This study is trying to present policy measures for the development of industrial capital cities as a strategy of balanced national development and self-sustained localization in Korea. The study covers following areas: theoretical and conceptual foundation of industrial capital cities, implications from model cities both domestic and foreign cities, selection of candidate cities for industrial capital in selected industries and important measures of government policies.
The study is composed of six chapters. The first chapter presents the background, objectives, scope, methods and framework of the study. The second chapter discusses previous studies and related theories, and then sets conceptual foundation of industrial capital city. The third chapter examines model cases of industrial capital cities. The fourth chapter shows examples of how to select industrial capital cities in Korea by employing a model that considers such aspects as hierarchical position of city, degree of industrial accumulation, regional competitiveness and policy factors. The fifth chapter presents basic framework of industrial capital city and specific policy measures. The last chapter presents a summary and future policy agenda.
Background of the study is that it is important to integrate various policy efforts aiming to promote regional industries into major cities as the focal points of localization.
Spatial scope of the study covers thirty largest cities in Korea and scope of industry includes manufacturing and service industries at three digits level of standard industrial classification. Research method includes literature reviews, experts survey using questionnaire and statistical analysis.
I - 22
A Study on the Promotion of Industrial Capital Cities for the Development of Specialized Regions in Korea
지역의 특성화 발전을 위한 산업별 수위도시 육성방안
Won-Sup Lee, Yong-Woo Lee, Se-Hoon Park, In-Kwon Park, Sang-Yeon Lim RR 2004-13․December 2004․243 pages․Korean
Theories related to industrial capital city include endogenous regional development theory, innovative milieu theory, world city theory, regional competitiveness theory, theory of accumulation economies and cluster based regional development theory.
Important conclusions drawn from the review of theories include the importance of externalities and accumulation economies, environment facilitating learning and innovation through experience and collective production system and enhanced competitiveness. Also, industrial capital cities should be the center of global production and service activities.
Building economic and social infrastructure and government's policy assistance are important to improve competitiveness of industrial capital cities.
Conceptual foundation of industrial capital city is centered on spatial hierarchies and functional linkages. Industrial capital city is defined as a city with a high level of accumulation of specific industries and located at the highest position of urban hierarchy owns complex economic structure comprised of a key industry, education and research institutions and business services, exerting strong influence to domestic and foreign regions. Industrial capital city, comparable to political capital city, contains both economic and geographical aspects. Industries are economic basis of region offering jobs and incomes for people's basic living.
Also, industrial capital city is a central place located at the highest position of urban hierarchy. In addition, industrial capital city includes government's intention for balanced territorial development by deploying and promoting various types of industrial capital in selected locations. Industrial capital city, as the locus of innovation and industrial restructuring can contribute to self-sustained localization as well as national economic growth.
Comparing industrial clusters, industrial capital city has a few distinct characteristics.
In terms of industrial structure, both have a high level of accumulation in specific areas.
However, in terms of hierarchical position on urban system, scale and scope of functional linkages and spatial scope of influence, industrial capital city has much powerful impact.
Therefore all of industrial capital cities are a large-scale industrial cluster, but only very successful and few largest clusters can be industrial capital city.
Examples of industrial capital city selected for analysis include four cities in Korea and three cities in other countries. For Korean cases, Daegu as a capital of textile industry, Busan as a capital of marine logistics, Gwangju as a capital of optical industry and Daejeon as a capital of research and development are selected. For international examples, Detroit of the USA as a capital of automobile industry, Rotterdam of the Netherlands as a capital of logistics industry and Tskuba of Japan as a capital of research and development are selected.
Important implications for development of industrial capital cities in Korea are drawn from the examination of foreign examples. Detroit case suggests that accumulation and sustainable growth of specific industries in a certain location demand capable human power, new technologies and infrastructure. Production of high value goods at lower costs is the key element of securing regional competitiveness. In addition, diversification of economic structure is also important to overcome the weakness arising from over-dependence on a single industry.
Rotterdam case shows that a good geographical location explains only part of competitiveness of the city as the capital of logistics industry. Political, economic and social stabilization of the country, efficient financial system and transportation facilities are also important requirement for the capital of logistics. In addition, superior logistics infrastructure and labor power with foreign language skills and work experiences of logistics industries are important factors. In terms of policy, future oriented investment and planning, flexible attitude toward reforming tax and administrative procedure, marketing strategy based on customers' demand and support from national and regional government are important.
Tskuba case suggests excellent lesson for the development of the capital of research and development in Korea. Tskuba, a research and education city, was developed with relocation of national research and test institutions and growth of Tskuba university. The result is simple accumulation of facilities and manpower, failing to create value added through industry-university cooperation. More emphasis was placed on basic research than on high technologies applicable to industries. If Dajeon to be a world class center of
research and development, clear long-term vision of the city needs to be established. A dense network and cooperation among government offices, businesses, companies, research institutions and universities is essential for the R&D capital city.
An analytical model was developed to select candidates for industrial capitals out of thirty largest cities in Korea, yielding nine cities with highest potential. The model is consisted of four elements that represent hierarchy, industrial accumulation, competitiveness and policy factors of each city. Each element was given differential weight depending on the relative importance. Two solutions were made by differentiating the weight of each element and both results were considered together to finalize candidate cities. For industries, twelve at two digits classification were chosen considering spatial pattern of location and growth potential.
The nine candidate cities for industrial capitals and matching industries are:
Seoul(apparel and knowledge based service industries), Busan(marine logistics industry), Daegu(textile industry), Incheon(air logistics industry), Ulsan(automobile industry), Changwon-Gimhae(machinery industry), Pohang(metallic industry), Gumi(electronics industry) and Gwangju(optical or cultural industry). An exception is Gwangju, which does not have enough potential as industrial capital city in the twelve selected industries but was included considering government's strong support to promote the city as the center of optical and cultural industry.
Promotion of industrial capital cities demands assistance from the government policies.
Basic framework of policy is consisted of six factors: key industry, backward and forward industries, innovation network, linkage of related policies, business startup and implementation system. In addition, six policy agenda deserve consideration for the promotion of industrial capital cities.
First, accumulation and competitiveness of key industries have to be encouraged in the capital cities. Second, development of backward and forward industries is essential for sustained growth of regional industries. Third, industrial capital cities should be the locus of innovation by creating a dense network of businesses, universities, research institutions and government. Fourth, favorable social environment needs to be made, offering tangible
and intangible infrastructure for business activities. Fifth, policies for industrial capital should focus on the linkages and integration of related policies for industries, regional development, infrastructure, science and education. Last, establishment of effective governance system should clarify role of related actors, central government, regional and local government and private sector.
