Transformation of the territorial structure of manufacturing in the Republic of Korea in the 21st century

The Asian financial crisis of 1997–1998 was a powerful economic shock for the Republic of Korea, which provoked significant changes in the territorial structure of the country’s manufacturing industry, to be dealt with in the article. After-crisis transformation of the territorial structure is characterized by five main processes. Two of them, at first glance mutually exclusive, i.e. decentralization and concentration, not only affect the entire structure, but also determine the general vector of its transformation in the period under review. Decentralization is observed in most branches of the manufacturing industry and is expressed in the growth of specialized industrial centers on the periphery of the old ones (the Capital Region) and in the emergence of new ones (in Chuncheon and Jeolla). The growing concentration is recorded in high-tech industries, such as pharmaceuticals, production of semiconductors, electronic components, and medical equipment, which receive more advantages from localization in large centers with a diversified economy and are increasingly concentrated in the Capital Region. Other processes, such as outsourcing, diversification, and pulsations in the local economy, either act locally or have a significantly smaller impact on the transformation of territorial structure of the manufacturing industry than the main two. The outsourcing of production functions by South Korean companies is mainly directed to developing countries in Asia (China, Vietnam, Indonesia), as well as to Eastern Europe and North America. The internationalization of production structure of the largest firms reduces the competitiveness of South Korean peripheral and old industrial regions, which are unable to attract new and retain existing enterprises. At the regional level, this contributes to the decentralization of territorial structure, but at the national level it provokes an increasing concentration in regions with the strongest competitive advantages (the Capital Region). Local processes, namely diversification and pulsations in the local economy, are characteristic of the most specialized industrial centers. Diversification touches primarily upon old industrial regions that previously specialized in textile and clothing production (Daegu, Jeonju, Busan). Pulsations in the number of employees and production volumes are mainly common to specialized shipbuilding centers (Tongyeong, Goseong, Geoje), which experience regular cyclical industry crises.

1. Amsden A.H. Asia’s next giant: South Korea and late in dustrialization, Oxford, Oxford University Press, 1992, 400 p.

2. Chernetskii F.M. [Pragmatic regionalism of Chungcheong in the context of regional confrontation in the Republic of Korea], Evolyutsionnoe stranovedenie: teoriya i praktika [Evolutionary country studies: theory and practice], Voprosy ekonomicheskoi i politicheskoi geografii zarubezhnykh stran, vol. 21, Moscow, Lomonosov MSU, 2023, p. 145–158. (In Russian)

3. Cho M., Hassink R. Limits to locking out through restructuring: the textile industry in Daegu, South Korea, Regional Studies, 2009, vol. 43, no. 9, p. 1183–1198, DOI: 10.1080/00343400802171973.

4. Ellison G., Glaeser E.L. Geographic concentration in US manufacturing industries: a dartboard approach, Journal of political economy, 1997, vol. 105, no. 5, p. 889–927, DOI: 10.1086/262098.

5. Jeon M.S., Lee J. Is public agency relocation effective to achieve decentralization? Evaluating its effects on regional employment, Journal of Urban Affairs, 2021, vol. 3, p. 1486–1501, DOI: 10.1080/07352166.2021.1962722.

6. Kalinowski T. The politics of market reforms: Korea’s path from Chaebol Republic to market democracy and back, Contemporary Politics, 2009, vol. 15, no. 3, p. 287–304, DOI: 10.1080/13569770903118770.

7. The Park Chung Hee Era: The Transformation of South Korea, Cambridge, MA, Harvard University Press, 2011, 744 p.

8. Koo Y. Evolution of Industrial Policies and Economic Growth in Korea: Challenges, Crises and Responses, European Review of Industrial Economics and Policy, 2013, no. 7, p. 3–21.

9. Lee C. Korea: geographical perspectives, Jincheon, Korean Educational Development Institute, 1988, 464 p.

10. Lee Y.S., Heo I., Kim H. The role of the state as an inter-scalar mediator in globalizing liquid crystal display industry development in South Korea, Review of International Political Economy, 2014, vol. 21, no. 1, p. 102–129, DOI: 10.1080/09692290.2013.809781.

11. Park S., Koo Y. Impact of proximity on knowledge network formation: The case of the Korean steel industry, Area Development and Policy, 2021, vol. 6, no. 2, p. 181–199, DOI: 10.1080/23792949.2020.1797518.

12. Park S.O., Chung D.C. Evolution of industrial cluster and policy: The case of Gumi city, Korea, Journal of the Korean Geographical Society, 2012, vol. 47, no. 2, p. 226–244.

13. Shin D.H., Hassink R. Cluster life cycles: the case of the shipbuilding industry cluster in South Korea, Regional Studies, 2011, vol. 45, no. 10, p. 1387–1402, DOI: 10.1080/00343404.2011.579594.

14. Web source KOSIS, Korean Statistical Information Service, URL: https://kosis.kr/index/index.do (access date 10.02.2023).