Collaborative Regional Development across the Korea-Japan Strait Zone

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ISBN 89-8182-341-3

Collaborative Regional Development across the Korea-Japan Strait Zone

Won Bae KIM Naoto TAKAKI

Dae-Shik LEE Editors

Korea Research Institute for Human Settlements Asian Institute for Regional Innovation, Busan National University Kyushu Economic Research Center Gyeong-Nam Development Institute Ulsan Development Institute Fukuoka Asian Urban Research Center

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All right reserved. Printed in the Republic of Korea. No part of this book may be reproduced in any manner without written permission except in the case of brief quotations embodied in critical articles and reviews. For information address Korea

Research Institute for Human Settlements, 1591-6, Gwanyang-dong, Dongan-gu, Anyang-si, Gyeonggi-do, 431-712, Korea.

http://www.krihs.re.kr

Collaborative Regional Development across the Korea-Japan Strait Zone / Edited by Won Bae Kim, Naoto TAKAKI, Dae-Shik LEE - Anyang: Korea Research Institute for Human Settlements, 2005

p. cm Includes bibliographical reference

ISBN 89-8182-341-3 CIP 2005002703

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Foreword

This study has been initiated by several institutions and individuals, who shared the idea of building a cross-border region across the Korea-Japan Strait Zone. Given the trend of economic globalization and the anticipation of Korea-Japan free trade agreement in the near future, these institutions and individuals strongly felt the need to promote cross-border cooperation at the local level. The deepening economic integration among China, Japan and Korea and accompanied changes in the industrial landscape of Northeast Asia were other background factors. As a matter of fact, many localities and regions in Japan and Korea face the prospect of industrial decline due to the push factors of their domestic economy and the pull factors of the rapidly growing Chinese economy. If these localities and regions do not take appropriate measures now, then they will very likely be degenerated into semi-peripheral or even peripheral regions. The prospect is gloomier for cities and regions in South Korea than those in Japan because of their lesser technological superiority over China.

Industrial upgrading and enhancing regional innovation capacities are obvious policy responses to be considered by cities and regions. These policies, however, may not be effective for some regions, which have weak fundamentals, i.e., low innovation capacities and little connections to the global economy. Considering the softening of borders and the advancement of communication and transportation technologies, cross-border cooperation provides a promising avenue to revitalize regional economies. Indeed, European cross-border regions and cooperation examples attest this.

Specialization due to market expansion, pooled use of management and innovative resources, cross-border subcontracting and joint market development and R&D constitute the rationale for cross-border cooperation.

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In addition, the long history of cultural and economic exchanges, geographical proximity and institutional compatibility make the Korea-Japan Strait Zone a very promising case of genuine cross-border cooperation in Northeast Asia.

This study therefore is aimed at developing a conceptual framework and strategies to strengthen cross-border cooperation between local areas within the Korea-Japan Strait Zone. It adopted cross-border cooperation as an essential part of regional development strategies. More specifically, the study sought to answer the following key questions:

- What are theoretical and empirical evidences for cross-border cooperation within the Korea-Japan Strait Zone?

- What are the promising areas for cross-border cooperation?

- What are major obstacles and how can they be overcome?

- What are appropriate cross-border structures and how should they be built?

- What are concrete cross-border projects and how should they be implemented?

Throughout the study, a bilateral not unilateral perspective was taken and a consensus was sought wherever possible. By taking a survey, the study also attempted to bring in the views and opinions of local community leaders and firm managers regarding the Korea-Japan free trade agreement and cross-border cooperation. Given time and resource constraints, some sectional analysis was not carried out to the extent desired. Nonetheless, all the participants in this study did their best to produce relevant policy implications for both central and local governments of Japan and Korea.

More than dozens of researchers and professors from Japan and Korea participated in this study. Their valuable contribution is duly acknowledged in this report. Such institutions as the Korea Research Institute for Human Settlements, the Kyushu Economic Research Center, the Regional Innovation Center at the Busan National University, the Kyongnam

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Development Institute, the Ulsan Development Institute and the Fukuoka Asia Urban Research Center provided generous financial support and research assistance for the study. The study is also indebted to several persons, who gave moral and substantial support: Mr. Akio Imamura at the Kyushu Economic Research Center, Professor Yuhei Ogawa at Seinan Gakuin University, Professor Jung Duk Lim at Busan National University, Professor Woo Bae Lee at Inje University, Professor Tsumori Takayuki at Okayama University, and Professor Nobuhiro Suzuki at Kyushu University.

As editorial committee members, Mr. Naoto Takaki at the Kyushu Economic Research Center and Professor Dae-Shik Lee at Busan National University spent days for editing this report.

In spite of current tension between Korea and Japan surrounding the issues of territory and history textbooks, all the participants in this study strongly believe that cultural, social and economic exchanges and cooperation between local areas across the border will not only contribute to the revitalization of local economies within the Korea-Japan Strait Zone but also help deepen mutual understanding between the two countries. This report is thus hoped to help build a bridge over the Korea-Japan Strait Zone.

Spring 2005 Won Bae Kim Senior Fellow Chair of the Editorial Committee

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Summary

Strategies for Collaborative Regional Development across the Korea-Japan Strait Zone

This volume is a collection of research papers, which have been carried out by researchers from both Korea and Japan. The report is composed of five parts. Part I deals with the historical and contemporary background of inter-local cross-border exchanges across the Korea-Japan strait. With the assessment of past performance in inter-local cooperation efforts, chapters in Part I examine achievements and problems in inter-local cooperation. It is noted that passengers and freight traffic has increased sharply between southeast Korea and northern Kyushu since 1999. In contrast, investment across the border has been inactive. There are many reasons for such low level of investment. One of them is the branch economy characteristics of both Kyushu and southeastern Korea. Another reason is that Korea is no longer a suitable location for low-cost production. This is partly reflected in the increasing trade imbalance between Japan (Kyushu) and Korea. Japan (Kyushu) imports more from China, while it exports more machinery products to Korea. Another important issue is that inter-local cooperative efforts did not produce tangible economic results despite many meetings and forums held among public authorities in the Korea-Japan strait zone.

Nonetheless, the Korea-Japan Strait Zone Governors’ Summit provides an institutional foundation for inter-local cooperation across the strait.

Against this background, chapters in Part I stress the need for closer inter-local cooperation. The basic rationale comes from the branch economy characteristics of both regional economies—southeastern Korea and northern

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Kyushu. The fate of these regional economies depends more on external forces than internal. Given the likelihood of free trade agreement between Korea and Japan in a few years of time (both Korean and Japanese governments were in negotiation for the conclusion of FTA at the end of 2005), regional economies that do not have international competitiveness will lose in a more liberalized economic environment. Thus, it is critical for these regions to capture the opportunities arising from FTA and in general globalization. If they do not make successful adjustments, they will fall back into the peripheral position. Of course, closer cooperation with the core region, for example, the Seoul capital region, is an option for southeast Korea. Given the structure of unequal relationship between the core region and non-core regions, it is difficult to expect that any non-core region such as northern Kyushu can break out of the structure of unequal relationship.

Although authors do not advocate the separation of domestic inter-regional dependency, they agree on the need to restructure this domestic inter- regional dependency by actively pursuing international inter-local cooperation. Certainly, this is one avenue for those semi-peripheral regions to upgrade themselves. The basic concept to be employed for this cross- border inter-local cooperation in the Korea-Japan strait zone should be ‘joint comparative or competitive advantage’ instead of simple comparative advantage.

Part II examines the rationales for cross-border cooperation in the Korea-Japan Strait Zone in theoretical and empirical terms. Chapter 4 argues for the need to consider cross-border cooperation as an important element of regional development strategy. This is particularly so under the circumstance of Northeast Asia, wherein economic interdependency is rising and free trade movements are gaining a momentum. Chapter 5 draws lessons from the European and North American experiences in cross-border cooperation. The major lesson from the European experience is that European integration and the emergence of a supra-national organization like the European Council

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provided a favorable environment for cross-border cooperation at the local level. Although it is not possible to replicate the European examples in Northeast Asia, one can certainly apply some of cross-border institutional structures to the Korea-Japan Strait Zone. The North American experience provides valuable lessons as well since Northeast Asia’s macro institutional conditions resemble those of North America. It reminds us of the importance of methodology--how to utilize a partnership between the public and the private sector, given the weak institutional foundation for inter-local cross- border cooperation.

Part III explains about the likely impact of Korea-Japan Free Trade Agreement on the regional economies of southeastern Korea and northern Kyushu. Undoubtedly, FTA is expected to increase trade volume between Korea and Japan. Similarly, trade between southeastern Korea and Japan on one hand, and trade between northern Kyushu and Korea on the other, will grow but trade imbalance may grow too in favor of Japan. Although the Korean side anticipates more Japanese investment from Japan following the Korea-Japan FTA, it is difficult to predict how much investment will flow into Korea and the southeastern region. For the southeastern region and Korea as a whole, investment environment must be improved to attract more Japanese investment so as to capture the benefits of FTA between the two countries. The second chapter in Part II deals specifically with the agricultural sector, which is regarded as a sensitive area. The author, while acknowledging the need to carefully deal with the sector, suggests that both governments of Japan and Korea establish some mechanisms in order to minimize negative impact on this sensitive sector. Sharing the benefits of free trade is one of important policy objectives and therefore both countries should work together to set up a joint fund to compensate for the enterprises or residents who may be negatively affected by the free trade agreement. It is also advised to set up a cross-border market for agricultural products.

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The other two papers in Part III introduces the results of the survey taken for this collaborative research. Community leaders and firm managers in the BUG (Busan-Ulsan-Gyeongnam) area favor the Korea-Japan free trade agreement, although they do not expect that the agreement will be concluded as scheduled. Most of respondents in the BUG area expressed a concern about the negative effects of the Korea-Japan FTA. This is in contrast to the opinion of the respondents in the FNSY (Fukuoka-Nagasaki-Saga- Yamaguchi) area. Japanese respondents are more in favor of the Korea-Japan FTA and about half of them have an opinion that the agreement should be concluded as early as possible. Korean and Japanese respondents also differ in terms of the perceived effects of the Korea-Japan FTA on their regional economies. Whereas a large proportion of Japanese respondents (89%) expect positive effects on the regional economy, lesser proportion of Korean respondents (51%) regard the FTA will bring positive benefits to the regional economy. However, both Korean and Japanese respondents agree that language problem, lack of information and differences in customs in commercial transactions are obstacles to economic cooperation across the strait. In response to the question of the most promising fields of cooperation, Korean respondents rank automobiles/parts, tourism, machinery and logistics in descending order. In contrast, Japanese respondents mention tourism, environment, semiconductor and automobiles/parts as most promising sectors. With a slight variation in the order of importance, both Korean and Japanese respondents consider that forming an integrated regional economy across the strait, expansion of exchanges at the private level, starting with cooperation in a few promising sectors or the earlier conclusion of Korea- Japan FTA will facilitate economic cooperation across the Korea-Japan strait.

Korean respondents consider that the role of local government in facilitating economic cooperation should focus on financial support, information provision and removal of institutional barriers. In contrast, Japanese

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respondents place similar emphases on information provision and removal of institutional barriers, while they put less weight on financial support.

The above survey results indicate that there are subtle differences in opinion between Korean and Japanese respondents with regard to the FTA, regional economic integration, the promising sector of cooperation, and so forth. Obviously, these differences stem from the perceptions that each side has on the other. As we are aware, these perceptions are not always based on facts and they are often tainted with misinformation and prejudices. In this regard, generation and dissemination of information as revealed in the survey results is the foremost important task to be done in order to promote cross-border cooperation.

Part IV examines the possibility of cross-border cooperation in specific industry or sector. Those sectors examined cover a wide range of industries including manufacturing, services and R&D. Although the level of analysis is uneven across the sectors, chapters in Part IV look at the potential and prospect of cooperation in each sector in the Korea-Japan strait zone.

Considering a substantial agglomeration of automobile and parts factories in southeast Korea and northern Kyushu, it is not too far fetched to imagine a cross-border automobile corridor in the strait zone. The Ontario- Michigan automobile corridor in North America provides an example of cross-border integration. We should remember, however, that the US-Canada auto pact was made long before North American Free Trade Agreement. In other words, an automobile corridor in the Korea-Japan strait zone will take time to mature. More importantly, it is not government but multinational companies that can bring the idea into reality.

Both southeast Korea and northern Kyushu have a strong base in machinery and metal industries. As such, potential for cooperation exists but the issue of how remains. In terms of technology, Japanese firms are ahead of Korean firms. Although Korean firms want technology transfer from Japan, Japanese firms are reluctant. The issue here is related to intellectual

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property ownership. Unless this issue is resolved and the attitudes of Japanese firms are changed, it seems difficult to have a mature cooperative relationship in the machinery industry. Given technological superiority, Japanese firms will enjoy the benefits of more export to Korea when the two countries conclude FTA. Unless the resulting trade imbalance is complemented by Japanese investment in Korea or some form of technological cooperation between the two sides, the machinery industry in southeast Korea is likely to have negative impact. Korea-Japan FTA will enlarge the opportunity of outsourcing or subcontracting for both Korean and Japanese firms in the machinery and metal industry. Whether or not firms will capture this opportunity depends on the evolving pattern of inter-firm relations across the border, wherein non-tariff barriers such as customs in commercial transactions and lack of trust between partners across the border are still high.

The information service industry, even though it is not the major industry yet in both southeast Korea and northern Kyushu, is growing fast and promising for cross-border cooperation. Given a rather recent birth of the industry, there is no significant technological gap between Korea and Japan. However, the information service industry and in particular software industry is sensitive to labor costs. Given that Korea’s wage level is much higher than that of China and India, there is no possibility of Korean firms to succeed in the order-made software market. There is a chance for cross- border cooperation in package software. Japanese firms in northern Kyushu can utilize the talents in the information service industry in Korea. By doing this, Japanese firms can avoid spending large expenses for the development of package software, while Korean venture companies can expand their market into Japan. For the moment, selling tie-up is considered to be a feasible and effective cooperation strategy.

The environment industry is another candidate for cross-border cooperation. Northern Kyushu is relatively advanced in terms of pollution

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abatement technology and recycling. As a matter of fact, Kitakyushu is at the vanguard of environment industry in Japan. Given the heavy industry orientation of southeast Korea, there is an obvious need to develop the environment industry and in fact the market is growing fast. Japanese firms in northern Kyushu can render technological support to southeast Korea. The city of Ulsan, for example, can learn a great deal from the experiences of the city of Kitakyushu. In order to develop cross-border cooperation in the environment industry across the strait, both sides should go beyond the above one-sided cooperation. There are a few avenues to realize higher levels of cooperation across the strait. One avenue would be in the re- exporting of recycled goods including automobiles, home appliances and others. The existing recycling facilities and logistics platform in the Korea- Japan strait zone would be a great asset for both sides. Another avenue, which is likely to take more time, would be advancing into the third country market jointly, utilizing technical expertise and financial resources in northern Kyushu and plant construction capability of firms in southeast Korea. Yet another would be to collaborate in the development of advanced environmental equipments. Firms in northern Kyushu plan, design and market the products in overseas market, while firms in southeast Korea manufacture the products. However, these possibilities should be further probed since there are many practical issues involved in realizing cross- border cooperation between Korean and Japanese firms.

As revealed in the survey results, tourism is one of the most promising sectors for cross-border cooperation. Obviously, tourism is a target sector for many urban and rural economies in Asia and Europe. Geographical proximity and cultural similarity between Japan and Korea provide very favorable initial conditions. Language barriers, border formalities, transportation, and expenses in turn pose frictions in cross-border tourism industry. There are two categories of measures to promote tourism in both southeast Korea and northern Kyushu. One applies to just between the two

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regions and the other is for anyone who comes to each region. Posting Korea’s street signs in Chinese characters for example will not only help Japanese tourists but also Chinese tourists. Japanese (Korean) language course in public broadcasting system in southeast Korea (northern Kyushu) would stimulate the interest of the residents in each region about the other country. Currency exchange is another negative factor for tourists. If hotels and restaurants in both southeast Korea and northern Kyushu accept either Japanese or Korean currency, it would be much more convenient for both Japanese and Korean tourists. An early adoption of visa exemption, which is under discussion now between Korean and Japanese government, will stimulate tourism in both places, especially from Korea. Especially for the residents in southeast Korea and northern Kyushu, we can consider coupon system—discounted prices for hotels, restaurants and airfare and sea fare.

Apart from tourism promotion between the two regions or countries, local authorities and tourist firms in southeast Korea and northern Kyushu can jointly promote tourism to attract tourists from China and other countries.

Another area of cross-border cooperation would be developing a new industry of medical services and health care based on the potential of a combined region covering both southeast Korea and northern Kyushu. This is not simply exploiting comparative advantage. Instead it is creating competitive advantage by pooling resources available in both regions. The combined region already provides a market of 17 million populations, with a significant proportion owed to the aged. Given the worldwide trend in the medical service industry, both Japan and Korea cannot close their medical service markets indefinitely. As shown in the case of Singapore, the medical service industry is one of the fast growing industries in Asia. Given the climatic and geographical advantages of the strait zone, there is a strong possibility to develop a medical hub (maybe not as a hub for comprehensive medical services but for medical services specialized for the aged, for instance). Of course, there are many obstacles to overcome beginning from

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domestic regulations on medical services and medical insurance system.

Nonetheless, joint efforts can begin in the areas where medical insurance does not cover. The two regions can begin cross-border cooperation in R&D and exchanges of technology and professionals. Given large inter-industry effects of the medical sector, it would be profitable to build a medical hub in the Korea-Japan strait zone with an emphasis on silver care.

The last topic in Part III is a key to building cross-border learning region.

As shown in the example of Copenhagen-Malmo in Scandinavia, cross- border cooperation in R&D and education can open up new possibilities of creating competitive advantage. There are many obstacles to building a cross-border learning region across the strait. Language barrier is one. Lack of information and trust is another. However, given the complementarity in terms of manpower and R&D facilities endowment between southeast Korea and northern Kyushu, there is a strong possibility for cooperation in R&D and education field. What is needed most is a sort of ‘clearing house’

organization, which can broker and coordinate interests between various types of organizations such as universities, research institutions, and private companies. Local governments can provide financial support in establishing this coordinating organization. This coordinating organization can utilize the existing channels of cooperation in the field of science and technology at the national level. It can also consolidate technological cooperation programs that are separately carried out by various organizations in the southeast region of Korea. Firms in northern Kyushu are keen about utilizing high- level manpower in southeast Korea for the development of IT service industries. Language courses offered at the coordinating agency will help the transfer of manpower between southeast Korea and northern Kyushu.

Increased exchanges in manpower and technology across the strait are in the long run believed to pave the road for building a cross-border learning region.

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Papers in Part IV discuss strategies and measures to promote cooperation across the Korea-Japan strait zone. Ideas suggested here, although they are tentative, include a localized network of free zones or a vision of an integrated cross-border regional economy based on a few promising industrial clusters. However, the first step in the efforts to promote cross- border cooperation should be building an institutional infrastructure. The existing Korea-Japan Strait Zone Governors’ Summit is one platform, on which more refined institutional structures can be built. In addition, local and regional authorities in the southeast region of Korea and in the northern Kyushu and Yamaguchi region of Japan respectively must set up a coordinating agency that covers two cities and one province in southeast Korea and the two large cities and four prefectures in northern Kyushu.

Following institutional infrastructure building, concrete cooperation programs should be developed in joint commissions under the council representing all the member units of southeast Korea and northern Kyushu.

A couple of commissions can be set up under the council to deal with various issues and sectors of cooperation. Cross-border cooperation of course can begin with sectors and areas, which can be easily carried out.

Some measures can be taken unilaterally and others by mutual agreement.

Local and regional public authorities can certainly lead the process of cross- border cooperation and they can begin with setting up information dissemination in appropriate organizations in two languages (Japanese and Korean). They can also strive for reducing institutional barriers to the maximum extent possible. Both regional authorities in southeast Korea and northern Kyushu can lobby national parliament and central government: 1) for the inclusion of a clause in the Korea-Japan free trade agreement in negotiation; and 2) for the elimination of institutional barriers as well as the provision of funds from national ODA funds.

The final chapter on conclusions and policy recommendations summarizes major findings from the theoretical and empirical investigations

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and suggests key policy recommendations. Given the prospect of radically changing industrial landscape in Northeast Asia due to the free trade movement and the emergence of China as the world’s major manufacturing center, city-regions with less competitive power are expected to face hard times. The fate of these semi-peripheral regions will depend on how they respond to changes in the external economic environment. One avenue that cities and regions can pursue in order to enhance their competitive position lies in cross-border or trans-border cooperation. The logic of cross-border cooperation especially in the Korea-Japan Strait Zone can be formulated from joint comparative advantage and competitive advantage instead of the conventional comparative advantage rule based upon factor cost differentials.

Considering the importance of institutional environment and cross- border governance structures in the success of cross-border cooperation, it is recommended to set up cross-border institutions by which local authorities across the strait can work together. Specifically, these institutions can be composed of a committee, council and secretariat. Before setting up these cross-border structures, both sides of the strait need to set up a regional association, by which municipalities and provinces (prefectures) can coordinate their economic development and international cooperation issues.

A round table conference of experts is suggested under the council in order to design a vision and key projects and their time table. The vision of cross-border region in the ‘Rainbow Strait’ should focus on the formation of cross-border industrial clusters. To achieve this vision, there should be detailed programs and funds. Many specific projects can be included in cross-border programs but they should be implemented in stages. A sort of principle to keep in mind is ‘agglomerations first’ and ‘clustering later.’

Although local authorities can allocate some portion of their budget for cross-border cooperation projects, additional funding should be sought from the central government, in particular, ODA funds. A network of free zones among many possible cross-border initiatives is recommended as the first

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priority strategic project. The strait zone already has similar types of free zones and what they need is a common framework and incentive system.

This network of free zones is not only an effective means to form a cross- border economic region but also an interim policy alternative to a delayed conclusion of the Korea-Japan free trade agreement. Finally, this concluding chapter emphasizes once again the importance of cross-border cooperation as an essential element of regional development strategy and as a stepping- stone for constructing a positive future for Korea and Japan.

December 2005 Won Bae Kim

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List of Tables

Table 2.1 Exports by Commodity Items from Kyushu to Korea 16 Table 2.2 Commodity Composition of Import of Kyushu from Korea 17

Table 2.3 Kyushu’s Overseas Investment 18

Table 2.4 Acceptance of FDI in Asian Countries 19

Table 2.5 Overseas Investments from Korea by Countries and Regions 20 Table 2.6 FDI Cases between Kyushu and Korea by Industries (Nov.10, 2004) 22 Table 2.7 Foreigners Registered in Japan and Kyushu 23 Table 2.8 Foreign Inhabitants Registered by Qualifications 24 Table 2.9 Acceptance of Technical Trainees by JICA and KITA(1988－2003) 25 Table 2.10 International Conventions in Japan and Kyushu 29 Table 2.11 Conventions connected with Korea in Kyushu 30

Table 3.1 Combined Tickets of Railroad, High-Speed Boat and Airway 48

Table 5.1 A Framework to Classify Cross-border Regions 73

Table 5.2 Case Studies: Schematic Comparison 75

Table 5.3 Major Indicators of Arizona and Sonora 98

Table 6.1 Korea’s Trade with Japan 115

Table 6.2 Changes of Competitive Complementary Relationships 116 Table 6.3 Impact on Trade Balance with the Elimination of Tariff by Industry 118

Table 6.4 FDI by Countries 120

Table 6.5 Investment and Business Environment by Countries in East Asia 120 Table 6.6 Economic Impact of K-J FTA (base data of GTAP) 122

Table 6.7 Exports and Import of the BUG Region 123

Table 6.8 Commodity Compositions of Exports from the BUG to Japan 124

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···

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···

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···

Table 6.9 Impact of Trade under K-J FTA 125

Table 6.10 Industrial Competitive Power of the BUG Region 126 Table 6.11 Increase of Production and Employment in the BUG region under K-J FTA 127

Table 6.12 FDI in the BUG region 128

Table 6.13 Inflow of FDI from Japan in the BUG region 128

Table 7.1 Welfare Comparisons Between FTAs With and Without Sensitive Products 137 Table 7.2 Retail Food Prices in Fukuoka and Seoul (Fukuoka: Dec. 2001, Seoul:

March142, 2002) 142

Table 7.3 Vegetable Production Costs and Worked Hours Comparison 144 Table 7.4 Milk Production Costs in Korea and Japan in 2002 144 Table 7.5 Effects of K-J FTA and KJC (Korea-Japan-China) FTA on Milk Markets 146

Table 11.1 Economic Indicators of the Strait Area 210

Table 12.1 Major Automobile Assembly Plants in Kyushu 228 Table 12.2 Number of Businesses of Automobile and Related Industries in Kyushu 229 Table 12.3 Tariff Rates of Automobile and Related Items in Japan and Korea 238

Table 13.1 Demand-Supply of General Machinery Industry in Korea and Japan

(2000) 251

Table 13.2 Trade Balance Trend of Machine Industry among Three Countries

(1997-2001) 252

Table 13.3 Comparison of Technology Level between Korea and Japan 253 Table 13.4 Main Indicators of Machine Industry in BUG 255 Table 13.5 National Share of BUG in the Machinery Industry 256 Table 13.6 Location Quotient of BUG Machine Industry 257 Table 13.7 Location Quotient of Machine Industry within BUG (Output basis) 258 Table 13.8 Main Indicators of Kyushu Machine Industry 260

Table 13.9 Share of Kyushu Machine Industry 261

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···

·

···

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···

Table 13.10 Prospect for Industry Interchange with Japan 262

Table 14.1 Specialization Coefficient of Kyushu’s Machinery and Metal Industry 271 Table 14.2 Trade of the Machinery and Metal between FNSY and Korea Export 272 Table 14.3 Kyushu’s Machinery and Metal Companies making Inroads into Korea 275 Table 14.4 Japan-Korea Relationship of Iron & Steel and Machine Tool after the

Conclusion of FTA 283

Table 14.5 Industry Clusters in the FNSY and BUG 285

Table 15.1 Prospect of World EI Market 289

Table 15.2 The Growing World Environmental Industry 289

Table 15.3 The Growth of the Korean EI 292

Table 15.4 Industrial Production of BUG Region (Production, 2001) 295 Table 15.5 Environmental Investment in Ulsan, 2000 – 2002 296 Table 15.6 The Details of Local Environmental Industry in Busan 297 Table 15.7 The Level of Busan’s EI Technology in comparison with Advanced

Countries 298

Table 15.8 Market Size and Employment of Environmental Industry in Japan and

Kyushu 300

Table 16.1 Current status of the information service Industry (2001) 308 Table 16.2 Outline of the Information Service Industry in Northern Kyushu 309 Table 16.3 Sales of the Information Service Industry by Sector (2002) 311 Table 16.4 Growth Field of the Information Service Industry in Northern Kyushu

by business 312

Table 16.5 Sales of the Software Industry in Northern Kyushu by Product 314 Table 16.6 Production of the Information Service Industry in Korea 315 Table 16.7 Distribution of the Information Service Companies in Korea (2002) 316

Table 17.1 Factors for and against Tour Promotion 325

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···

·

···

Table 17.2 Tourists by Country of Origin 326

Table 17.3 Tourists by Visiting Purpose 327

Table 17.4 Air Transportation in Gimhae Airport 327

Table 17.5 Passenger Boat Transportation 328

Table 17.6 Visit of counterpart country within last three years 329 Table 17.7 Frequency of Visit in last Three years 329

Table 17.8 Purpose of Visit 330

Table 17.9 Place of Visit 330

Table 17.10 Means of Transportation 331

Table 18.1 Number of visitors to Fukuoka city (Statistics on Tourism, Fukuoka city) 343 Table 18.2 Number of Cumulative Overnight Visitors to Fukuoka city 343 Table 18.3 Number of Visitor’s Conventions held in Fukuoka 344 Table 18.4 The Number of Boat Passengers using International Services at Hakata

port 346

Table 19.1 Number of Medical Service Agencies in the Southeast Region of Korea 352 Table 19.2 Employees of Medical Service Industry in Southeast Region of Korea 353 Table 19.3 Number of Medical Service Agency in Kyushu Region, 2002 354 Table 19.4 Employees of Medical Service Industry of Kyushu Region, 2002 354 Table 19.5 Average Expenses for Traveling for Treatment in Foreign Hospitals and Clinics 357 Table 19.6 Present Medical Service Law of Advertisement 359 Table 19.7 Issues of Opening Medical Service Industry to Foreign Market 362 Table 19.8 Development Strategy of Medical Service Industry in EU nations 369 Table 19.9 Ratio of Population Aged over 65 years old 370 Table 19.10 Forecasting for Ratio of Population aged more than 65 371 Table 19.11 Land Use Plan of Island City Project 380 Table 19.12 Comparison of Medical Service Special Zones in Asian Countries 382

Table 20.1 Changing Places of Top 20 Ports in the Whole World 398

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···

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···

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···

·

···

Table 20.2 Rapid Growth of Container Throughput of Shanghai port 399

Table 20.3 Growth of Chinese main ports 400

Table 20.4 Share of East Asian Container Cargo Volume of the Whole World 401

Table 20.5 Share of Post-Panama type’s Vessels 405

Table 20.6 Transshipped Container Cargoes and Its Rate of Busan Port 408 Table 20.7 Rise of Transshipment of Japanese Container Cargoes handled by East

Asian ports 408

Table 20.8 Wide Hinterland of Shimonoseki Port 410 Table 20.9 A Plan of Construction of Hibiki Container Terminal 412 Table 20.10 The Hakata Island city terminal (plan) 413 Table 20.11 Chinese Main Ports’ Development Plan of Container Port Facilities 414

Table 20.12 Busan New Port Development Project 415

Table 21.1 Corporate R&D Activities of BUG 422

Table 21.2 Industries with Large Expenditures in Corporate R&D 423 Table 21.3 Students and Professors of Universities and colleges (as of 2000) 423 Table 21.4 R&D Activities of Universities and Colleges (as of 2000) 424

Table 21.5 Regional Research Centers of BUG 425

Table 21.6 TIC of BUG 426

Table 21.7 Kyushu’s R&D Resources (share of the nation) 427 Table 21.8 Universities & Colleges and Public Research Institutes (as of 1999) 428 Table 21.9 Establishment of TLOs in Kitakyushu (as of September 2003) 430 Table 21.10 Numerical Index of Technological Competitiveness of Japan to Korea 433 Table 21.11 Expectation about Influences on Firms after Korea-Japan FTA 435 Table 21.12 Desired Cooperating Types with Japan 436 Table 21.13 Technological Cooperation Types with Japan in the Past and Future 436 Table 21.14 The Channels of Technological Cooperation with Japan 437 Table 21.15 KJCF-Sponsored Technical Training Programs 439 Table 21.16 The Number of Trainees joining in KJCF-sponsored Training Programs 440 Table 21.17 Number of Trainees joining KITA Technical Training by Region 442

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·

···

Table 21.18 Number of Trainees joining New Industry Technical Training by region 442 Table 21.19 Number of New Industry Technical Trainees by Destination 443 Table 21.20 The Number of Foreign Specialists Invited by Nationality 447

Table 23.1 Fukuoka and Yamaguchi Prefectures’ Trade with Korea 476

Table 24.1 Proposed List of Projects 503

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···

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···

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List of Figures

Figure 1.1 Korea-Japan Strait Zone 7

Figure 2.1 Trade Trends between Kyushu and Korea 14 Figure 2.2 Trade Links of trade between Kyushu and Korea 14 Figure 2.3 International Exchange Agreement in Educational Institution

(2003, Kyushu and all Japan) 26

Figure 2.4 International Sister City Agreement (2003, Kyushu and Japan) 28

Figure 3.1 Passenger transport volume between Northern Kyushu/Yamaguchi

and Busan by Type of Transport 36

Figure 3.2 Passenger Transport Networks connecting Kyushu and South

Korea 37

Figure 3.3 The Volume of Container Freight Transport via the

South Korean Sea Route 39

Figure 3.4 Location of the Member Prefecture-City-Province of the

Japan-Korea Governors’ Summit 41

Figure 3.5 Locations of the Member Cities of East Asian City Conference 42 Figure 3.6 Locations of Ports and Airports, Railroad, and IT optical

corridor in the Japan-Korea Strait Area 45 Figure 3.7 Locations of Free Zones in the Japan-Korea Strait Area 50

Figure 4.1 Investment Flows into Core and Periphery Regions 59 Figure 4.2 From Comparative Advantage to Competitive Advantage 63 Figure 4.3 Trade Liberalization, Regionalization of Production and Subnational

Regions 66

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···

Figure 5.1 Euregio 76

Figure 5.2 Arc Manche 84

Figure 5.3 Arizona-Sonora Region 96

Figure 8.1 Number of Workers 155

Figure 8.2 Main Operating Area 155

Figure 8.3 Perceptions about the Japan-Korea FTA 156 Figure 8.4 Influence on Kyushu economy by the Japan-Korea FTA 157 Figure 8.5 Effects on the Firm by the Japan-Korea FTA 158 Figure 8.6 Current Status of Relations with Korea 159 Figure 8.7 Cooperation Forms with Korean companies 160 Figure 8.8 Channels used to Establish Relationship with Korean firms 161 Figure 8.9 Desired Form of Inter-firm Cooperation 162 Figure 8.10 Desired Form of Technical Cooperation 162 Figure 8.11 Obstacles to Building Economic Cooperation between Firms

across the Japan-Korea strait 163

Figure 8.12 Local Government's Role to Facilitate Economic Cooperation among Companies in the Japan-Korea Strait Zone 164 Figure 8.13 Promising Sectors for Economic Cooperation in the Japan-Korea

strait zone 165

Figure 8.14 Strategies to Facilitate Economic Cooperation at the Regional Level between northern Kyushu and southern Korea 166

Figure 8.15 Main Fields of Interest 168

Figure 8.16 The Necessity for the Japan-Korea FTA 169 Figure 8.17 Obstacles to the Japan-Korea FTA Conclusion 170 Figure 8.18 Influence by the Japan-Korea FTA conclusion 171 Figure 8.19 Influence on Domestic Industry by the Japan-Korea FTA

conclusion 172

Figure 8.20 Influence on Kyushu economy by the Japan-Korea FTA

conclusion 173

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···

·

···

·

···

·

···

Figure 8.21 Policy of Local Government Supports for Economic Cooperation 174

Figure 9.1 Perceptions to K-J FTA of Korea 178

Figure 9.2 Progress of K-J FTA 179

Figure 9.3 Regional Economic Impact of K-J FTA on Korea 180 Figure 9.4 Obstacles for Establishing Economic Cooperation in K-J strait 181 Figure 9.5 Local Government's Role to Facilitate Economic Cooperation

in Korea 182

Figure 9.6 Promising Fields for Cross-Border Cooperation in K-J Strait Zone 183 Figure 9.7 Strategies for Facilitating Economic Cooperation in K-J Strait 184

Figure 11.1 Industry Cluster of Kyushu-Proposed 204 Figure 11.2 Industry Cluster of BUG-Planned 206 Figure 11.3 Cross-Border Trade in Intermediate Goods and Regional Integration 207

Figure 11.4 Economic Power of BUG and FNSY 211

Figure 11.5 Global Competitiveness of SE Korea and Kyushu 212 Figure 11.6 The Share of BUG and Kyushu in Korea-Japan Trade 213 Figure 11.7 The Share of BUG and Kyushu in Combined Exports of Korea

and Japan to China 213

Figure 11.8 Knowledge-Based Industries in BUG 215 Figure 11.9 National Shares of BUG & Kyushu in Public R&D 216 Figure 11.10 The Competitive Position of BUG in terms of Occupational

Structure 217

Figure 11.11 The Competitive Position of FNSY in terms of Occupation

Structure 218

Figure 12.1 Locations of Assembly Plants of the Automobile Industry in

the Japan-Korea strait area 223

Figure 12.2 Image of “a special zone for the automobile industry” 224 Figure 12.3 Locations of Automobile Assembly Plants in Korea 226

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···

··

···

··

···

Figure 12.4 Locations of Automotive Parts Companies in Korea 227 Figure 12.5 Trend in Automotive Parts Trade between Kyushu and

Korea 231

Figure 12.6 Composition of Automotive Parts Trade by Item between

Kyushu and Korea 232

Figure 12.7 Trend in Automotive Parts Trade between Japan and Korea 233 Figure 12.8 Trend in Complete Car Trade between Kyushu and Korea 235 Figure 12.9 Trend in Export of Korean Complete Cars to Japan 235 Figure 12.10 The Picture of a Korean “Matiz” 236 Figure 12.11 Trend in Production of Korean Car and Import of

Automotive Parts 238

Figure 12.12 Trend of Output at Toyota Kyushu Motor and the Kyushu

Plant of Nissan Motor 241

Figure 12.13 The Future Image of Automotive Parts Trade and Industrial Cooperation between the southeastern Korea and the northern

Kyushu 243

Figure 13.1 Machine Industry Belt in Gyeongnam 254

Figure 14.1 Main Machinery and Metal Factories in Kyushu Yamaguchi 270 Figure 14.2 Trade of the Machinery and Metal between FNSY and Korea 273

Figure 14.3 Posmetal’s Network 276

Figure 14.4 Transportation System of Central Uny 277 Figure 14.5 Change of the Industrial Technology Structure of Japan and

Korea after the Conclusion of K-J FTA 281 Figure 14.6 Change of Transaction Structure 282

Figure 15.1 Market Size of Kyushu’s Environmental Industry in 2010 300 Figure 15.2 Kyushu Recycle and Environment Industry Plaza (K-RIP) 304

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····

···

Figure 16.1 Regional Share of the Information Service Industry (2002) 310 Figure 16.2 Trend of Software Industry in Northern Kyushu 313 Figure 16.3 Software Trade of Japan (Excluding Game) 317 Figure 16.4 Software Trade of Japan by Product (Excluding Game) 318 Figure 16.5 Outsourcing Countries of Information Service Industry

of Japan 319

Figure 17.1 Evolution of Tourism 324

Figure 17.2 Boat Passengers between Busan and Kyushu 328

Figure 17.3 Actual Example #1 334

Figure 17.4 Reimbursement amount #1 334

Figure 17.5 Actual Example #2 335

Figure 17.6 Reimbursement Amount #2 335

Figure 18.1. Visitor Arrivals by Nationality to Japan and Fukuoka 346

Figure 19.1 Location of Busan·Jinhae Free Economic Zone 376 Figure 19.2 Residential and Resort Areas in Free Economic Zone 377 Figure 19.3 Location of Island City Development Zone 379 Figure 19.4 Island City Development Project 380

Figure 20.1 Spatial Diffusion of Container Port Functions 395

Figure 22.1 Industrial Cluster of the Cross-Border Region-Proposed 461

Figure 22.2 Obstacles to Integration 466

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List of Contributors

Akio Imamura is President of Kyushu Economic Research Center. He led to make the Proposal Toward Kyushu Autonomous State in the Select Committee organized by Kyushu Association of Corporate Executives as vice chairman. He is also the editor and author of 'Analysis on West-Southern Region'.

Dae-chul Jeong is Director of Department of Economy & Social Study in the Gyeongnam Development Institute. He holds Ph.D. in Economics (Dankook University).

Takayoshi Kabu is Chief Researcher of Research Department, Kyushu Economic Research Center. He has been engaged in research studies of regional economy. He is the co-author of Inter-City Networking Strategies in the Yellow Sea Sub-Region and The global management strategy of regional company.

Won Bae Kim is Senior Fellow at the Korea Research Institute for Human Settlements. He has been working on urban and regional development issues in East Asia for the past 20 years including his stay at the East West Center from 1985 to 1996. He holds Ph.D. from the University of Wisconsin at Madison.

Tae-Yel Kwack is Director of Regional Human Resources Development Center and Senior Research Fellow in Gyeongnam Development Institute since 1992. His research fields are regional development policies and human resources development. He is co-auther of "Korean Regional Economics(Bubmunsa, 1998)".

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Dae-Shik Lee is Professor of Department of Economics, Pusan National University and Acting Member of Presidential Committee of National Balanced Development. He coauthored books, Regional Development Strategy for Knowledge Based Economy(2004), Policy Issues on Universities for Region(2003), Innovation for Regional Economy(2001),among others.

Han Sook Lee holds Ph.D. Dept. of Economics, Pusan National University and her specialty is in Labor Economics.

Sung Su Lee is researcher at the Korea Research Institute for Human Settlements. He has been working on North-East Asia including North Korea.

He is in the Ph.D. course at Sogang University.

Woo Bae Lee is Professor, Graduate School of Business Administration, Inje University. He holds Ph.D., School of Policy, Planning and Development, University of Southern California. His main field is urban and regional planning.

Jung Duk Lim graduated from Seoul National University and obtained Ph.D in Economics from University of South Carolina. He worked at the Bank of Korea and taught at Wingate College before becoming Professor of Economics at Pusan National University. He served as the President of Busan Development Institute recently.

Hirofumi Nishizono has been on loan to the Fukuoka Asian Urban Research Center as chief researcher from Fukuoka city government for two years. He has been engaged in research of urban policies.

Yuhei Ogawa is Professor, Faculty of Commerce, Seinan Gakuin University.

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He has been engaged in research studies of East Asian Economy. He is the author of The Era of the East Asia Mediterranean, The Development of the Northeast China, Industrialization and Changes of Thai Society, The Era of Asian Coexistence, For Those Wishing to Learn Trade Theory, and so on.

Kazushige Toumoto is Senior Research Associate of Research Department, Kyushu Economic Research Center. He has been engaged in research studies of urban and regional Economy. He is the co-author of Modern Economic Geography.

Hyung Seo Park is Research Fellow at the Korea Research Institute for Human Settlements. He has an interest in the field of social conflicts in urban and regional development and has studied the collaborative system for resolving public conflict. He holds Ph.D. in Town Planning and Landscape from the University of Liverpool in UK.

Nobuhiro Suzuki is Professor of Department of Agricultural Economics and Asian Policy Center, Kyushu University. He has been engaged in research studies of WTO and FTA negotiations. He is the co-author of “Impacts of the Doha Round Framework Agreements on Dairy Policies,” Journal of Dairy Science, 88(5) May 2005, pp. 1901-1908.

Naoto Takaki is Director of Research Department, Kyushu Economic Research Center. He has been engaged in research studies of urban and regional development in Kyushu region and Asian countries. He is the author of Economy of Northeastern China in Transition, and co-author of Inter-City Networking Strategies in the Yellow Sea Sub-Region.

Tsumori Takayuki is Associate Professor of Faculty of Economics,

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Okayama University. He has been engaged in research studies of port economics and port management in East Asia, especially, in Japan. He is the author of Structural Changes of Cargo Flow System in East Asia and the Japanese Economy.

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Part I

Background

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Chapter 1 Introduction

1. Background

Both Korea and Japan face the prospect of deteriorating growth potential due to their improper responses to the globalization and regionalization trend.

These two countries are most insular among OECD (Organization for Economic Cooperation and Development) countries in terms of transnationalization of their economies. On top of this, the rise of the Chinese economy poses a threat of industrial hollowing-out in Korea and Japan. Korea faces a more bleak future than Japan because of its lesser technological superiority over China than Japan.

It is inevitable for both Korea and Japan to make free trade agreements with many other countries in coming years including one between them. As a matter of fact, both governments of Korea and Japan are working towards concluding the negotiation for the free trade agreement between the two countries by the end of 2005. The removal of institutional barriers by free trade agreement and other types of regional trade agreements is known to increase trade and welfare in member countries. Despite these overall national benefits of free trade agreement in the long run, the impact of free trade agreement will be uneven across industries and subnational regions.

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Moreover, increasing economic competition engendered by FTA(Free Trade Agreement) and other liberalization trends is likely to expedite the restructuring processes including the rationalization of some economic activities. The geographical impact of these processes is likely to be uneven.

Competitive regions with innovative capacities can seize the opportunity engendered by FTA and generally the globalization trend, whereas non- competitive regions specialized in routine production may lose out from an intensified competition. Some regions with an already established global competence can exert a powerful influence in securing high value-added and knowledge-intensive activities for their territories, whereas others are in a much weaker and vulnerable position.

Considering the superior position of core regions in terms of financial capital, talents and advanced services in Japan and Korea, it is peripheral regions with lesser global competence, which will suffer more from an intensified inter-territorial competition. However, free trade agreement and in general the lowered national borders offer not only threats but also opportunities. From the territorial perspective, lifting borders usually implies more cross-border interactions, which involve both elements of competition and cooperation. For the regions with less global competence, cross-border interactions could bring a new set of opportunities to enhance regional competitiveness. As a firm utilizes another firm’s competence to complement its weakness, a territorial economy like a city or region can secure or create additional sources of global competence by cooperating with other territorial economies across the border. For some firms and regions, cross-border cooperation does not have to be circumscribed by distance.

Certain activities are, however, subject to distance function. Moreover, the concept of industrial clusters or the thesis of new geography strongly suggests the benefits of regional clusters and agglomeration of inter-linked activities (Porter 1990, Krugman and Obstfeld 1991 Krugman and Venables 1996). Therefore, cross-border cooperation presents an alternative avenue to

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regions with lesser global competence. These regions can simply exploit static comparative advantage across the border, i.e., wage differentials, create joint comparative advantage, or build competitive advantage for a cross-border region.

In short, open borders and globalization pressure constitute the background of the need for cross-border and trans-border cooperation by local and regional organizations. The ongoing Korea-Japan¹ free trade negotiations render a timing factor for cross-border cooperation as well. Moreover, the decentralization processes, which are currently undergoing in Korea and Japan, tend to raise the demand for more local and regional autonomy including international cooperation by subnational authorities. Hence, external and internal conditions are ripe for cross-border cooperation between subnational regions of Korea and Japan. In fact, the need for cross-border cooperation is more acutely felt in the non-core regions with lesser global competence, since cross-border cooperation provides them with an avenue to secure additional sources of competence. In this respect, the Korea-Japan strait zone, which satisfies the basic conditions of geographical proximity, economic complementarity and cultural affinity, is deemed to have a great potential to become a cross-border region in the coming years of porous border.

2. The Aim, Scope and Method of the Study

As stated in the background, this study aims at developing strategies at the local and regional level for making a cross-border region in the Korea- Japan strait zone based on the examination of the possibilities of cooperation in various sectors. These strategies will touch upon feasible programs and 1) Since this study is a joint product of Korean and Japanese researchers, Korea- Japan FTA is sometimes written as Japan-Korea FTA. Similarly both Korea-Japan Strait and Japan-Korea Strait are used.

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policy measures to deepen cross-border cooperation as well as to improve institutional, socio-cultural and physical conditions surrounding cross-border cooperation.

In this study, the concept of cross-border cooperation and cross-border region is defined as follows. From the European experience, the following four criteria define cross-border cooperation (CBC): a) it is usually located in the realm of public agency; b) CBC refers to a collaboration between subnational authorities in different countries (although these actors are not normally legal subjects according to international laws); c) CBC is foremost concerned with practical problem-solving and not so much concerned with ideology; and d) CBC involves a certain stabilization of cross-border contacts over time, i.e., it is not a one time shot. Cross-border regions (CBR) are characterized by homogeneous features and functional interdependence according to the council of Europe. Hence CBR is a potential region inherent in geography, history, ecology, and economic possibilities and so on disrupted by the sovereignty of the national governments. This is not much different from concepts such as ‘natural economic territories’ (Scalapino 1992).

Whereas the Korea-Japan strait zone is taken as a larger geographical unit of analysis, we focus on the southeastern part of Korea and the northern region of Kyushu to probe into the possibility of industrial cooperation across the sea. The reason that we take the Korea-Japan strait zone as a secondary unit of analysis lies in that this zone does not have a close economic interdependence as yet. However, we cannot ignore the future potential of cross-border cooperation in this zone especially in the tourism and agricultural and fishery industries. Moreover, the Governors’ Forum in the Korea-Japan Strait Zone provides an institutional platform, which can be further developed into a more tightly structured cross-border governance system. The geographical boundary of the Korea-Japan strait zone is shown in Figure 1.1. Within this zone, this study will take an intensive look at the

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BUG (Busan, Ulsan Gyeongnam) region of Korea and the FNSY (Fukuoka, Nagasaki, Saga, Yamaguchi) region of Kyushu, Japan.

In terms of approach and methodology, this study is differentiated from other studies. Differently from conventional studies on economic integration, this study looks at economic integration and cross-border cooperation from the perspective (position) of a subnational region and in particular from the standpoint of public agencies and local firms. Hence, it is differentiated from the national level analysis, which disregards the subnational dimension of international economic development.

Another distinguishing feature is that this study takes bi-lateral not unilateral viewpoints. For the mutual benefits of concerned regions in Korea and Japan, opinions of company managers and community leaders in the regions under investigation are solicited by a questionnaire survey. Also, a few selected firms were interviewed to obtain industry-specific perspectives on cross-border cooperation. Furthermore, as shown in the composition of this report, researchers on both sides consulted each other to make policy recommendations acceptable to both regional communities through two international meetings and email correspondence.

Figure 1.1 Korea-Japan Strait Zone

Note : The shaded area is the focus of this study.

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References

Krugman, Paul and Obstfeld, Maurice. 1991. International Economics:

Theory and Policy. Second Edition. New York: HarperCollins Publishers.

Krugman, P. and Venables, A. 1996. Integration, specialisation, and adjustment," European Economic Review 40: 959-967.

Porter, Michael. 1990. The Competitive Advantage of Nations. New York:

The Free Press.

Scalapino, Robert 1992. The politics of development and regional cooperation in Northeast Asia. Proceedings of the Vladivostok Conference, Northeast Asian Economic Forum.

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Chapter 2 Evolution of Commercial, Cultural and Technological Exchanges across the Korea-JapanStrait

1. Historical Ties between Southeastern Korea and Northern Kyushu

Migration and cultural exchanges between Korea and Japan began at least five thousand years ago (Lee and Gang 1998). The remains of earthenware in the southwest region of Japan indicate that people around the coastal areas of Southeast Korea and Southwest of Japan traveled often across the sea through Tsushima and Iki islands. About BC 400, rice farming began in northern Kyushu area and then were spread to Tohoku area.

Although the origin of rice farming practice is not clear, it seems certain that the technology had come with migrants. About BC 200, bronze technology was introduced to Japan. The remains of the bronze culture are found scattered around the Fukuoka area. It is speculated that migrants from the southern part of Korea brought these bronze tools to northern Kyushu.

Besides rice farming practice, earthenwares and metallic tools, shamanism were also brought into Japan by migrants. Their first settlement areas are known to be northern Kyushu area and the western part of Chugoku.

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Beginning from 4^th and 5^th centuries, there was more migration from Korea to Japan. This period was when small kingdoms such as Gaya (located around now Gimhae and Haman area) were squeezed out by wars between the three kingdoms of Goguryeo, Shilla and Backje. Many ‘boat people’

came to Japan, especially to Kyushu area (Lee and Gang 1998). From the three kingdoms period in the Korean peninsula, cultural exchanges between Korea and Japan became frequent. The role of Backje was significant in the blooming of the Aska culture in Japan. Many scholars and priests came to Japan and their role was similar to that of Westerners implanting Western cultures in Japan. Cultural exchanges continued until formal relations between Shilla and Japan were stopped in 779. Informal exchanges by Shilla merchants, however, continued as evidenced in Gorokan in Hakata.

Coming to the Goryeo and Joseon period, porcelain became the most treasured item in trade. As a matter of fact, Hideyoshi’s invasion into Korea was called a ‘ceramic war’ by some Korean historians. Goryeo’s inlaid celadon was highly appreciated in Japan. White porcelain made for the royal court in Korea captured the minds of the noble class of Japan in Muromachi period (Yu 2003). Kyushu’s porcelain technology had been behind other places in Japan. However, after importing porcelain from Korea and China between 12^th-16^th centuries, Kyushu area had become the center of porcelain technology. During the Joseon dynasty, Korea and Japan became deeply interdependent in terms of porcelain culture.

In the early Joseon years, most kilns were concentrated in the coastal areas of Gyeongsang-do and Jeolla-do, where Japanese merchants resided for commerce and trade. Some of these merchants (so-called ‘waegu’) were engaged in robbery and killing. Such a situation created a long period of tension in the area. Nevertheless, economic exchanges between the coastal areas of southern Korea and northern Kyushu continued and they were independent from formal trade allowed by the government. It is not too difficult to imagine that many people including porcelain craftsmen in

Collaborative Regional Development across the Korea-Japan Strait Zone