TCI 2015 Evaluating Korean Innovative Cluster Policies: Emerging a New Type of Asian Clusters?

Evaluating Korean Innovative Cluster Policies: Emerging a New Type of Asian Clusters?

Kee-Bom Nahm

Special Plenary Session: Clusters in Korea: Development Process and Achievement

Evaluating Korean Innovative Cluster Policies: Emerging a New Type of Asian Clusters?

Kee-Bom Nahm (University of Seoul)

Paper presented at the 18th TCI Global Conference: Clusters in a Creative Economy, 3-6 November, 2015, Daegu, Korea

Ⅰ. Korean Industrial Cluster Policies in Context

Ⅱ. Overcoming the Dichotomy of Exogenous growth vs. Endogenous growth

Ⅲ. Legacies and New Challenges of Korean Cluster Policies

Ⅰ. Korean Industrial Cluster Policies in Context

1 Changes in Korean Industrial Policies

O1 [Korean Industrial Cluster Policies in Context]

4

□ The Role of the state•Korean Regional policies have been changed, from 'top-down' decentralization policies, mainly implemented in the1970s and 1980s•to 'bottom-up' decentralization policies to develop endogenous potentials, mainly by SMEs in regions •“balanced regional development” through “competition and cooperation” among regions.

□ Industrial Complexes• Korea has fostered industrial growth and economic development by establishing Industrial Complexes•National industrial complexes: 35, Local industrial complexes: 262, Urban high-tech industrial complexes: 5, Industrial-Agricultural complexes: 363.

1 Changes in Korean Industrial Policies


5Source: Park, 2010

2 From Industrial complexes to innovative clusters


6

Theoretical Evolution &

Needs

Policy Tools

1990s1980s 2000s

Marshall Porter Miller & Morris

Industrial Parks:Production

Concentration

Clusters:Network

R&BD Clusters

Industrial InfraIndustrial Complex

Skilled Labor

Innovative InfraNetworkingGovernance

Tech TransferVenture Business

EcologyGlobal Networking

Regional IndustriesAccumulation of Human CapSpecialization

CollaborationInnovative Investment

New IndustriesIntegrated Value AddedPractical R&D

Industrial complexesGovernment

PoliciesIndustrial clusters Innovative clusters

Ⅱ. Overcoming the Dichotomy of Exogenous growth vs. Endogenous growth

1 Exogenous growth vs. Endogenous growth

O2 [Overcoming the Dichotomy of Exogenous growth vs. Endogenous growth]

8

□ The exogenous school

•exogenous factors (foreign investment and trade) as the main determinants of economic development

and growth

• the global commodity chains and global value chains approach

• the determinants of growth and explores how nations are transformed by flows of capital, labor, and

knowledge of which are regarded as external factors.

□ The endogenous school

•emphasize the role of knowledge, innovation, and learning processes in sustaining clusters, arguing that

knowledge creation through learning and innovation is a source of competitive advantage.

•Concepts such as `knowledge spillover', `regional innovation system', `learning region', `innovation

milieux', and `institutional thickness' have been developed by this school to explain cluster development

2 Korean industrial policies as a developmental state


9

□ Korea as a developmental state

• The state, as industrial cluster builder, may foster or discourage firm networking and synergy

• Developmental state: the state has played proactive roles in shaping industrial location through national

industrial and regional policies

• industrial build-up(1960s-1970s) industrial restructuring (1980s)

• Since the 1990s, the state as a main actor in promoting the knowledge-based economy as a new

paradigm of economic development and clusters as a powerful policy tool for achieving growth

•Both central and regional governments: develop innovative clusters in a step-by-step process,

•starting with simple production clusters, moving to R&D clusters to innovative clusters

•The state have evolved continuously toward innovation and cluster development Korean innovative

clusters and cluster policies can be classified a distinctive type: new Asian clusters?

2 Korean industrial policies as a developmental state


7Source: MKE and KICOX, 2011

□ Industrial Complex Cluster Program: ICCP• key concept: converting industrial complexes into innovation clusters• building indigenous innovation clusters of industry–university–research institution networks and to establish an industrial ecosystem• building an innovation system through networking among regional actors, such as companies, universities, research institutions, and local governments

•Major changes: strengthening regional autonomy, the state as a facilitator or broker contributing to the consensus building for cooperation among innovative actors in clusters• customized bottom-up approach instead of the usual top-down manner of other previous policies

Ⅲ. Legacies and New Challenges of Korean Cluster Policies

•Established Regional Innovative Infrastructure : Collaborative networks•Basis for endogenous growth in local economies Participants in the Strategic Industry Promotion Projects and ICCP grew faster and invested more in R&D and revenues compared to non-participants•Has undergone restructuring,

•has taken an endogenous approach to cluster development,•places more emphasis on nurturing local firms and local institutions

•Pay attention to coordinating local development policy with global resources •need to develop a more collaborative environment to foster closer ties between foreign and local tech firms for the long-term growth of the industry

1 Outcomes of Korean cluster industrial policies

O3 [Legacies and New Challenges of Korean Cluster Policies]

12

2 Lessons from Korean cluster policies

13

•Identification and benchmarking: Korea benchmarks the performance of its national industrial clusters

on an international basis, and these Cluster Cities are an important component of national performance.

•Engagement of actors: Industrial complexes are seeking to improve linkages among business and

universities as well as with regional entities collaborative initiatives between universities and firms.

•Government service delivery: organizing industrial production in spatially concentrated zones, such as

industrial complexes serves to facilitate government service delivery, notably infrastructure.

•Entrepreneurship and innovation: The cluster plans place the greatest accent on developing incubators

and other services to support entrepreneurship as well as the development of technical expertise centers

within the clusters.

•Resource allocation and investment: The promotion of these innovative cluster cities to foreign

investment is an expected component of the overall initiative to support balanced regional development.


3 Policy Implications for the Industrializing Countries

14

•Local Government-oriented Innovative Capability & Capacity Building since late 1990s•Planning, Managing, Evaluating

•Institutional Basis for Regional Innovative Clusters since 2003•Legislation, Plan, Governance, Program(Project)

•Paradigm Shifts : Decentralization since 2003•National Clusters to Local Clusters

•Industrial Policy : Selection & Concentration•Sectoral Targeting•Physical Infra to Industrial Infra with HR, R&D, and Business Support

•Policy Target for Regional Industries•local small & medium enterprises but not conglomerates•leading enterprises or potential enterprises

•Sustainable Consistent Policies•long-term planning under stable policies•trial & error over time due to frequent changes in policy

•Governance of Complexity and Inefficiencies •Governance problem from multi layers of policies


4 New Avenues for Korean cluster Policies

15

•Engage in industrial cluster development from a long-term perspective

•reevaluated in relation to overall territorial development plans and considering other sectors and

their industrial linkages priorities of subprograms and issues such as timing and public and private

sector expenses must be assessed

•More Distributive and Non-hierarchical Governance

•Bottom-up planning and implementation of cluster policies

•Proper role sharing between local governments and central government

•Establishment of cooperation and competition system among local governments

•Promotion of resilient new path creation in major knowledge clusters

•Strengthening horizontal and vertical linkages in clusters

•Establishment of cooperation system among ministries of the central government


4 New Avenues for Korean cluster Policies

16

•Innovative Clusters: critical containers and shapers of different economic agents and their activities, •more than simply the sum of their individuals, households, workers, firms and other institutions understanding the coevolution mechanism is important• challenge to traditional and mechanical approaches to Korean cluster policy-making• need for more bespoke strategies with a defined cognizance of particular institutional cultures and networks in innovative clusters

•Korean innovative clusters: •Mature stage in cluster life cycle: somewhat lowering shared vision, belongingness, coherence because of the recent restructuring and fragmentation• act as obstacles for industrial upgrading and regional industrial resilience.

•Establishing a nonhierarchical and relational leadership and distributional governance will be a crucial for the development of the Korean innovative clusters


Economy & Finance

TCI 2015 Evaluating Korean Innovative Cluster Policies: Emerging a New Type of Asian Clusters?