The ICT(Information and Communication Technology) industry has played a crucial role in national and regional economic growth in the information age. In order to strengthen the competitiveness of the ICT industry, there needs to analyze the ICT industry clusters, other related industries and supporting functions. This study aims at researching strategies on interregional function sharing of ICT industry in Korea.
This report is organized with seven chapters. Chapter 1 is the introduction section. It contains background, necessity, goals, methodologies and ranges of the research with respect to time, space, and contents. Chapter 2 reviews relevant theories and characteristics of the ICT industry. The ICT industry is the core industry consisting of regional economy. Compared with other industries, the ICT industry has the highest R&D investment rate. Due to complexity of the ICT industry having a wide variety of meaning, range and classification system, the new different framework needs to be established to differentiate this study from other researches. The theories having strong connection with the growth of the ICT industry, such as Kondratiev's wave theory, the New Economy theory and cluster theory, are mainly examined by various means. The formation of ICT industry clusters does not only require both supply and demand benefit, but also has the possibility that each cluster can be developed in different ways according to specific industry of the region.
Chapter 3 deals with development of the ICT industry. In addition, the location policies and many cases of the ICT industry are presented by comparing domestic and foreign cases. The ICT industry has been incrementally diffused from U.S.A. to Asia or
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Strategies on Interregional Function Sharing of Information and Communication Technology Industry
정보통신기술(ICT)산업의 지역간 기능분담 방안 연구 Young-Sub Kwon, Seh-Il Byeon, Hyun-Sik Kim, Kyung-Hyun Park
RR 2004-21․December 2004․313 pages․Korean
Europe. This phenomenon is based on locational changes of multinational corporations affected by mass production and standardization. The ICT industry clusters can be divided into two types: policy-type and market-type. India and China are good examples of Asia.
In Europe, ICT clusters are simultaneously impacted by central and local location policies.
Ireland, Northern Europe, Finland and the Netherlands made different cluster models. This chapter concentrated on comparing ICT industry policies and growth models of some foreign countries having ICT industry clusters with Korea. This analytic approach helps to illuminate the limits of the Korean ICT industry policies. Generally market-type cluster is dominant in the Seoul metropolitan area, while policy-type cluster is dominant in local areas.
The present condition and agglomeration of the Korean ICT industry are reviewed in Chapter 4. Production, employment, R&D, importation and exportation, forward and backward linkage effect and clustering are all considered. After the position of the Korean ICT industry identified, the criteria for ICT industry clusters are selected. The ICT industry has strong forward and backward linkage with almost all other industries. The formation of ICT industry clusters is showed as a map by using Arcview. Seoul, Gyeonggi, Chungnam(Cheonan, Asan), Cheongju, Daejeon, Gwangju, Gumi, Daegu, Changwon and Busan are representative of ICT industry clusters. ICT industry clusters are classified into four categories according to the agglomeration degree of the ICT industry: the position of cities(ICT industrial cities, ICT industry candidate cities, ICT industry potential cities), the presence of a core city within local areas, the distribution of supporting institutes, and a government policy toward fostering the ICT industry. The cities which have more than two of the four conditions are named as ICT industry cities, and ICT industry cities are classified into four categories by growth stage and industry type: service industry-growing stage type(Seoul), manufacturing industry-growing stage type(Suwon, Gumi), service industry-formative stage type(Daejeon), manufacturing industry- formative type(Cheongju, Cheonan, Gwangju).
Chapter 5 covers empirical studies. For evaluating the existing clusters and searching for new policy alternatives, empirical studies are carried out by both surveys and in-depth
interviews. This chapter is focused on researching ICT industry cities, which were classified in the former chapter 4, and analyzing interregional function of each city to present policy alternatives to strengthen ICT industry competitiveness. The growth, location, agglomeration and function of ICT industry cities are investigated respectively.
Based on the condition and degree of ICT industry agglomeration, elements and linkage of each ICT industry cluster are analyzed at a regional and interregional level.
A SWOT analysis is conducted in order to establish strategies on interregional function sharing of ICT industry clusters. Major findings are as follows. The Seoul ICT industry cluster is a ‘service industry-growing stage’ cluster. It has the advantage as Korea's Capital, where management and financing are comparatively good. Second, the Daejeon ICT industry cluster is a ‘service industry-formative stage’ cluster. Although its linkage with information is strong, the linkage with market is weak. Third, the Suwon ICT industry cluster is a ‘manufacturing industry-growing stage’ cluster. Based on digital media, the Suwon ICT industry cluster has close relationship with other firms.
At a domestic level, the Suwon ICT industry cluster maintains high linkage with proximate regions such as Cheonan, Asan and Gumi, on the other hand, at a global level, Suwon shares information and service with other global clusters. The Cheonan ICT industry cluster is a ‘manufacturing industry-formative stage’ cluster. Despite benefits from the location of Samsung Electronics Co., the domestic position is not competitive.
R&D activities have not been joined with supply chain. Core parts and materials depend on global outsourcing.
The growth of the Gumi ICT industry cluster is mainly caused by an industrial park and large electronics companies. In recent years, the Gumi ICT industry cluster has a strong point in mobile and display, but R&D activity is weak. The Cheongju ICT industry cluster is a ‘manufacturing industry-formative’ cluster. The growth of the Cheongju ICT industry cluster is based on manufacturing factories, and as a result, its supply basis is not strong. The Gwangju ICT industry cluster is a ‘manufacturing industry-formative type.’ The Gwangju ICT industry cluster is strong in the area of opto-electronic industry.
Chapter 6 suggests the means for function sharing of the ICT industry. For better
directions of function sharing, it is necessary to apply ICT industry clusters to a global service city model, capital growth model, function specification model, and FDI growth model. The new standards used for classification are mono-function type, multi-function type, plan type and natural appearance type. The means for function sharing of ICT industry clusters are based on four directions: industry type, size of clusters, growth stage, critical mass.
The means for function sharing are as follows; For the Seoul ICT industry cluster to grow as a global ICT cluster, it is required to link with global cities and global ICT clusters like Silicon Valley. At a national level, it should cooperate with the Daejeon ICT industry cluster which has a strong point in terms of R&D activity. Second, the Suwon-Cheonan ICT industry clusters should grow as global clusters in the sector of semiconductor and display. Although its function is overlapping with the Gumi ICT industry cluster, competition in good faith deserves establishing. Third, the Daejeon ICT industry cluster having market and critical mass should make efforts to attract multinational corporations.
To overcome internal weakness, it is essential to link with the Seoul ICT industry cluster in terms of venture capital, legal service, consulting, etc.. Fourth, the Gumi ICT industry cluster should attract large sized firms including multinational corporations. The size of the cluster needs to be expanded to Gimcheon, Chilgok, and Daegu to compensate for the disadvantage of small town. The Cheongju, Gwanju ICT industry clusters should reinforce R&D activity by constructing cooperative environment between large companies and subcontractors. Because the Cheonan, Cheongju and Gwanju ICT industry clusters are all based on local areas, government should support these clusters.
For the Gangnam Teheran Valley and Suwon ICT industry cluster to strengthen competitiveness as leading clusters, location support and deregulation policies are essential. In case of Daeduk, multinational corporations should embed in the area and support SMEs. The Cheonan-Asan, Gumi-Daegu, Gwangju and Cheongju ICT industry clusters cooperate with foreign R&D institutes, universities as well as domestic universities. In addition, infrastructures for innovation are required to provide sound living
conditions to high-paid labour forces.
Chapter 7 has conclusions and next research issues. To strengthen national competitiveness of ICT cluster, it is indispensable to construct ICT industry clusters according to specific characteristics of each region. By joining interregional distinct characteristics, interregional function sharing of the ICT industry can be reached in the direction of maximizing synergy effect. In this study, the strategies for selection and concentration are discussed. The function sharing between ICT industry clusters is able to guide symbiotic developments. Especially, new areas in the middle of planning should attract multinational corporations, universities and R&D institutes.
Next research issues are as follows. First, the next research project considers more specific factors about ICT industry clusters investigated in this research. Second, the interregional function sharing of the BT(Bio Technology) industry, which most local governments long for as a strategic industry, needs to be studied. Third, critical mass, optimal size, function sharing of R&D, deregulation and financial support policies of the government are necessary to build ICT industry clusters and competitive RIS.