By Geunwoo Ryu, presented at the 19th TCI Global Conference, Eindhoven, 2016.

1. Titel presentatie
[Naam, organisatienaam]
Working Day - Track: Modern cluster policy
A taste of worldwide cluster approaches
Geunwoo Ryu,
Keimyung University
Thinking out Innovation of industrial clusters
in Daegu, Republic of Korea

2. TCI Global Conference
10 November 2016
Eindhoven
Thinking out Innovation of industrial clusters in
Daegu, Republic of Korea
Geunwoo Ryu, Professor,
Keimyung University, Daegu, Republic of Korea

3.  M. Porter (1998, 2011)
 Business clusters : geographic concentrations of a critical mass of interconnected
companies and institutions in a particular field including suppliers, service providers,
universities, trade associations, etc. Whereby proximity leads to shared advantages
through the aggregation of expertise and specialized resources
 In creating shared value-How to reinvent capitalism and unleash a wave of
innovation and growth, companies can create shared value opportunities by
enabling local cluster development with other critical factors (with Mark R. Kramer)
 Jerome S. Engel(2014)
 CIO(Clusters of Innovation)
 Core elements of Porter’s industrial agglomeration and extended stage of
development and innovation of the clusters’ constituents (Silicon Valley)
I. Preview

4.  Components of a Cluster of Innovation (2014, Global Clusters of Innovation).
 Entrepreneurs, Mature Corporations, Universities, Industrial research centers,
venture capital, service providers, sharing management, Government and
prefecture
 Mobility of resources, money, people, know-how/technology, entrepreneurial
process,
 global strategic perspective, alignment of interests-incentives-goals, global ties
and bond-network,

5.  Innovative Creativity
Inspirations, Creative imitations, desire & passion to change, talents (esp.
Startup firms), Clusters’ sustainability. Even though most peoples have
experiences on impromptu inspirations hardly applicable, an impromptu
inspiration’s very important by using historical data.
 Besides fundamental composition of basic operability in clusters with
competent managers and brokers, Hardware & software infrastructure,
collaboration with international organizations, connected social network etc.
 Economic & social progress growth, mutual understanding of cross-cultures,
employment promotion, and harmonization between rules based compliance
and deregulation etc.

6.  Business ecosystem & Transitional Strategic Innovative Options
Receptiveness of cross-cultural diversity and acceptance, esp. policy of employments.
Entrepreneurship, entrepreneur’s passion and courage, leaderships, business model
including cross-border cooperation for creative shared value.
Transformation and development traditional clusters into traded clusters.
 Comparative studies reveal presence of strong clusters like traded clusters
enhances employment and growth to the region in contrast to traditional
cluster where local industries serving primarily the local market.
 Practices on the cross-border collaborations between clusters, esp. Denmark
and Deutsch, Trade Agreement based on clusters between Czech Republic and
Serbia, Global and regional Chapters of TCI-Network.
 Possibility of application with mini-clusters’ experiences in South Korea to other
Asian countries by ongoing TCI Asia Chapter.

7.  Futuristic Vision
Green revolution with climate change, forthcoming 4th industrial
revolution with assuring stable employment
New business opportunity- Mega national plan like as One belt one road
in China, Make in India, Industry 4.0 in Germany and Taiwan
Corporate Social Responsibility with anti-corruption policies

8. A. A quick review of Korea’s Industrial Policy(KICOX(2010); Kim (2015); Park & Koo(2013))
 Evolution of Korea’s Industrial Complex:
Industrial parks have greatly contributed the Economic growth of Korea which
is a planned site that is developed and managed to provide industrial location
initiated by Government.
Most industrial parks, mainly export orientation, were developed by the government,
such as Outward-Oriented Industrial Promotion, Selection of Industries for
Promotion, Substantial Support from the Government, Incentives for Industrial Park
Development, Legal Framework of Support, long-Term Plan for Industrial Cluster
Development, Specialized Agencies for Industrial Cluster Development etc.
 A Blueprint to decrepit industrial complexes be converted into places of creation
and innovation, such as industrial complex renovation or eco-industrial park
 KICOX is in charge of 75 industrial complexes in 6 areas nationwide firmly support
the national economy.(national 41, local 20, foreign 11, agro-sector 3 including East
–South mega region, Gumi-Changwon-Ulsan-Daegu-Busan regions)
II. Focusing on evolution of Korea’s industrial complexes into clusters of innovation

12.  What is mini clusters?
 Mini clusters refer to small group alliances of SMEs, universities, research
institutes, supporting agencies and local government categorized by the similar
type of special sectors (e.g. engines, materials ..) in strategic business or
technological goal
 As the Korean economy become increasingly advanced, companies demanded
more than industrial real estate and R&D inputs. The KICOX ‘mini-cluster’
program, launched ten years ago, aims to address these needs, enabling
collaboration among especially smaller companies located in industrial zones.
 In addition, theme clusters are based on specific theme of specialized
production to collaborate among different sectors’ firms and institutes
 In 2013, 69 Mini Clusters create 59,900 network activities and 7,500 members of
Industry-University-Research Institute completed 17,700 projects
III. Knowledge Sharing with mini-clusters’ experiences in South Korea

13.  Industry-academia-research Cooperation Network to support Businesses

14.  Case of mini cluster in Daegu
 Participants: universities, research institutes, resident companies, cluster managers and
(local government)
 Roles: communication and collaboration for problem solving
 Achievements: patents, new marketing opportunities and developing business models
 Case of a Firm’s Successful Business Method : User-based open innovation
 Besides developing new products-implant denture with specialty, acquiring
knowledge on unskilled areas to realize innovative ideas, gathering patients and
dentists based information using international network, interactive communication
between internal and stakeholders, utilization of O2O connected networking platform,
community between dentists, financial supports from Techno Park in prefecture.
 In this case, it is possible to enact, only if product user and producer as product
attributes is all the same if not market forces larger, proactive producer leading and
changing users’ preference into new product)

18. strategic industry

22.  Limitations:
Sustainability of the future
Bottom-up and need based approach
Effective ‘long-term’ relationships with global and regional stakeholders
Efficient communication system building
- Government Institutional Setting
- Global and National level coordination
IV. Discussion and small word of cautions
 Caution1_Risks embedded in the heavy handed top-down cluster policies
 Especially economic sustainability measured in terms of productivity and value-
added for resident companies and clusters
 Caution2_Overlapping specialized industries in Metro Regional Economic Areas
may increase a risk and volatility arising from global economic cycles, e.g.
slowdown of global economies, especially the US and China
 Agglomeration or diversification: a problem of choice for regional development

23.  Requiring continuous efforts for innovation initiated by resident companies and their
voluntary funding combined with government’s funding
 Increasing an intense tri-partite collaboration, at least, between universities, research
institutes and resident companies whiling cluster managing agencies function as
facilitators
 Enabling a bottom-up approach of developing sustainable innovation capacities based
on local comparative advantage and competitive advantage
V. Policy Recommendations

24. - What is the experience with clusters and cluster-based economic development
approaches across Asia? Is there evidence of an “Asian model”, distinguished from
approaches used elsewhere?
- Do Asians have an appetite for the creation of an Asian ‘learning community’ of
practitioners in this field?
VI. Further Discussions on Asian Models of Industrial Clusters
NRF-TCI-World Bank Group, Workshop at Singapore, 6th June 2016
- It is not helpful to talk about an ‘Asian model’ of cluster-based economic development.
While there are systematic differences between Asia and western OECD countries, there
are also large differences within Asia.
- Asia government has a stronger role and fewer private or private-public institutions to
manage cluster-specific activities. it is likely that also the size and internal organization
of a country matters; regions often play an important role in cluster-based efforts.
Douglas Zeng, Dr., The World Bank’s Trade and Competitiveness
Christian Ketels, President of TCI, Professor of Harvard Business School

25. Reference 1. Current Situation and Challenges of Domestic Industrial Complex
Upon comprehensive planning, designation and a group of developed land to establish as a
group such as factory‧ knowledge industry ‧ information and communications industry etc.
and education ‧ data processing ‧ circulation facility ‧ culture ‧ medical treatment ‧
sightseeing ‧ exercising ‧ welfare facilities etc.
Domestic
Concept
It had started in U.K. to rise
improvement in productivity
through upgradation of labor
and living environment.
Spread to the USA and
European countries are active
industrial development in the
20th century
Spread to the developing
countries rapidly after World
War Ⅱ.
After Industrial Revolution After the 20th Century After World War Ⅱ
Appearance
theory of
innovation
cluster
• National competitiveness for Regional Industry-Academic Cooperation Innovation
Clusters.
• Geographically adjacent businesses, universities, research institutes and local government
cooperation network of various players, including catalyst role in innovation activities.
Building innovation networks for Industrial Innovation Cluster with the Industry-University-Institute
Collaboration by an integrated industrial complex projects around the national industrial complex
It fulfill the role of industry complex into innovation cluster since it was launched in 1960’s which is
started in U.K. after the Industrial Revolution
Industry Complex conception and background

26. Industrial complex promoted industrial development and national economic growth for more than 50 years
from building Guro industry complex in 1964.
Step
Industry
Role
1960’s 1970’s 1980’s 1990’s 2000’s
export-led light
industry
Heavy
chemical
industry
Industrial
structure
adjustments
Takeoff in
industry
development
Expansion of
industrial
development and
growth
• Textile ∙ Rag
wig
• Petrochemist
ry, Steel,
• Machinery
• Electronics,
automobiles,
automobile.
• SW, IT,
Semiconductor
• Information
Communication,
life science
• Guro
Industry
Complex
Ulsan, Changwon,
Yeocheon, Onsan,
Geoje, Pohang,
etc.
Banwol, Sihwa,
Namdong, Gunsan,
Gwangyang, Daebul,
Gunjang
• Gwang-ju
high-tech,
TP
• Urban high-
tech,
Osong,
Ochang.
2010’s
New industrial
development
• integration
Knowledge
Services
• Innovative and
Specialized
industry complex
Industry Complex has contributed in 1 trillion export and $20,000 GNP per capita for 50 years.
source : KICOX(2016)
Mechanical, electrical, electronic
industry and non-manufacturing etc.
Petroleum, chemical and steel,
transportation equipment, etc.light industry
National economic development through industrial complex development
Reference2. Current Situation and Challenges of Domestic Industrial
Complex

27. Division
Designated status moving-in
enterprise
(Companies)
employment
(person)
Production
(a billion)
Export
(1 million $)Number Area(km2)
Content 1,124 1,402 85,789 2,160,761 978,932 386,281
• Among 1,124 industrial complex, 41 national industry complex , 597 general industry complex, 19
urban high-tech industrial complex, 467 agricultural industrial complex.
• By type of industrial complex, general industry complexes are over than 50% in all of industry
complex, national industry complex take over than 50% by designated area.
• Efficient management and operation supporting service to
residential companies
• Promoting industrial complex development & build up,
Upgrading industrial structure of the complex
• Fostering Industry-academic cooperation network clusters
• Establishing Environmentally Ecological industrial park (EIP)
• Research on Industrial Location Policy and development, etc.
• The end of 2014 : Total 30 , designated area is 657km²
• by regional groups : Gyeong-gi Province are most
frequent in six.
• By park : Sihwa industry complex are maximum section
in 124km²
• By manic state : under construction complex in 15,
Completed complex 4, undeveloped complex in 1.
In Korea, There are 1,124 industrial complex, Korea industrial complex corporation handle 41 national
industrial complex.
Operation Status and main business of the industrial complex.
Reference3. Current Situation and Challenges of Domestic Industrial Complex

28. Reference4 Limits to Growth according to the development path of
clusters and industrial complex.
Although industry complex carried out the roles in process of national economic development, it is
needed new adaptable model to overcome the limits of existing growth and development on the path
U
The growing period
(Regional base for
growth)
The transformation
period
(Build up new cluster)
The maturing period
(diversified industrial
structure)
The beginning period
(Physical base to
Manufacturing Sector)
Complex Emerging
Large Scale Complex
Maturing Complex
breakaway/bankruptcy
Deindustrialization
Promote initial
export-led growth
and heavy chemical
industry in Guro,
Ulsan, country
southeast area,
industry complex, etc.
Pursuit
Balanced National D
evelopment and
spread develop of
industry complex.
Advancement of
industry structure
policy and
develop new
industry complex
New Adaptable Model
17% 4%7%31%
1980’s 2010’s2000’s1970’s
GDP
average
annual
growth rate
11%
1990’s
Post-industrial
complex
Old development path New development path

29. Despite its outward growth, the decline of the core industries such as the sagging industrial parks and
the delayed growth of new industrial growth sectors is only decreasing due to the decreasing
competitiveness of the industry.
Majorcompanydownsizing,overseastransfers
becauseofconsiderdeterioratingeconomic
growth
Downsizing, overseas transfers
- While companiesare hesitant toinvest byasluggish
economy,downwardtrendinthebankloansorstock
issuance, corporatebonds.
Occurrence a hollowing out of the
country caused by building overseas
facilities in China etc. and moving
overseas with cooperative companies
- Accelerate in reduction in corporate
presence or reducing production function
with regional industry complex as the
center.
While operate company and employments
are increasing, employer per company
decreased.
An increase in the number of small
businesses in industrial parks
- Operating companiesinanindustrial complexincrease
anannualaverage of10.3%. ,employmentgrowthrate6%
Small businesses in the industrial
complex's tenant has increased
- Employeeperoperatingcompany
2001 41.2 person-> 201523.6person(-42.8%)
Through Recycling complex Innovation
park, an attempt to upgrade industries of
companies entering the industrial complex
Base industry estate acceleration
- Developing higher value-added of the
tenant industries, industrial parks,
propulsion and convenience facilities
and infrastructure in the industrial
complex, support facilities, etc.
Small business major metropolitan area with a
high percentage of national industrial
complex artist small increase in rental
companies in the case of altitude delay.
- 2000~2015 Tenant Growthrate incapital area
(Seoul19%,Namdog8.2%,Banwol-Siwha 16.3%)
The industrial complex, contribute to the development of the nation's economy under demand that
the new changes due to environmental changes.
Government is carrying out upgrading industry complex, trying to seek industrial restructure
acceleration in the future
Recent Changes in Industrial Complex According to Environment Change
Reference5 Current Situation and Challenges of Domestic Industrial Complex

30. Time to
support
industrial
complex
strengthening
a suitable
cooperation
system for
globalization.
Globalization is deepening consistently in local production and sale of the product etc.
Intensifying globalization of industry
Reference7 External environment changes

31. Reference8 Domestic industrial type and competitiveness
National
industry
complex
General
industry
complex
Ulban high-
tech industrial
complex
Agricult
ural ind
ustrial
complex
Foreign
Investmen
t Zone
free
trading
region
Free
Economic
Zone
Purpose
National
infrastructur
es and
advanced
technology
industries.
Local
economic
revitalizatio
n,
promotion
of industrial
distribution
to rural
areas.
High-tech
industries,
including
knowledge,
suspect,
culture,
suspect,
information
and
communication
industries.
increase
the inco
me of far
mers and
fisherme
n
Promotion
of foreign
investment
Promotion of
regional
development
and attracting
foreign
investment,
trade
promotion,
and
international
logistics
Facilitation.
Manageme
nt of
foreign
investment
enterprises
and
improving
the living
conditions.
Appointer
Ministry of
Land
Mayors ‧
Governors
of provinces
Mayors ‧
Governors of
provinces
Mayor‧
Governor
‧
The head
of a Gu
Mayors ‧
Governors
of provinces
Ministry of
Industry,
Trade,
Energy
Ministry of
Industry,
Trade,
Energy
Target
area
Underdevel
oped areas
that require
promotion,
industrial
and
advanced
industrial
sites as
good a
period of
local
developmen
t.
Employme
nts, also in
terms of the
balance
necessary
for the
developmen
t of areas in
the event.
High-tech
industries to
foster good
urban areas.
Location
condition
s are in
good
areas in
the
military
in the
event,
the
learned
Investors
who want
to foreign
investment
and
industrial
areas.
Port,
airport
grounds,
existing
industrial
complex.
Settlement
likely area
and attract
foreigners.
*
(단위 : 개, 천㎡)
Site Type
Complex number Designate area
number Specific gravity Number Specific gravity
Nation 41 3.6% 789,805 56.3%
General 597 53.1% 530,487 37.8%
Urban
high - tech
19 1.7% 6,223 0.4%
Agriculture and
industry
complex
467 41.5% 75,595 5.4%
Total 1,124 100.0% 1,402,110 100.0%
(단위 : 십억원, 백만 달러, %)
Site Type
Production Export
2014 2015
Percentage
Change
2014 2015
Percentage
Change
Nation
665,686 593,880 -10.8 281,511 230,347 -18.2
General 339,813 333,172 -2.0 152,151 143,177 -5.9
Urban
high - tech
188 939 398.7 1 282 23,637.5
Agriculture and
industry
complex
50,762 50,941 0.4 12,777 12,475 2.4
Total 1,056,449 978,932 -7.3 446,4397 386,281 -13.5
Source: KICOX, 2015 4Q