This document discusses the evolution of industrial clusters in Korea from the 1960s to the present. It analyzes how different industries clustered in different regions over time, from labor-intensive industries in the 1960s to high-tech industries today. It also describes some of Korea's world-class industrial clusters, such as the electronics belt, shipbuilding belt, and Daeduk Science Park. Finally, it notes some new trends, including a policy shift towards innovation clusters, the movement of chaebol R&D facilities to Seoul, and the growth of towns like Pangyo as high-tech hubs.

1. 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

2. 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
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3. Are Clusters Old or New?
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Dashilar St. (1420- )
Agglomeration is concerned,
it is as old as human history.

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Domain of Clusters
Industry
Academia
CLUSTERS
Government
Clusters in 20C = “IPARGA”
Industry Production + Academia Research + Government Administration
Triangular cooperation

5. Understanding Korea (1)
from the Perspective of Industrial Clustering
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(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

6. Understanding Korea (2)
from the Perspective of Industrial Clustering
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(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

7. Understanding Korea (3)
from the Perspective of Industrial Clustering
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(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%

8. Geographical Distribution of Industrial Districts
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Population by City

9. Locational Dynamics of Industrial Districts (1)
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1960s 1970s 1980s 1990s

10. Locational Dynamics of Industrial Districts (2)
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2000s

11. Evolution of Industrial Clusters in Korea (by Period)
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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

12. Forces Influencing Industrial Clusters
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- 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

13. World-class Industrial Clusters in Korea (1)
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(1) Electronics Belt
Companies: Samsung, LG, SK
Locations: Paju, Suwon, Pangyo, Icheon, Asan
→ “SPIA”

14. World-class Industrial Clusters in Korea (2)
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(2) Shipbuilding Belt
Companies: Hyundai, Samsung, Daewoo, STX
Locations: Ulsan, Busan, Geoje → “BUG”

15. World-class Industrial Clusters in Korea (3)
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(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

16. World-class Industrial Clusters in Korea (4)
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(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

17. New Trends and Evaluation
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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)

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Muchas Gratias
Clusters are living entities
subject to changes in business environment.