evolution of clusters in korea(hwg 2015) valencia

Evolutionary Process of Industrial Clustering in Korea

Trends and Policy Implications

Won-Gyu HWANG Gangneung-Wonju National University, Korea &

University of Valencia, Spain

http://nine8007.tistory.com

May 28, 2015

International Conference on Clusters

Valencia, Spain

CONTENTS

01. Introduction

02. Evolution of Industrial Clusters in Korea: 1960s-2000s

03. New Trends and Expansion of Industrial Networks in Korea

04. Policy Implications


Are Clusters Old or New?


Dashilar St. (1420- )

Agglomeration is concerned, it is as old as human history.


Domain of Clusters

Industry

Academia

CLUSTERS

Government

Clusters in 20C = “IPARGA” Industry Production + Academia Research + Government Administration

Triangular cooperation

Understanding Korea (1) from the Perspective of Industrial Clustering


(1) Compact Society with Hyper-Urbanization - 50 million on 100 sq. km

→ Competitive society

- 92% urbanization ratio (over 70% in metropolitans)

→ A virtual city state of megalopolis

(2) Goal of Territorial Development - Overarching goal of spatial plan: Depopulation of Seoul

- Balanced regional development

→ Reality: Ever increasing concentration



(3) Export-led Economy - Trade dependency: over 80%

→ Trade volume: No. 7~8 in the world

- Industrial location toward trading partners

→ From the Pacific Ocean to Yellow Sea

(4) Industrialized Economy - Manufacturing , especially high-tech

- Powerhouse of ICT

→ Location pattern of high-tech industry



(5) Role of Government - Traditional: Dirigistic, but development-oriented

→ “Korea Inc.”

- Recent: Weak coordination power in pluralistic society

(6) “Chaebol”-dominating Society - The Country of “LOHAS” → Korean Paradox

- Group sales turnover / GNI (2012) Samsung: 23% Hyundai: 12%

Geographical Distribution of Industrial Districts


Population by City

Locational Dynamics of Industrial Districts (1)


1960s 1970s 1980s 1990s

Locational Dynamics of Industrial Districts (2)


2000s

Evolution of Industrial Clusters in Korea (by Period)


Period Target Industry Core Industry/Business Area

1960s

Labor-intensive Ligh

t Industry

M-led Garment Footwear Plywood

Busan Busan Busan

G-led Petro-Chemical Ulsan

1970s

Heavy & Chemical I

ndustry

M-led Garment Busan, Seoul

G-led Steel Shipbuilding Machinery Automobile Electronics EPZs

Pohang Ulsan Changwon Ulsan Gumi Masan, Guro

1980s

Technology-based In

dustry

M-led Electronics Shipbuilding

Suwon Geoje

G-led Steel & Chemical Guangyang-Yeosu

1990s

Technology-intensiv

e Industry

M-led Electronics-Semiconductor Petro-Chemical & Steel

Suwon, Ichon Asan Bay

G-led R&D – Public Components & Materials

Daejon Banwol-Sihwa

2000s

High-Technology Industry

M-led Electronics-Display Automobile IT-Software (Game) Fashion –Dongdaemun

Asan, Paju Pyungtaek Seoul Seoul

G-led Bio-Pharmaceutical Medical Equipment

Osong Wonju

Forces Influencing Industrial Clusters


- Efficiency vs. Equity

- Centripetal vs. Centrifugal

- Market (or, Chaebol) vs. Government

- Government’s emphasis: from Big to SMEs or ventures

- Fostering Measures: from direct intervention to indirect support

“Picking-up Winners” → R&D, market information

- Spread vs. Backwash → Polarization

- Direction of industrial location: “Sunflower Effect”

in consonant with trading partners

R&D Expenditure

Public Private

World-class Industrial Clusters in Korea (1)


(1) Electronics Belt

Companies: Samsung, LG, SK

Locations: Paju, Suwon, Pangyo, Icheon, Asan

→ “SPIA”



(2) Shipbuilding Belt

Companies: Hyundai, Samsung, Daewoo, STX

Locations: Ulsan, Busan, Geoje → “BUG”



(3) Dongdaemun Fashion Town

World mecca of fast fashion

Markets: 30

Wholesale shops: 23,000

Retail shops: 12,000

Business owners and employees: 100,000



(4) Daeduk Science Park

Premier research institutes and top university are located

Statistics (2013)

- Companies & Institutions: 1,490

- Annual sales turnover: €13 billion

- Ph.D. holders: 12,000

New Trends and Evaluation


Policy Shift - “From Industrial Complexes to Innovation Clusters”

- KICOX reorganized

Local Exodus Toward Seoul - Slacken restriction over capital region

→ “Demand Explosion”

- Chaebol R&D facilities rushed-in

- Pangyo, the outskirts venture town

→ No. 1 high-tech town in Korea

Lotte 123 (555m)

Hyundai 115 (563m)


Muchas Gratias

Clusters are living entities

subject to changes in business environment.

evolution of clusters in korea(hwg 2015) valencia

Economy & Finance