By Byungho Seong, presented at the 18th TCI Global Conference, Daegu, 2015.

1. Korean Technopark’s Clustering Role
and Development Direction
Byungho Seong
Daegu Technopark, Korea
Parallel Session 1.5: Accelerating Cluster Growth in Asian Countries

2. TableofContents
 Ⅰ. Introduction
 Ⅱ. Concept and types of clusters
 Ⅲ. Changing role of Korean technoparks
 Ⅳ. Development direction of Korean technoparks

3. Ⅰ. Introduction

4. 4
Changes to the industrial complex development policies in accordance
with changes to the basic industrial policy trends of Korea
1.Historyof Koreanindustrialcomplexpolicies
Ulsan Industrial Center
Export industrial complex
(Seoul Guro Industrial
Complex)
Zones for promoting the
development of regional
industries
Large industrial complexes
in the southeastern
region
Large industrial complexes
in the southwestern
region
Development of agricultural
industrial complexes
Apartment-type factories
Changing the name of
industrial complexes
Simplifying development
procedures
Increasing individual lots
Creating Technoparks
-Urban cutting-edge
industrial complexes
-Cultural industry
complexes
-Software development
promoting complexes
-Pilot Cluster
Complexes
Policy
target
Basic
policy
Indust
rial
struct
ure
Major
indus-
trial
comp-
lexes

5. 2.Pursuitofpoliciesforthecreationofinnovative clusters 5
After the 1990s, policies of innovative clusters were pursued.
1980s
Regionally dispersed the population concentrated in and around the capital, and narrowed
regional gaps through the balanced development of Korea
(Vertical industrial policies) government-led development of strategic industries
→ (Horizontal industrial policies) promoting private R&D and creating industrial ecosystems
(Policies to develop industrial complexes) simply providing industrial lots
→ creating an environment for reinforcing the innovative capacity of companies in the complexes
1990s
Pursued policies to create regional innovation clusters and had organizations supporting
companies form cooperative networks within each region so that the clusters would function
as footholds of innovation
1994 Plan for the development of Regional Cooperation Research Centers /
1995 Five-year plan for the expansion of Korea’s technology infrastructure
→ Pursued a project for Technology Innovation Centers(TIC) and Regional Cooperation Research Centers
(RRC)
1997 Pursued a project for the creation and management of technoparks and selected pilot TP businesses
1999~2002 Started pursuing the first stage of a project to promote regional industries in four regions
2003~2007 Pursued the second stage of the project to promote regional industries
/ expanded the pursuit to nine regions
2009~2014 Pursued a project to develop leading industries in metropolitan economic zones
2015 Pursuing a project to develop regionally specialized industries

6. 2.Pursuitofpoliciesforthecreationofinnovativeclusters(continued) 6
Changes to the regional industry policies
Category
Kim Dae-jung administration
(people’s government)
Roh Moo-hyun administration
(participatory government)
Lee Myung-bak administration Park Geun-hye administration
Issue
Overcoming the financial crisis and
developing endogenous regions were
important issues
Developing regional industries
(strategic industries)
Reinforcing the competitiveness of regional
industries
(realizing economies of scale)
Creating regional jobs
(Reinforcing inter-regional cooperation)
Major laws
and systems
Special act on designation and management
of free economic zones (2002)
Industrial cluster development and factory
establishment act (2002)
Special law for balanced national development (enacted in 2004 and
amended in 2009)
Amended (January 2014)
Five-year plan for balanced national
development (2004~2008)
Basic plan for bolstering industrial
clusters (2004)
Five-year plan for regional development
(2009 - 2013)
Basic plan for bolstering industrial clusters
(2009)
Regional
policy
paradigm
Development of lagging regions Balanced national development
Reinforcing regional competitiveness
(introduction of the metropolitan zone
concept)
Regional competitiveness + residents’
happiness
(introduced regional happy living zones)
Developing
regional
industries
Metropolitan city-led first
stage (2009 - 2012)
Metropolitan city-led
second stage
(2012 - 2014)
Industrial cooperation zones
(2014 -2018)
First stage development of
strategic industries in four
regions (1999 - 2004)
In nine regions (2002 - 2007)
Second stage development of strategic
industries in four regions (2004 - 2009)
Project to promote regional
strategic industries
4+9 regions
(2008 - 2012)
New specialized
industries
(2013 - 2014)
Main force industries
(2015~2018)
System to
support
regional
industries
Technopark
-Pursuit of a project to create industrial
technology infrastructure (1995)
-Designation of demonstration technoparks
(1997)
Korea Industrial Technology Foundation
Korea Institute of Industrial Technology
Evaluation and Planning
Technopark
Korea Institute for the Advancement of Technology
Korea Evaluation Institute of Industrial Technology
Leading industries support force (Institute for Regional Program Evaluation)
Technopark
- Kim Dae-jung administration (1998-2003) : quickening period of regional industry policies
- After the enactment of the Special law for balanced national development (2004), policies to support regional industries
fully spread.
- Technoparks played the centripedal role of developing regional industries and creating regional innovation clusters

7. Ⅱ. Concept and types of clusters

8. 1.Conceptofclusters
Concept of clusters
8
- Innovation cluster
Refers to a concentration of horizontally and vertically related companies and innovating entities
(universities, research centers, government agencies, and supporting agencies) that create new knowledge and
technology based on mutual interaction. Or it refers to a region where such activities are held.
(Presidential Committee for Balanced National Development, 2007)
- Technologically innovative cluster
A network of mutually interacting companies, universities, research institutes, and various participating
entities that are related to a particular industry and are concentrated in a limited region
- Industrial cluster
A new form of industrial space that creates price and technology competitiveness by building a close
network of companies specializing in a particular industrial field and engaging in various relevant activities
(Yong-tak Kim, 2014)
★ The clusters are not just companies concentrated in a limited space,
but the connectivity and networking of various innovating entities are important
★ An innovation cluster is a concept that emphasizes the system of
sharing and spreading knowledge, as well as the role of knowledge creating institutions
(universities and research centers, etc.)
★ Korean industrial complexes are the combination
of government-led industrial clusters and innovation clusters

9. 1.Conceptofclusters(continued)
Concepts similar to clusters
9
Concept Definition
Industrial district
 The positive externality generated in industrial clusters where mutually related companies
aggregate, develops the industrial district.
 Externality is generated by the three factors of knowledge spreading among companies, the
introduction of special factors and services in supported industries, and the large expert
workforce that a region possesses.
 An industrial district is expected to bring about achievements greater than the simple sum
of individual units present in the district (Peneder, 1999, p.340).
Agglomerations / regional
industry cluster
 Cluster regions, consisting of entities sharing a common geographical location, is defined in
terms of metropolitan areas and functional economic units.
Industry cluster
 Entry into a cluster in itself binds companies with non-profit organizations, as well as
procurers with parts manufacturers, largely impacting the competitiveness of individual
companies. Common technologies, procurers, distribution channels, or workers pool tie them
together (Enright 1997:191).
Value Chain industry cluster
 A value chain industry cluster is an industrial cluster with expanded introduction-calculation
or procurer-supplier chains.
 Strategic partnerships of production networks of mutually connected independent
companies, universities, research centers, knowledge-intensive business services, mediating
agencies, and consumers in a value added production chain, are also included in these
clusters.
Industrial complex
 An industrial complex is based on the connection of companies not only developing new
technologies, but also using similar technologies.
Technological system
 A network of entities mutually interacting in a particular technological field, system, and
infrastructure for the creation, spread, and use of technologies.
 A technological system consisting of a dynamic knowledge and capacity network is defined
from a knowledge viewpoint and not general goods and services.
* Source: Korea Institute for Industrial Economics & Trade (2014), Best Global Practices and Success Factors of Innovation Clusters

10. 2.Diversification ofclustertypes
Changes to cluster types in tandem with industrial economic development stages
10
- Creation of exporting industrial complexes in the 1960s
light industry-centered industrial complexes were built to provide lots and cheap labor,
as well as draw investment into light exporting industries.
- Development of large-scale industrial bases in the 1970s
created large-scale industrial clusters that developed industrial footholds and intensively supported
the workforce, technology, and funds necessary for the upgrading of industrial structures,
beyond the simple provision of industrial lots.
- Creation of innovation clusters after the 1990s
Industrial lots that were more than simple production bases, were built using various means,
such as the creation of regional innovation clusters based on R&D.
- Establishment of technoparks in the 2000s
Innovation networks within a region were formed and managed by creating technoparks in each region,
under the goal of creating regional innovation clusters for balanced national development.
★ Technoparks started to be created under the goal of supporting the creation
and spread of technologies, as well as companies, based on technology systems,
which is a cluster similar to a technopark.

11. 2.Diversification ofclustertypes(continued)
Diversification of cluster types in accordance with management methods / purpose of creation
11
- Types according to industrial complex management method
National industrial complex, general industrial complex, urban cutting-edge industrial complex,
agricultural industrial complex, SME cooperative complex, foreign investment zone, free trade zone,
and free economic zone, etc.
- Types according to the purpose of industrial complex creation
Science research complex, industrial technology complex, software promotion complex,
cultural industry complex, R&D special zone, venture firm developing and promoting zone,
knowledge-based industrial agglomeration zone, and cutting-edge comprehensive medical complex, etc.
★ The creation of industrial lots for these various types was the outcome of
various policy attempts made to develop the industrial economy.
⇒ Endogenous to the development of various industrial complex types,
were the industrial policy goals of each era.
⇒ Industrial complexes upgraded and developed into industrial clusters of various types
with each development stage of the industrial economy.
★ (Changes to the industrial location policy goals)
simply providing an industrial lot ⇒ supporting the innovation of companies
in an innovation cluster and building networks in order to enhance their competitiveness

12. 3.Keyfactorsforsustainableclusters 12

13. Ⅲ.Changingrole
ofKoreanTechnoparks

14. 1.Definitionoftechnopark
Definition of technopark
14
- A non-profit organization aggregating the capacities of regional industries, universities, research centers,
and government agencies in order to promote their mutual interaction,
build a system for regional technological innovation, create a new technology corporate ecosystem,
bolster the technological innovation of companies and the establishment of business startups
based on new technologies, as well as develop the relevant region
- Selection and concentration of resources to plan industries and create growth engines
- For effective company support based on achievements made and demand
- Building a regional foothold system
by enhancing the connection between industries, universities, research centers, and government agencies
Purpose of and legal basis for establishing technoparks
- Purpose of establishment
Building a network of companies inside a park with research centers, universities, and companies in a region,
in order to support venture firm startups,
as well as technology transfer from universities and research centers to companies
- Legal basis
Article 32 of the Civil Code
Special act for supporting industrial technological complexes
and Industrial cluster development and factory establishment act
Main functions of Technoparks

15. 2.Changingroleoftechnoparks
Role and function by stage
15

16. Ⅳ. Development direction
of Korean Technoparks

17. 1.Changestotheregionalpolicyparadigm
Changes to the regional policy paradigm
17
Category Old paradigm New paradigm
Recognized
problems
Income, infrastructure, employment gaps between regions
Weak regional competitiveness
and the potential of little used regions
Policy goal Enhance fairness through balanced development Enhancing competitiveness and fairness
Policy
framework
Temporarily compensating
to offset the geographical disadvantages of lagging regions
Tapping on all the potentials of each region
not yet used in order to enhance regional competitiveness
Intervention
unit
Administrative unit Functional economic zones
Policy target Lagging regions All regions
Approach One-size-fits-all for each field
Considering regional characteristics(location-based approach)
Comprehensively approaching various development projects
Focus Drawing external investment and transferring resources Utilizing assets and resources endogenous in each region
Entity
pursuing
the policy
Central government
Multiple layer government (central, regional, and local)
Various stakeholders (participation of the private sector)
Policy tool
Subsidies
State funds support
Combining hard and soft capital
(capital stocks, labor market, corporate environment,
social capital, and networks, etc.)
* Source: OECD(2009), Regions Matter: Economic Recovery, Innovation and Sustainable Growth, Paris
OECD(2010), Regional Development Policies in OECD Countries, Paris
Jae-gon Park (2015), The issue of and direction for the smart specialization of Korea regional industry policies
(material presented at the First Regional Policy Forum in 2015)

18. 1.Changestotheregionalpolicyparadigm(continued)
New paradigm of projects to support regional industries
18
 [Autonomous → creation]
Reinforcing the autonomy of regions with regional industry development plans
- Preparing a framework that encompasses all projects that support regional industries
 [Value → achievement]
Making actual achievements as a regional economy growth factor
- Building a system for comprehensive and mid-to long-term management of achievements made
 [Open → win-win]
Win-win growth through connected cooperation among regions
- Connecting and cooperating among cities and provinces based on regional autonomy
and creativity (economic cooperation zones) to generate achievements
 [Convergence → leaping forward]
Structurally changing regional industries in order to respond to the convergence trends
- Responding to the convergence trends of technologies and industries,
as well as creating convergence-friendly industrial ecosystems
 [Planning → future]
Pioneering the future with regional differentiation development plans
- Establishing specialization development strategies led by each region,
which reflect the regional industrial structure and conditions, and consolidating new projects

19. 2.Development directionofKoreantechnoparks
(1) Reinforcing its function as a regional innovation foothold
19
- Reinforcing its functions of overall planning / arbitrating / mediating ⇒
expand its role and status as a foothold organization
 (Past) TP of the technology
complex management type
 (Present) TP of the company supporting type
 (Future) Combined TP
- Drawing companies into technological complexes
- Managing the incubation of business startups
- Managing government support projects
- Supporting R&D/non-R&D
- Comprehensively supporting the technological development,
test product manufacturing, certification, equipment,
workforce training, marketing, and other services of companies
- Oversee and supervise regional industry development plans
- Arbitrate and mediate organizations supporting each region
- Expand the function of providing comprehensive business support

20. 2.Development directionofKoreantechnoparks(continued)
(1) Reinforcing its function as a regional innovation foothold (continued)
20
- Build a comprehensive support system throughout the plan-do-see stages
based on convergence and collaboration among government agencies
so that technoparks may actually settle as regional industry development foothold organizations

21. 2.Development directionofKoreantechnoparks(continued)
(2) Reinforcing its platform function
by building a comprehensive company supporting system
21

22. (3) Lead and pursue policies for smart specialization
22
 Need to switch the direction of regional industrial policies
in order to respond to the changing environment in Korea and globally
 Weak actual regional economic growth despite visible achievements made
and quantitative expansion of investment in regional R&D
- Fragmented investment because of complicated programs of the central government
and the consolidation of excessive budget for new projects of local governments
- Lack of focused strategic investment that takes into consideration regional characteristics and conditions
 Need to strategically approach and selectively merge various central government projects,
as well as expand investment in regional R&D
- Need to pursue policies for smart specialization that induces the restructuring and switch of regional projects
2.Development directionofKoreantechnoparks(continued)
Globally
- globalization is progressing : need to consolidate global competitiveness
- Rapid technological changes : weakening effectiveness of industry targeting strategies
because of the convergence of technologies and industries,
as well as the shortening of industrial life cycles
In Korea
- increasing demand for welfare because of a low birth rate and aging society
: limitations to the method of local governments relying on state funds
- Continued basic low growth trend : maintaining economic growth is a major challenge to tackle
- Need to switch from catching up strategies to pioneering strategies
: the need for a creative economy has been presented.

23. 2.Development directionofKoreantechnoparks(continued)
※ Background to and concept of smart specialization
23
 Background to the emergence of smart specialization strategies
- European paradox : Europe’s economic achievements made were mediocre
compared to the level of their basic and original technologies.
- Self-reflected the problem of the European public research system :
Investment in R&D resources dispersed in different regions
⇒ not achieving economies of scale / standardization by region / weak global competitiveness
- In 2009, Knowledge for Growth proposed smart specialization
as an alternative investment strategy to the central and local governments of EU
- In 2010, the European Commission announced the Europe 2020 strategy :
Set European Research Areas (ERAs) in order to create economies of scale and ripple effects
Adopted the concept of smart specialization as a key strategy in order to realize ERAs
- In 2011, the EU Cohesion Policy demanded the application of smart specialization
as an advance condition in 2014 ~ 2020
* Smart specialization strategies are being emphasized as a key concept of economic development
and growth policies in various reports recently published in Europe.
(ex) Barka Report, EU2020 Strategy, Innovation Union, Regional Policy Contributing to Smart Growth in European 2020,
and EU Budget Review, etc.

24. 2.Development directionofKoreantechnoparks(continued)
※ Background to and concept of smart specialization
24
 Smart specialization strategy
- The purpose of the strategy lies in investing in long-term growth potential
in order to respond to the rapidly changing technologies and globalization,
while also overcoming financial limitations (OECD, 2013)
- As a policy that entails selecting fields that specialized regional clusters should develop first,
it includes discovering the priority of fields to develop through entrepreneurial discovery (Foray, 2009)
 Six stages of applying smart specialization into regional industrial policies (EC, 2012)
Stage 1
Analyzing the regional characteristics, assets, and potential
: need to differently approach in accordance with regional conditions
Stage 2 Building a private governance system, wherein various stakeholders participate
Stage 3
Setting and sharing future visions together with regional stakeholders
: establishing endogenous development strategies
Stage 4
Setting the priority
: priority fields include not only particular industries or fields, but also new activities
Stage 5
Establishing comprehensive policies
: maintaining uniformity, mutually connecting, and comprehensively pursuing policies,
roadmaps, execution plans, and pilot projects
Stage 6
Comprehensively monitoring and evaluating
: improving, executing, and evaluating plans, providing feedback,
and re-introducing the improved knowledge

25. 2.Development directionofKoreantechnoparks(continued)
(3) Lead and pursue policies for smart specialization (continued)
25
 Establish and lead regional industrial policies based on smart specialization
as a regional innovation foothold
- Unify the capacity and know-how accumulated so far while planning regional industrial policies,
providing comprehensive company support services, incubating business startups, developing companies,
as well as building and managing innovation cluster networks to set the priority of fields
to develop in each region and promote their activities.
Industry
targeting
(selecting/
exclusion)Investment
on Infra
Lack of HR
and N/W
Poor
innovation
performance
Low GRDP
growth rate
Protracted
regional
economy
slump
The influx
of
out-
standing
HR
population
growth/
Growth
of city/
Improved
Settlement
Environment
Simultaneously
Localization
And
urbanization
Increased number
of companies/
consolidation of
competitive power
Activation of
startups, R&D,
innovation
Development
human
resources
Improvement
Diversity
and
Tolerance

26. Thankyouforyourattention!