GK:3.3.1 Major Industries and Industrial Areas

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 Geography of Korea: III. Production and Consumer Space > 3. Industry  > 1) Major Industries and Industrial Areas

1) Major Industries and Industrial Areas

From the 1960s the South Korean government implemented a policy of full-scale promotion of the country’s export industries. Achieving this through government support, from the 1970s the government moved from an important substitution industrialization and began large-scale investments to promote an export-oriented heavy industry. If this period was one of quantitative growth through concentrated capital investment, the 1980s saw increased in investment in human capital and research and development aimed at improving productivity rather than just increasing output. The fastest growing industries during this period would prove afterwards to be the engines driving the long-term growth of the South Korean economy.


Korean industry got its start in construction with the founding of large-scale companies and the undertaking of massive building projects in the 1960s and early 1970s. After this came the growth of heavy industries like steel, automotive, and shipbuilding, while the electronics industry also saw rapid development. The growth of construction was in the context of the country’s First Economic Development Plan (1962–1966), which sought to secure energy resources such as electricity and coal and to focus national efforts on the foundation of economic development through the expansion of key industries and infrastructure such as road and rail networks. Accordingly, large-scale civil engineering projects were implemented, such as the construction of refineries, cement plants, thermal power plants, and bridges over the Han River, the Seoul-Incheon double-track line, hydroelectric plants, and multi-purpose dams. Through the “Industrial Complex Development Act” of the Second Economic Development Plan (1966–1971), locations such as Gumi, Changwon, Pohang, and Banweol, became the sites of industrial complexes. Also during this period the Seoul-Incheon and Seoul-Busan expressways were constructed. Through such large-scale national development projects the domestic construction industry gained notable technical skills. Such experiences and the technical proficiency they brought established a foundation for the nation’s economic development. In the mid-1970s the government threw its heavy support behind the development of the six strategic industries of steel, chemicals, non-ferrous metals, electronics, machinery, and shipbuilding.


In response to the rapid growth in demand for steel, the government in the 1960s attempted the construction of steel mills but found itself hampered due to an inability to secure the required funds. Eventually, through funds acquired as compensation from Japan for its period of colonial rule over Korea, as well as secured loans, by 1973 the Pohang Integrated Steelworks (today’s POSCO) was completed, which made possible the smooth supply of the steel required for domestic industrial, construction, and public infrastructure development. Since that time, with the establishment of Dongguk Steel and Hyundai Steel companies, South Korea’s steel production continues to grow. As of 2012 it had an annual output of nearly 35 million tons, making it the sixth largest producer of steel in the world.


Though Korea possessed some shipbuilding capacity in the 1960s, full-scale growth did not begin until the establishment of the shipyards of Hyundai Heavy Industries in 1973, followed soon thereafter by that of Samsung in 1977, and Daewoo in 1978 that were equipped to construct large-scale vessels. As of 2011, South Korea claimed the top market share in new shipbuilding orders, accounting for 51.2 percent, compared to 31.2 percent for China and 4.7% for Japan. In recent years, the manufacture of various equipment used in the oil and gas extraction industry, such as LNG carriers, ice-breaking tankers, and oil rigs, are also claiming a higher market share.


South Korea’s automobile industry had its real beginnings when in 1962 Saenara Automotive established a plant in Bupyeong, Gyeonggi-do province and began assembly production, followed thereafter by the building of Shinjin, Saehan, Hyundai, and Kia assembly plants that began the assembly of semi-finished American and Japanese car models. However, automobile production didn’t being until 1973 when Kia Motors established an assembly line production plant in Gwangmyeong, Gyeonggi-do province. This was followed in 1975 by Hyundai Motor Company building a comprehensive automobile plan in Ulsan equipped with modern equipment. With the production and export to the US market of the Pony Excel (or Hyundai Excel), the country was on its way to becoming an automotive powerhouse. However, with the financial crisis that hit in the latter part of the 1990s Hyundai Motor Company acquired Kia Motors, Daewoo was sold to GM, Samsung Automotive to Renault, and SsangYong was eventually purchased by SAIC (Shanghai Automotive Industry Corporation). In the wake of these changes, the South Korean automobile industry gradually regained a competitive place in the world market, rising to fifth in the world in terms of automobile sales.


The electronics and telecommunications industry may be called the heart of Korean manufacturing. From the 1970s Lucky Goldstar (now LG) and Samsung have been surrounded by intense competition in the electronics industry. With an eye towards the development of an export-driven economy, in 1971 the government spearheaded the development of the Gumi Electronics Industrial Complex, as well as other companies such as Anam Electronics and Taihan Electric Wire Group.


In terms of the semiconductor industry, due to its low labor costs South Korea from the late 1960s attracted such international companies as Motorola as a base for the assembly of their products. In 1966, the Korea Institute of Science and Technology (KIST) was founded to further national efforts at technological research and development. Through efforts led by the private sector but with government support, the country’s semiconductor industry gradually reduced the gap between its output and the products of developed nations. By 1993, South Korea led the world in D-RAM sales and in 1996 it successfully commercialized CDMA service for digital mobile communication. Though South Korea’s electronic industries began to emerge only in 1994, the country soon led the world in the sales of such technologies as semiconductors, cell phones, and digital displays.

Figure 3-12. South Korea’s primary industrial areas


South Korea’s industrial development began in the 1960s with labor-intensive light industries such as textiles, clothing, and shoes in major cities such as Seoul with large labor pools. During the 1970s and 1980s capital and technologically intensive heavy industries such as the steel, petrochemical, shipbuilding, and oil refinery industries began to be developed while industrial areas in the country’s southeastern coastal region were built to facilitate the import of raw materials and export of industrial output. From the 1990s knowledge and technologically intensive industries like computers and semiconductors developed, concentrated in urban centers that provided the most advantageous conditions for their growth and development.


Looking at the salient characteristics of South Korea’s industrial areas, urban zones with their convenient transportation nodes, wealth of capital and labor, and large consumer markets, are the country’s largest manufacturing centers with an established tradition of evenly developed light, heavy, and high-tech industries. The country’s southeastern coast industrial zone is advantageously situated for the import of raw materials and export of industrial products. Government policy has led the growth of this area as locus of the country’s heavy industries, such as steel (in Pohang and Gwangyang), petrochemicals (Yeosu, Ulsan), automobiles (Ulsan), shipbuilding (Geoje, Ulsan), and machinery (Changwon). The Yeongnam (a geographical term referring collectively to Gyeongsangnam-do and Gyeongsangbuk-do provinces) inland industrial zone is labor-rich and conveniently situated for rail and road transport, making it a center of labor-intensive industries such as textiles and electronics. However, the area is experiencing a recession due to the rise in worker wages and continuing transfer of factories overseas. The Rich in raw materials, the Taebaek industrial zone has developed industries such as cement that are based on raw materials. With its proximity to China, the Honam (referring collectively to Jeollanam-do and Jeollabuk-do provinces) industrial zone has a high potential for growth as the country’s second coastal industrial zone (after the southeastern coast zone) with a focus on trade with China. Benefitting from convenient transport links and proximity to large urban centers, the Chungcheong (Chungcheongnam-do and Chungcheongbuk-do provinces) industrial zone is an area for the distribution of urban-based industries, with the development of heavy industries in the Seosan-Dangjin region and high-tech industries in the Daejeon-Cheongju area.


As of 2012, in addition to a being major producer of cell phones, South Korea is also a world leader in semiconductor sales (second worldwide), shipbuilding orders (second worldwide), and automobile production (fifth worldwide). In this, government policies have played a key role in South Korea’s achieving, in the short period of about thirty years beginning in the 1960s, the technological independence necessary for securing industrial competitiveness and achieving its current worldwide recognition as a technological powerhouse.

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