By Beom Cheol Cin & Eui Young Lee, presented at the 18th TCI Global Conference, Daegu, 2015.

1. Boosting Cluster and Mini-
Cluster-Based Programs in
Korea
Beom Cheol Cin & Eui Young Lee
Special Plenary Session: Clusters in Korea: Development Process and Achievement

2. Boosting Clusters and Mini-Cluster-
Based Programs in Korea
Beom Cheol Cin & Eui Young Lee
TCI Conference 2015

3. 1.Why Cluster?
Positive Role of Clustering
• Boosting innovation
• Lead to higher wages and productivity
• Improve employment opportunities
• Stimulate regional entrepreneurship
• Aid diversification and improve regional
sustainability

4. 1. Risk Factor of Clustering
• Lock-in of existing clusters and technologies makes
it more difficult for new clusters or technologies to
develop and thus can potentially limit competition
• Excessive specialization in specific sector or
dependency on one firm can lead to greater
vulnerability to external shocks
• A barrier to cross-sectional collaboration
• A weak entrepreneurial culture, difficulty in
integrating SMEs, mismatches on labor qualification,
and insufficient supply of innovation finance
OECD(2010)

5. 2. Cluster policy in Korea
• To enhance the industrial
competitiveness through
increased interconnection
between the industry and the
technology R&D sector in
the region
• Used as a tool for industrial
policy & regional
development policy as well
Industry
Policy
Regional
Policy
Cluster
Policy
Science,
Technology
Policy

6. 2.1 Development of Korean Cluster Model:
shifting from industrial complex through regional cluster to
innovation cluster model

7. 2.2 Development of Korean Cluster Model:
shifting from industrial complex through regional cluster
to mini-cluster in 2000s

8. 2.3 Performance of Cluster:
Output, Employment and Exports
All
Manufacturing
Sectors
All Industrial
Clusters
(IC)
National
Industrial
Clusters
(NIC)
Share of
IC(%)
Share of
NIC(%)
Production
(Bil. Won)
15,114,951 10,374,502 6,796,019 68.6 45.0
Employment 3,715,162 1,726,562 949,432 46.5 25.6
Export
( Mil. US Dollar)
533,193 430,128 267,435 80.7 50.2
• Shares of production in clusters and NICs out of all manufacturing sectors
are 68.6% and 45% in 2013;
• Employment shares are 46.5 and 25.6%;
• Export shares are 80.7% and 50.2%

9. 2.3 Performance of Cluster Participants:
increase in 7.7% of exports, 6.6% of Production, 6.7% of
employment over the period 2011 and 2012

10. 3. Shifting Cluster Policy:
from industrial complex model to innovation
cluster policy
• Due to lack in R&D capability and industry-university-Research linkages,
Korea had difficulties with development of new technology and new
products and thus sustainable growth

11. 3.1 Development of Mini-Cluster Programs:
What is Mini-cluster Program?
1. To response to the risk factors associated with
clustering, both Korean government and KICOX
implement various Mini-cluster programs
2. Mini clusters are various types of small group alliance,
composing of firms(especially SMEs), universities, research
institutes, KICOX and local government
3. categorized by sectors (e.g. engines, materials), by
technological goals and types, by R&D collaboration
between large and small medium sized enterprises, by
marketing strategies
4. Policy Mix of top-down approach with bottom-up
approach to market demand

12. 3.2 Feature of Korean MC Model:
MC Activities
1. Types of Activities:
• Policy briefing, technology seminar, project-finding meeting,
evaluation, regular meetings among member companies
2. Role of Actors:
• KICOX plays a role of broker and network agent to encourage
interconnection of SMEs within a cluster; support for formation
of Mini-cluster, inter-firm network activity and R&D
collaboration projects
• Leader Company proposes projects and hosts various MC
program meetings
• Members are sharing knowledge and information about
technology, market demand, difficulties with management and
production, building up trust and thus solving the problems
together

13. 3.3 Operating system of Mini-Cluster Model:
• Identifying firms’ problem & seeking solution together through
MC activities;
• KICOX supports for networking and joint R&D of IUR(Industry-
Universities-Research institute)

14. 3.3 Operating system of MC Programs:
Composition & Operating Process of MC

15. 3.3 Operating system of MC :
Operating process of MC
• Market-driven R&D investment through MC activities can reduce
failure rates

16. 3.3 Operating system of Mini-Cluster:
MC Activities for joint R&D, Production and
Commercialization

17. 3.4 Operating Mini-cluster programs:
Successful Cases

18. 3.4 Operating Mini-cluster programs
Successful Case:
Banwol Sihwa metal and material MC programs

19. 3.4 Operating Mini-cluster programs:
Banwol Sihwa metal and material MC programs

20. 4. Performance of MC programs:
Expansion to 68 MC programs in 6 major areas in 2012;

21. 4.1 Performance of MC programs:
Formation of Mini Cluster, Inter-firm Network Activity and Project support
• The number of MC
is when peak of 81
and then transform
in 2013, 69 MC
In 2013, 69 Mini Clusters create 59,900 network activities and 7,500 members of
Industry-University-Research Institute completed 17,700 projects
7차 8차
70 69
9차
34
3차 4차 6차5차
81
54
39
77
2차
55
1차
35
9차
7,537
10%
3%
13%
8차
3%
10%
4%
12%
73%
5,987
11%
74%
7,182
72%
11%
13%
4%
13%
5차
5,413
7,087
11%
6차
73%
7차3차
5%
2차
69%
5%19%
70%
15%
69%
70%
5,153
3,120
8%6%
2,706
4%
17%
67%
4차
11%
13%
11%
5%
3,149
1차
5%
19%
대학
기업
지원기관
연구소
대상단지
확대
광역 개편
10,560
(17.6%)
정부정책 및
클러스터사업 설명회
1,802
(3.0%)
교류회
7,686
(12.8%)
1,589
(2.7%)
5,222
(8.7%)
기술세미나
기타(홍보등)
1,718
(2.9%)
지원기관
협의회
정기회의
평가위원회
27,107
(45.3%)
4,205
(7.0%)
과제발굴회의
시제품제작
2,975
(16.8%)
기관연계
마케팅
5,170
(29.1%)
R&D
2,005
(11.3%)
산업재산권
기타
3,906
(22.0%)
120
(0.7%)
1,644
(9.3%)
1,935
(10.9%)
교육
Mini Cluster
formation
Number of MC
member
N/W 활동 Project SupportsN/W Activities
 MC membership is
increasing trend
average per year 13%
in 2013, number of
member 7,537
 The number of N/W
activities 59,889, Ave.
per year
increased23% and
through conference
of project is the most
important
 Total number of
project support
17,755, Marketing
skill support is the
highest (total share
29.1%)
자료) 한국산업단지공단 자료 기반 KnowledgeWorks 분석

22. 4.1 Performance of MC programs:
Network Activity of Mini-Clusters
Incidence of Network Activity
of Mini-Cluster
Types of Network Activity

23. 4.2 Performance of MC programs:
Sales rate of all members, project-participants, all
manufacturers
• Participants have, on average, higher annual rates of sales than
manufacturers:
• in 2012, 34.15% for all MC members, 30.9% for project participants,
4.21% for all manufacturers

24. 4.3 Performance of MC programs:
Patent registration and commercialization of
projects
No. of Patent App and
Registration per 10 Bil. Won
Patent Performance Commercialization Performance
Cluster project, Regional
Specialization Project, Ministry
R&D Project, National R&D Project

25. 4.4 Performance of MC programs:
Support for joint R&D project by 50% of total
investment
R&D Subsidy per project(Mil. Won)Annual Subsidy for all projects and
R&D projects (Bil. Won)

26. 4.4 Performance of MC programs:
Commercialization and Sales Effect of Project
Cluster
Project
SME Technology
Development Project
Commercialization
Success Rate(%)
52.40% 44.10%
Sales per project(Bil. Won) 12.15 7.23
Employment per project 4.8 3.7
MC activities help member companies to increase per project sales
and employment, and commercialization of transferred technology.
• Overall cluster project has higher commercialization success
rate, higher sales and employment than SME project

27. 5. Performance of MC Programs:
Concluding Remarks
• Boosting Cluster by enhancing inter-company
cooperation and participation in R&D activities, MC
programs show better economic performance (higher
sales rates, employment, and commercialization)
• Facilitating IUR(Industry-university-research) joint
cooperation and aiding technology transfer, MCs can
mitigate negative effects such as lock-in, reduce
international mismatches between knowledge
infrastructure and market needs
• SMEs members within a cluster can participate in
national R&D programs, which results in getting more
opportunities of joining medium and large-sized R&D
collaboration programs

28. BEOMCHEOL CIN,
EUI YOUNG LEE
THANK YOU