The government has announced a plan to expand and revamp the railway network to connect major cities so that it will be possible to reach any place in the country within two hours. It hopes to complete a high-speed railroad linking Daegu and Busan by November and another crossing through South Jeolla Province between 2014 and 2017, while refurbishing existing railways to accommodate trains that can travel up to 230 km/h. The government forecasts the number of people using the rail service will rise to 770,00 a day by 2025 from 310,000 a day in 2007, while trains will handle 25 percent of the country's cargo transport volume compared to the present 7.5 percent.

The aim is to shift the transportation policy focus from highways to railways. Trains are less polluting than automobiles, emitting just one-sixth of the greenhouse gases while being eight times more energy-efficient. That is why countries around the world are boosting investment to upgrade their rail networks and achieve what has been termed a "railway renaissance." China plans to build 17,000 km of high-speed railways and spend W360 trillion (US$1=W1,186) on the project over the next three years. The U.S. and countries in Europe are seeking to build 14,000 to 15,000 km of high-speed railways.

Since the 1960s, more than 3,000 km of highways have been built in Korea, but the country's railway network has increased by only 370 km over that period. Excluding construction of the Seoul-Busan high-speed railway, there has been virtually no investment. Even in the U.S., where automobiles reign, trains handle 16 percent of cargo transport. But in Korea, trains handle less than 8 percent.

More investment has to be made to shift Korea's transport and logistics system to railways. The government says it will boost the annual budget for train services from W4 trillion to W6 trillion, but that is still far short of some W100 trillion needed for the entire project. It will have to secure the funds by minimizing overlapping investment on roads, regional airports and other marginal projects. And the focus should go beyond just bolstering the country's rail network. Korea, like Japan, should aim at nurturing the railway and related businesses including manufacturing of trains as a future growth engine driving exports.

The global railway industry is growing at a rate of 2.5 percent each year and is estimated to reach W250 trillion by 2020. The government should come up with financial and other measures to encourage businesses to develop new railway technologies and services targeting overseas markets.