A Feasible Connectivity on Industrial Clusters between Daegyeong in South Korea and Osaka Regional Areas in JapanGeunwoo Ryu

Academic 2: Industrial Trends, Innovation and the Cluster Ecosystems

11 November 2014

A Feasible Connectivity on Industrial Clusters between Daegyeong in South Korea and Osaka

Regional Areas in Japan

Professor Geunwoo Ryu, Keimyung UniversityAssociate Professor Byoungki Kim Shiga University

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

1. Background

2. Industry Supporting Policies

3. Industry Clusters in Kansai and Daegyeong Regions

4. Collaborative Relations Kansai-Daegyeong Regions

5. Conclusions

Outline

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

1. Background

• Emphasis on the role of initial conditions, the potential for innovation and knowledge spillovers, and the composition of economic activity (Porter, 1990; Glaeser et al., 1992; Krugman, and Venables, 1999; Ketels,2013)

• Presence of innovative clusters of related companies and industries (Porter, 1998; Saxenian, 1994; Swann, 1998; Bresnahanand Gambardella, 2004)

• Regional economic performance including growth in employment, wages, business creation and innovation(Porter et al., 2011)

• An Economic Role of Union of Kansai Governments in Glocalization Age (Byoung-Ki Kim, Geun-Woo Ryu, Seung-Ho Park, 2014)

Why some regions achieve significantly higher growth rates than others?

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

2. Industry Supporting Policies

• Structural reforms

• National Strategic Special Zones

• Industrial Cluster Policies

Monetary PolicyTo end Deflation

Fiscal PolicyTo provide a short-term boost to the economy

Growth Strategy

Abenomics Three Arrow Policy

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

2+5 Regional Economic DistrictsDivide the nation into seven mega economic regions.In each economic region, functions such as industry, education, medicine, culture and others are integrated.

Science Business BeltTo develop science cities where world level researchers gather and develop new ideas and technologies.

Four Major Rivers Project

Balanced Regional Development Policies

Creating multipurpose spaces for local residents and regional development centered on the rivers.

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There are many industry clusters, but only a small number of companies working in their partner countries

• Territory • Historical issue concerning the previous war

- Particularly the wartime comfort women issue

Disputes

Japan-Korea Relations

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

Human Development Index RankJapan: 10, Korea: 12

Doing Business Economy RankKorea: 7, Japan: 27

The World Competitiveness RankJapan: 21, Korea: 26

Regional GDPKansai: 788bil$ (nearly equivalent to Netherlands)Dae Gyeong: 119bil$

PopulationKansai: 20mil, Dae Gyeong: 5.2mil

Determinants of National Advantage

Competitiveness of the Regions

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

Local government

Companies

University University

Local government

Companies

Kansai Daegyeong

Feasibility of connectivity on clusters ?Innovation, cost reduction, ….

Industry Clusters

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

3. Industry Clusters in Kansai and Daegyeong Regions

MOU for the promotion of exchange of local industries and companies (2012.4)

• Sharing of information about Industry exhibitions

• Promotion of exchange through local governments

• Support research and development

Daegyeong

Kansai

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Source: JETRO

Kansai Area

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE Source: JETRO

Industry Clusters in Kansai Area

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

Source: JETRO

Foreign Companies in Kansai Area

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

Source: DGFEZ

Industry Clusters in Dae Gyeong Area

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• 35 Government funded research institutes• 11 Government designated R&D centers• 5 Industry support centers

Source: DGFEZ

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

4. Collaborative Relationsin Kansai-Daegyeong regions

Regular Ferry route in 2015

Maizuru (Japan)- Pohang (Korea)

Feasibility of implementation of a water industry cluster

3rd World Water ForumKyoto, Shiga and Osaka, Japan

2015 Apr 12-17

2003 Mar 16-23

17 TH TCI GLOBAL CONFERENCE | CREATING SHARED VALUE THROUGH CLUSTERS FOR A SUSTAINABLE FUTURE

5. Conclusions

Impact of clusters on multiple dimensions of regional economic performance including growth in employment, wages, business creation and innovation (Delgado et al.,2012).

Many industrial clusters in Daegyeong and Kansai regions.

• Cross-border exchanges of companies and information is critical between two regions.

• Support to companies in the aspects of cost, information, risk management, R&D, infrastructures by local government is required.

• The role of Universities as coordinators to boost exchange research and information is also crucial to link the cross-boarder areas.