governments in Gyeonggi Province, a policy-relevant setting with substantial internal variation across cities and counties, this study highlights the role of local government capacity and knowledge-based industries in regional economic growth. Our findings showed a strong correlation between per capita budget size, financial independence, and regional growth, which underscores the need for efficient fiscal management. Local governments are thus encouraged to prioritize efforts to attract knowledge-based industries and medical institutions as key strategies to drive future economic growth and differentiate their regions, and the strategic importance of fiscal management, industry attraction, and healthcare infrastructure in regional development is emphasized.