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The main purpose of this paper is to analyze fiscal impacts, especially treasury loans and investments, on the disequilibrium development in Korea during four decades. The difference of regional disparities makes regional disequilibrium of budget scale which fixes and magnifies regional disparities, and vice versa. To mitigate regional disparities correspondent policy mix and corrective measures should be prepared. And the regional governments are given a power, albeit a limited one, to levy their own tax rates. Consequently, policy-makers should induce regional governments to engage in a rational fiscal competition through, for example, the local fiscal adjustment system or tax sharing program and make sure that regional tax structure are not distorted by the influence of a few interest groups.
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