National grants for local transportation facilities play a major role in building highly efficient transportation systems. The central government provides national grant to guide the construction of local transportation systems in the nationally desirable direction and promote the welfare of the whole nation.

This study presents the criteria for the differential grant for the local road facilities that meets the purpose of the national grant system. The criteria is established by utilizing as the external effect index which indicates the degree to which roads in the region are also used for traffic to other regions, and the service level of the road that means the travel time and degree of congestion. In addition, independent rate of finance of the local government was also reflected to the criteria for the differential grant.

As a result of the analysis, it was found that the roads were located in Sejong, Chungcheongbuk-do and Chungcheongnam-do regions were often used not only for intra-regional traffic but also for inter-regional traffic. Regions with relatively heavy road congestion were Seoul, Gyeonggi-do, and Daegu, and independent rate of finance indicating the financial conditions for road construction, were relatively low in Jeonlanam=do, Jeonlabuk-do and Gangwon-do. Overall, higher grant rate is required in the Chungcheongbuk-do, followed by Gyeongsangbuk-do and Seoul.

The following recommendations are suggested for the reorganization of national grant system considering the continuous progress of decentralization and the policy to strengthen the role and responsibility of local governments.

Firstly, it is recommended that the guideline as well as the legal basis for the national grant system need to be clarified and provided. A guideline needs to be provided and stipulate whether or not to grant such as land expropriation costs and whether the amount of grant is based on the total project cost or each cost item. It is also necessary to have a legal basis for the enforcement.

Secondly, it is recommended that the regional differential grant rate is applied to increase the external effects of the local transportation facilities, which is the policy goal of the national grant system, and to improve transportation services and to alleviate the imbalance of transportation investment.

Finally, it is suggested that the differential national grant rate system need to be applied according to the type of the projects. To do this, the projects need to be clarified according to the project that contributes to the construction of the national trunk transportation system, the project that can alleviate the disparity in transportation services, and the project which is environmentally friendly and contribute to the improvement of traffic safety.

This study presents the specific criteria examining the legitimacy of the national grant system for local road facilities, and contributes to the policy direction for improving the differential national grant system. It is worthy noted that the recommendations in this study are based on the analysis of real individual travelling data which has not been conducted in any other studies.

Preface
Executive Summary

Chapter 1 Introduction

Chapter 2 National Grants and Road Transportation Facility Grants
　Section 1 National Grants
　Section 2 National Grants for Road Transportation Facilities

Chapter 3 Literature Review and International Cases
　Section 1 Literature Review
　Section 2 National Grant Methods and Rates for Transportation Facilities in Other Countries

Chapter 4 Differential Subsidy Rates for Nationally Subsidized Road Projects
　Section 1 Indicators and Data for Analysis
　Section 2 Calculation of Differential Subsidy Rate Indicators

Chapter 5 Criteria for Regional Differential Subsidy Rates for Road Projects
　Section 1 Normalization of Indicators
　Section 2 Regional Differential Subsidy Rates

Chapter 6 Comprehensive Conclusion and Policy Recommendations

References
Appendix
ABSTRACT