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The relationship between industrial and technological catching up and territorial development is a major economic development puzzle, both in theory and in practice. Industrialisation and technological catching up are key ingredients for national development; but there are no automatisms that guarantee that the benefits will be equally distributed across the territory and the society, and that positive backward and forward linkages will be established, thus fostering an inclusive and more resilient production structure. How to support industrialisation avoiding territorial and social exclusion is a common concern for OECD and non-OECD economies. There will be no unique response to this challenge, but there are good policy principles that can be shared and lessons to be learned from the experience of other countries.
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Korea is a unitary country, with elected regional authorities since 1994. The capital of Korea is Seoul. Administratively, Korea is divided into seven metropolitan cities (Seoul, Incheon, Daejeon, Gwangju, Daegu, Busan, Ulsan) and nine provinces (Gyeonggi, Chungbuk, Chungnam, Jeonbuk, Jeonnam, Gyeongbuk, Gyeongnam, Gangwon, Jeju). In the document, provinces and metropolitan areas are referred to as provinces. Adjacent provinces and metropolitan areas are referred to as “regions” because they share a common culture and history. These regions are not administrative. The lower administrative level includes 232 bodies including Cities, Counties and Autonomous Districts.
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The OECD Development Centre, as a policy dialogue platform between OECD and non-member countries, undertook this study with the aim of sharing knowledge with developing and emerging economies from the Korean experience in industrial and territorial development. Emerging and developing economies are heterogeneous. They differ in assets, resources and institutional capabilities; but there are common features of the development process that make knowledge sharing a valuable exercise for policy making.
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Korea is a well-known case of successful catching up achieved through an effective government-led export-oriented strategy. It is one of the few countries in the world that has managed radically to transform its domestic economy from one based on agriculture to that of a leading world industrial power, with a constant increase in income per capita and a high growth pattern. The Korean catching up has been the result of a deliberate national development strategy which fostered industrialisation in heavy and chemical industries through sequenced and complementary policy interventions targeting the creation of domestic industrial capacities (through a mix of export promotion and import controls), development of education and skills, infrastructure building and management of capital markets.
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This chapter presents an overview of long-term trends of economic and industrial indicators in Korea. It shows the successful results of the early catching up strategy in terms of growth, industrial transformation, export orientation, and development of skills and technologies. This chapter adds the regional development dimension to the traditional analyses of Korea’s catching up. It illustrates the Korean regional development patterns, highlighting the trends over the last two decades.
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This chapter reviews the evolution of regional development policy in Korea. The chapter identifies three phases in the Korean regional development policy and describes major changes in the governance and in the policy mix. It draws attention to the relatively recent emergence of the regional debate in the country by comparison with other OECD economies and it stresses the rapid catching up in the policy paradigm and the shift from balanced growth to competitiveness.
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This chapter draws lessons from the Korean experience and identifies what can be learned from the catching up strategy and the progressive integration of regional concerns into the country’s growth strategy: from the evolution of regional development policy, and the recent paradigm shift towards regional competitiveness, to the current challenges that Korea is facing to advance further in regional development. The chapter concludes by underlining that beyond sharing knowledge on general lessons, there is no single response to development challenges. Each country needs to identify its current opportunities and challenges, establish its own priorities and develop its own strategy, mixing continuity in effort with experimentation of new policies to address new challenges, as Korea has been doing.
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