GK:3.3.3 Initiatives towards Balanced Regional Development

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 Geography of Korea: III. Production and Consumer Space > 3. Industry: Electronics, IT, and Shipbuilding > 3) Initiatives towards Balanced Regional Development


3) Initiatives towards Balanced Regional Development

Efforts to maintain the country’s competitiveness and to foster balanced regional development can be seen in initiatives to establish industrial zones and promote clusters, as well as in policies to create such things as innovation cities.


South Korea’s industrial complexes date back to the 1960s as the driving forces behind the nation’s rapid industrialization. Beginning with the creation of Ulsan Industrial Complex, these complexes continued to be gradually established. There are various advantages to establishing an industrial complex, including the granting of industrial land with infrastructure and government tax breaks and financial support, all of which serve to reduce initial investment costs. Further, the clustering of industrial enterprises allows for a synergy that promotes production, while on a national level the clustering of factories promotes more efficient land use while reducing social and environmental costs. However, a supplier-oriented use of industrial land resulted in a regional supply and demand imbalance, this along with the aging of infrastructure, the environmental damage caused by environmentally reckless development, and the failure to respond appropriately to changes in both domestic and foreign industry, have given rise to many problems.


Industrial complexes can be categorized into large national industrial complexes, regional industrial complexes, and agricultural industrial complexes. As for large national industrial complexes, these emerged from the Minister of Land and Transportation’s fostering of key industries as well as advanced scientific and technical industries. Regional industrial complexes are established through the designation of industrial areas by relevant city or provincial heads as a way of stimulating the local economy. Agricultural industrial complexes are set up in agricultural areas by the relevant town, county (gun), or district (gu) head with the aim of attracting and promoting industries to the area as a way of raising local incomes. Regional industrial complexes can be subdivided into general industrial complexes and high-tech urban industrial complexes. While general industrial complexes are largely manufacturing-oriented, high-tech urban industrial complexes, as the name implies, are geared towards the knowledge/culture/ICT industries through the establishment of such things as private venture complexes, cultural industry complexes, software development complexes, and industrial technology complexes.


As of 2012, South Korea had a total of some 960 industrial complexes, to include forty national industrial complexes, 488 regional industrial complexes, and 432 agricultural industrial complexes. In terms of area, they cover a total of about 111 million square meters, with over half of that (56%) taken up by national industrial complexes. Of the 64,788 enterprises distributed among these complexes, about 62.4 percent are found in national industrial complexes, 29.4 percent in regional industrial complexes, and 8.2 percent in agricultural industrial complexes. And in terms of workers, all together the complexes employ about 1.74 million individuals, with national industrial complexes employing the majority (56%), followed by regional industrial complexes (36%), and agricultural industrial complexes (7.9%).


Table 3-1. Overview of National Industrial Complexes (2012) Source: Korean Industrial Complex Corporation (KICOX) (Hanguk saneop danji gongdan), 2012.
Number of complexes Total area (m2) Number of enterprises* Number of total employees
National Industrial Complexes 40 566,074 40,436 977,434  
Regional Industrial Complexes 488 482,103 19,025 627,519
Agricultural Industrial Complexes 432 68,666 5,327 138,306
Wholesale and Retail Distribution Mokpo, Guri, Sokcho, Seogwipo, Suncheon, Seoul Special City, Yeongju, Jecheon, Andong, Jeonju Hanam  
Total 960 1,116,843 64,788 1,743,259


Although in terms of dispersal across the country, regional industrial complexes are the most numerous, they only account for about 30 percent of the total number of enterprises and workers, while agricultural industrial complexes account for the smallest number of both enterprises and workers. Though numbering only forty—the smallest number among the three types of industrial complexes—large national industrial complexes are the most important, as seen by the fact that they account for the highest number of enterprises and employees.


South Korea’s first national industrial complex dates to 1962 with the establishment of the Ulsan-Mapo National Industrial Complex. This was followed by three complexes founded in the 1960s: the Korea Export Industrial Complex in both Seoul and Incheon and the Gumi Industrial Complex in Gyeongsangbuk-do province. The 1970s saw the establishment of some fifteen complexes, including ones at Iksan, Okpo, Ulsan, Changwon, Yeosu, and Asan. Seven industrial complexes were set up in the 1980s, in places such as Gwangyang, Jinhae, Incheon, Gunsan, Gunjang, and Daebul. The 1990s saw the establishment of eight more complexes, including one in Gwangju (Jeollanam-do province), a petrochemical industrial complex in Chungcheongnam-do province and the Osong Industrial Complex in Chungcheongbuk-do province. Finally, in more recent years, seven complexes were set up in the 2000s, including ones on Jeju Island, in Daedeok and Daegu, bringing the total of national industrial complexes nationwide to forty as of 2012.


South Korea’s industrial complexes play a major role in the country’s total production and exports. Taken together, the country’s industrial complexes total output value amounted to 987 trillion Korean won (US$925 billion) in 2011. Of this, national industrial complexes contributed 65 percent, regional industrial complexes contributed 30 percent, while agricultural industrial complexes contributed about 5 percent. In terms of exports, the large role played by national industrial complexes is seen in the fact that in 2011 they contributed $US412 billion worth of exports, some 74 percent of the total value of national exports of $US555 billion. The output from such industrial complexes continues to rise steadily, with national industrial complexes in particular seeing increases in output and continuing to play a significant role in the nation’s exports.

Figure 3-15. Chronological development of South Korea’s industrial complexes
Table 3-2. Manufacturing and Export Volume by Industrial Complex Type Source: Korean Industrial Complex Corporation (KICOX) (Hanguk saneop danji gongdan), 2012.
Total National Complex Regional Complex Agricultural Complex
Production(in 1 trillion KRW) Exports ($US100 million) Production (in trillions of KRW) Exports ($US100 million) Production (in trillions of KRW) Exports ($US100 million) Production (in trillions of KRW) Exports ($US100 million)
987 4,120 643 2,758 292 1,239 50 123
2011 -100 -100 -65.3 -66.9 -29.6 -30.1 -5.1 -3


Examining overall production output and export output by industrial complex according to region, not only are conditions in such complexes ideal for production but together the six regions of Ulsan, Gyeonggi-do province, Jeollanam-do province, Gyeongsangbuk-do province, Gyeongsangnam-do province, and Chungcheongnam-do province, whose industrial complexes have a high number of large petrochemical and electronics companies, account for some 79 percent of the nation’s industrial output and about 85 percent of its total exports.


From 2005, in order to strengthen competitiveness in the nation’s conglomerated industrial areas, focus moved from the existing concentration on labor and capital input and production to a regional strategic industry approach fostering creativity and innovation through the formation of “industrial clusters.” This strategy not only has one company in charge of production, but assigns a university in charge of research and development, and service providers in charge of various research institutes and support functions. Thus, more than simply concentrating production in one geographic location, the fostering of such clusters aims at a higher value-added to the production process.


Figure 3-16. Production and export share of industrial complexes by region (2011)


Recently established large-scale industrial clusters include Daegu Textiles, Ulsan Marine Shipbuilding, Gyeongnam (Gyeongsangnam-do province) Knowledge-based Machinery, and Ulsan Automotives. A variety of strategic industries have also been organized into small- and medium-sized clusters. In pursuing a regional economic development policy since 2008 the government seeks to gradually shift the economic unit that of the economic region. Linking national and general industrial complexes with clusters composed of specialized enterprises from a given region is a way of fostering the development of strategic regional industries.

Table3-3.JPG

Specialized industries making up these economic regions include high-tech, telecommunications, and the components/materials industries of the capital region; the automotive, mechatronics, and aerospace industries of the country’s southeastern region; the electronics and machinery industries of the Daegu-Gyeongsangbuk-do province region; the IT, electronics, and related industries of the Chungcheong region; the shipbuilding, automotive-automotive parts, and optical electronics industries of the Honam region (comprising Jeollanam-do and Jeollabuk-do provinces); and finally, though relatively sluggish in their development, Gangwon-do province and Jeju Island have emerging medical device and food biotech industries.

Figure 3-17. South Korea’s specialized regional clusters Source: Korean Industrial Complex Corp. [KICOX], http://www.kicox.or.kr/


Another initiative towards balanced regional development involves a focus on fostering development in relatively backward regional areas as a response to the development of country’s capital region through the establishment of so-called “innovation cities.” Innovation cities are envisioned as pioneering futuristic cities, ideally livable locales combining high-level residential, educational, and cultural facilities. Here transferred government facilities will work in close collaboration with health, educational, research, and institutional organizations in an optimally innovative environment. One key aspect of the plan is the transfer of government offices, and with them their affiliated enterprises, schools, and research centers, from the Seoul capital region to these innovation cities in growth pole regions.


The government’s initiatives towards balanced regional development also involve the aforementioned fostering of innovation clusters, geared towards regional economies, from the country’s network of industrial complexes. Thus, along with the transfer of government offices to the provinces in order to promote regional industry, education, and research, one sees that the government is pursuing a variety of strategies simultaneously to both promote regional development and strengthen national competitiveness.

Korean version

GK:3.3.3 지역균형발전계획