Written by Lall(1996)

1
IT Knowledge Creation Opportunities by Joint
Collaboration among APT Countries - Focused on
Innovative Cluster Policy in Korea
SQ 3.7
Rapporteur Yooduk Jun(jyd_at_iita.re.kr)

• Written by Lall(1996)
• Presented by Jun, Yoo-Duk

2
Content

• Introduction
• Cluster and Technological Regimes
• Study of Technological Innovation and Clusters
  in the developing Countries
• Case Analysis of Mobile Communication Clusters
  in Korea
• Conclusion and Policy Implications

3
Introduction

• Since 1990s, the cluster-based policies for
  accelerating regional innovation and spreading
  developed technology have been experimented as
  successful strategies for nurturing and
  developing local industry and technology.
• Recently, Korean government has implemented
  various cluster-based policies to activate local
  economy. However, it seems likely to degrade the
  efficiency of the national innovation system
  which was promoted to chase the developed
  countries due to the problem that the cluster
  policies have been only focused on creating
  physical infrastructures such as attracting the
  associated companies or establishing research
  institutions or supporting organizations.

4
Introduction of IT Cluster Policy

• Cluster Theory
• to foster the local industry
• to develop technology
• Additional factors to affect innovative cluster
• Innovation pattern of developing countries
• Sectoral Characteristics

Cluster theory OECD(2001), Porter(1998),
Bok(2003)
ICT Innovative Cluster
Latecomers innovation pattern Kim, L(1997),
Song(2004)
Sectoral Characteristics Breschi Malerba(2000),
Malerba, 2002
5
Cluster and Technological Regimes

• Innovative Cluster concept by OECD

Source Compiled from Lee (2001)
6
Cluster and Technological Regimes

• Sectoral innovation system Technological Regimes

Knowledge spatial boundaries
T R
Source
Opportunity
Knowledge
Nature
Appropriability
Accessibility
Cumulativeness
Geographical distribution of innovators
Learning process Orga. capacity Market feedback
Knowledge base
Agents
Firms
Non-Firms
When the appropriability, opportunity and
accumulativeness of technology are high,
innovation leaders, especially industrial
business groups, get together geographically,
while they locate separately from each other when
the same features are low, according to him.
Institution
Schumpeter petterns of innovation
Source Breschi (2000) Malerba (2002)
7
Study of Technological Innovation and Clusters in
the developing Countries

• Innovation Pattern of developing countries

Technology transfer
Technology transfer
Innovation ratio
Process innovation
Product innovation
Utterback Abernathy(1994)
Technology transfer
Upgrade
Creation
Upgrade
Acquisition
assimilation
assimilation
Acquisition
Time(reverse)
Fluid Phase (Variation)
Transitional Phase (Selection)
Specific Phase (Retention)
Kim, L.(1997)
8
Assumptions

• The formation and evolution of clusters in Korea
  are assumed by means of the relationships of
  technology, the characteristics of technological
  changes
• The formation and evolution of clusters in the
  developing Korea are assumed to be established by
  means of national innovation system and its
  inherent technological innovation patterns.

9
Case Analysis of Mobile Communication Clusters in
Korea

• RD cluster for mobile communication

MIC
Institute of Information Technology Assessment
(IITA)
Policy Support
Evaluation of Research Output
Policy Suggestion
Annual Project Plan
Domestic joint Development Manufacturer
System Development Commercialization Support
Mobile Telecomm- unication Carrier
Technical Support
Mobile Telecommunication Technology Research
Lab. (ETRI)

• LGIC
• Samsung
• - Hyundai
• - Maxson

- SKT - Shinsegi Telecom (94.7.)
Research Fund
Research Financial Support and Manpower Dispatch
Parts Technology Development

Research Consignment
Core Technology Offer
Cooperation of ETRI Division

Research Manpower Cooperation

• Semiconductor Tech. Group
• Switching Tech. Group
• Information Tech. Group
• Code Technology Department

Cooperation Research with Qualcomm (U.S.A.)
Source   J -Y Choung(2002)
10
Case Analysis of Mobile Communication Clusters in
Korea

• Mobile phone patents

Samsung LG Pantech ETRI others
1992 1 2 1
1993 1 2 2 2
1994 0 2 1 2
1995 5 5 1 6
1996 10 5 1 2 7
1997 30 5 5 1 16
1998 26 3 0 26
1999 34 8 7 2 50
2000 14 21 6 9 62
Total 121 53 19 19 171
Source   KIPO(19922000)
11
Case Analysis of Mobile Communication Clusters in
Korea

• Regional Mobile industry production

(Unit Million won)
Region Mobile Phone production Ratio() Mobile system Production Ratio()
Seoul 3,101,595 14.2 308,972 12.5
Kyonggi 3,402,439 15.5 562,216 22.8
Incheon 30,874 0.1 92,807 3.8
Pusan 815 - 21,772 0.9
Taegu 2,813 - 788  
Kwangju - -    
Daejon 24 - 11,173 0.5
Ulsan - - 687  
Kangwon   -    
Chungbuk 1,258,113 5.7 30  
Chungnam 359,330 1.6    
Chonbuk - -    
Chonnam - -    
Kyungbuk 10,807,660 49.3 1,464,506 59.5
Kyungnam 2,947,726 13.5    
Cheju - -    
Total 21,911,389 100.0 2,462,951 100.0
Source   KAIT(2003)
12
Case Analysis of Mobile Communication Clusters in
Korea

• Value Chains of Mobile Communication Clusters

• LCD
• Memory
• Battery
• Modem chip
• Camera Module

Hardware provider
SKT, KTF, LGT
Venture Firms
Developer
Telecommunication Service
Manufacturer (Brand)
Customer
IP
Test
Contents Service
Operator, TTA, Firms
Venture Firms
Software provider

• Device controller Memory, In/out
• Modem controller
• Middleware WAP
• OS Brew, WIPI

13
Case Analysis of Mobile Communication Clusters in
Korea

• Regional distribution of Mobile firms

(Unit No. of firm)
Region Manufacturer (Brand) Developer Test Hardware Software Contents and Service Total
Seoul 2 36   49 17   93
Incheon       3     3
Kyonggi 3 10   13 1 1 28
Taegu   20   2     21
Kyungbuk 1 20         21
Kwangju   1     1   2
Daejon       5 2   7
Pusan       3     3
Chungnam   1         1
Ulsan   1   1     2
Cheju       1     1
Source   KOITA(2003)
14
Case Analysis of Mobile Communication Clusters in
Korea
ETRI

• Mobile Communication Cluster in Kumi Area

ltInternationalgt Intel IBM
Venture firm1
RD collaboration
V2
V3
Spin-offs
V4
V5
Yeungnam Univ.
Incubating center
V7
V6
CDMA Development partnership
Local Gov.
Joint Development
Embedded Software RD Collaboration
Samsung Electronics
RD Collaboration
IT CRC
SME1
Gov.
Kyungbuk National Univ.
S2
S3
Kumi RD center
RD collaboration
S4
S5
Components suppliers
Hub Firm
Techno pole
S7
S6
Samsung Suwon RD center
Core Components suppliers (Display, Camera
module, battery)
SDI, SEM
15
Conclusion and Policy Implications

• Conclusions
• Clusters evolve in compliance with the technology
  and technological changes
• The formation and evolution of clusters in the
  developing Korea are established by means of
  national innovation system and its inherent
  technological innovation patterns
• Policy Implications
• there comes a necessity to investigate Korean
  style cluster model in terms of technology and
  technological changes rather than to follow the
  successful cases of the past