Developing Action Plans of Decrepit Industrial Clus-ters 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

ContentsI. 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

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 im-provements

• 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-Gyeong-buk Economic Belt (DaeGyeong Belt)• Autopart manufacturers: 1st tiered and 2nd tiered vendors

• Creating an autopart cluster

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.

Spatial Arrangement of Autoparts Industry

• Two major spatial ar-rangement • Capital Region Eco-

nomic Belt and Dong-nam(South-East) Region Economic Belt• With more recent

emergence of Southern Part of the Capital Re-gion Economic Belt and Chungcheong Region

Source: Automobile Annals (2008)

<Vehicle Manufacturing Plants and Au-toparts Manufacturings (2005)>

Spatial Arrangement of Autoparts Industry

Spatial Arrangement of Autoparts Industry in Daegu

ClassificationDistrict

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 Products

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)

Spatial Arrangement of Autoparts Industry in Gyeongbuk

Source: Surveys of Autoparts Manufacturers in Daegu-Gyeongbuk (2014)

ClassificationDistrict/Subregion

Gyeongju City Gyeongsan City Chigok-gun Yeongcheon

City Gumi City Goryeong-gun

Seongju-gun

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 Trailer 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 Ma-chinery and Equipment

39 9 23.10% 14 35.90

% 5 12.80% 3 7.70% 6 15.40

% 2 5.10% 　 　 　 　

Metal Products Manufacturing, except Ma-chinery and Furniture

39 10 25.60% 11 28.20

% 7 17.90% 6 15.40

% 2 5.10% 2 5.10% 1 2.60% 　 　

Rubber and Plastic 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 Equipment 12 3 25.00

% 5 41.70% 2 16.70

% 　 　 1 8.30% 　 　 　 　 　 　Furniture 12 12 100.0

0% 　 　 　 　 　 　 　 　 　 　 　 　 　 　Other Manu-facturing 14 1 7.10% 2 14.30

% 5 35.70% 　 　 5 35.70

% 1 7.10% 　 　 　 　

Data Analysis

Data Analysis

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 Em-

ployees, 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

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 agglomera-

tion effect• Lack of Data limits more detailed and firm-based research

Thank you very much