By RYU Geun-Woo, SEO Jung-Soo, and YOO In-Hye , presented at the 18th TCI Global Conference, Daegu, 2015.

1. Developing Action Plans of Decrepit Industrial
Clusters of Urban Regeneration: A location analysis
of Daegu-Gyeongbuk automobile parts
manufacturing clusters
RYU Geun-Woo, SEO Jung-Soo,
and YOO In-Hye,
Keimyung University, Korea
Parallel Session 2.2: New Role of Clusters in the Broader Economic Context

2. Contents
I. Introduction
• Motivations
II. Theoretical Background
• Research Hypotheses
III. Data Analyses
• Location Quotient
• The Results & Discussions
IV. Spatial Arrangement of Autoparts Industry in Daegu-
Gyeongbuk
• A regression analysis & the result
V. Concluding Remarks

3. Introduction
• Automobile industry in Korea (2014)
• 3.3% of GDP & 12.3% of exports
• Improvement and rationalization efforts
• In terms of saving labor, production and management system
improvements
• Modularization of auto
• Ulsan and Pyongtaek:
• Two major locations in Korea for Vehicle manufacturing
• Autoparts manufacturers
• Seeking Technology alliance, agglomeration effect
• Close to major automobile locations?
• Dongnam Belt close to Ulsan (Hyundai Motors)
• But also outside Dongnam Belt
• Daegu and Gyeongbuk (Gyeongsan, Yeungcheon): Daegu-
Gyeongbuk Economic Belt (DaeGyeong Belt)
• Autopart manufacturers: 1st tiered and 2nd tiered vendors
• Creating an autopart cluster

4. Theoretical Background
• Research Hypotheses
• In order to investigate autoparts manufacturing firms
which are located in DG Economic Belt
• Working H1
• Those autoparts manufacturers who are belonging to the 1st
tiered vendors will locate close to the vehicle manufacturers
• Working H2
• The higher the value addition of autoparts manufacturing, the
more those 1st tiered vendors of autoparts manufacturers will
be clustered, creating an agglomeration effect.

5. Spatial Arrangement of Autoparts Industry
• Two major spatial
arrangement
• Capital Region
Economic Belt and
Dongnam(South-East)
Region Economic Belt
• With more recent
emergence of Southern
Part of the Capital
Region Economic Belt
and Chungcheong
Region
Source: Automobile Annals (2008)
<Vehicle Manufacturing Plants and
Autoparts Manufacturings (2005)>

6. Spatial Arrangement of Autoparts Industry

7. Spatial Arrangement of Autoparts Industry in Daegu
Classification
District
Dalseo-gu Buk-gu Dalseong-gun Seo-gu Dong-gu Jung-gu Suseong-gu Nam-gu
Total 687 314 45.70% 195 28.40% 133 19.40% 39 5.70% 3 0.40% 1 0.10% 1 0.10% 1 0.10%
Manufacturing
Industries
Vehicle and
Trailer
428 196 45.80% 113 26.40% 97 22.70% 19 4.40% 1 0.20% 1 0.20% 1 0.20%
Other
Machinery and
Equipment
103 47 45.60% 42 40.80% 9 8.70% 5 4.90%
Metal Products
Manufacturing,
except
Machinery and
Furniture
86 37 43.00% 27 31.40% 11 12.80% 10 11.60% 1 1.20%
Rubber and
Plastic Product
s
39 22 56.40% 4 10.30% 9 23.10% 2 5.10% 1 2.60% 1 2.60%
Primary
Metal
Products
10 3 30.00% 2 20.00% 4 40.00% 1 10.00%
Electrical
Equipment
12 6 50.00% 3 25.00% 2 16.70% 1 8.30%
Furniture 1 1 100.00%
Other
Manufacturing
8 3 37.50% 3 37.50% 1 12.50% 1 12.50%
Source: Surveys of Autoparts Manufacturers in Daegu-Gyeongbuk (2014)

8. Spatial Arrangement of Autoparts Industry in Gyeongbuk
Source: Surveys of Autoparts Manufacturers in Daegu-Gyeongbuk (2014)
Classification
District/Subregion
Gyeongju City
Gyeongsan Ci
ty
Chigok-gun
Yeongcheon
City
Gumi City
Goryeong-gu
n
Seongju-gu
n
Gimcheon
City
Total 614 240 39.10% 137
22.30
%
71
11.60
%
55 9.00% 35 5.70% 31 5.00% 20 3.30% 10 1.60%
Manufacturing
Industries
Vehicle and Tr
ailer
453 199 43.90% 98
21.60
%
46
10.20
%
42 9.30% 11 2.40% 17 3.80% 18 4.00% 8 1.80%
Other Machine
ry and Equipm
ent
39 9 23.10% 14
35.90
%
5
12.80
%
3 7.70% 6
15.40
%
2 5.10%
Metal Products
Manufacturing,
except Machin
ery and Furnitu
re
39 10 25.60% 11
28.20
%
7
17.90
%
6
15.40
%
2 5.10% 2 5.10% 1 2.60%
Rubber and Pla
stic Products
32 4 12.50% 6
18.80
%
5
15.60
%
3 9.40% 9
28.10
%
2 6.30% 1 3.10% 2 6.30%
Primary Metal
Products
13 2 15.40% 1 7.70% 1 7.70% 1 7.70% 1 7.70% 7
53.80
%
Electrical Equi
pment
12 3 25.00% 5
41.70
%
2
16.70
%
1 8.30%
Furniture 12 12
100.00
%
Other Manufac
turing
14 1 7.10% 2
14.30
%
5
35.70
%
5
35.70
%
1 7.10%

9. Data Analysis

10. Data Analysis

11. Spatial Arrangement of Autoparts Industry in Daegu
Gyeongbuk Economic Belt
• A regression Analysis
• To find out what identifiers affecting Value addition in
the region?
• Location (District/subregion), Number of Firms, Number of
Employees, Time
Dependent Variable
Coef. Std. Err. t P>|t| [95% Conf. Interval]: Log(value addition
per capita)
District 0.287 0.047 6.15 0.000 0.195 0.379
Log(no of firms) 0.100 0.010 9.59 0.000 0.080 0.120
dum_year1999 -0.404 0.099 -4.09 0.000 -0.600 -0.210
dum_year2007 0.175 0.092 1.90 0.059 -0.007 0.358
dum_year2013 0.185 0.090 2.06 0.041 0.008 0.362
_cons 3.479 0.084 41.61 0.000 3.314 3.643

12. Concluding Remarks
• Major findings
• High location quotients of autoparts industry in Daegu-
Gyeongbuk Belt,
• Due to an agglomeration effect associated with a few industrial
complexes or clusters
• Relatively Close to Vehicle Manufacturers
• Convenient Logistics associated with Road Transportation
• Not much difference in Location Quotient by Number of Firms
• But marked difference in Location Quotient by Value Addition
• Low Technology based autoparts manufacturers located in a cheaper
district or subregion in Gyeongbuk
• Higher Technology autoparts manufacturers located in Daegu
• Limitations and Further research
• Assumed that Autoparts manufacturing firms in Daegu-
Gyeongbuk formed a cluster
• But no specific mentions on the cluster itself and the
agglomeration effect
• Lack of Data limits more detailed and firm-based research

13. Thank you very much