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Innovation of ICT Manufacturing and Agglomeration Economies: Evolution over the Life Cycle

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Quantitative Regional Economic and Environmental Analysis for Sustainability in Korea

Part of the book series: New Frontiers in Regional Science: Asian Perspectives ((NFRSASIPER,volume 25))

Abstract

Innovation is one of the most important driving forces of ICT industries, the leading industry of the Korean economy, and agglomeration economies are known to have positive impacts on innovation. The evolutionary agglomeration theory, however, suggests that the effects of agglomeration economies may vary depending on the life cycle of an industry. This study investigates how agglomeration economies have affected the innovation of the ICT manufacturing sector over its life cycle in the Seoul Capital Area (SCA), South Korea. A panel data set for patent applications during the period 2001–2013, which falls into the birth stage (2001–2003), the growth I (2003–2006) and II (2006–2009) stages, and the maturity stage (2009–2013), is used to model innovation in terms of various types of agglomeration economies. The results show that the types of agglomeration economies that have significant impacts on innovation vary over the life cycle of the industry: while local industrialization has a positive impact only in the birth stage, diversity has positive impacts in all the stages except the growth II stage. While large firms’ leading has a positive impact only in the growth II stage, competition among small firms has a positive impact only in the birth stage. This implies that different strategies for agglomeration are needed over the life cycle in order to sustain innovation in ICT manufacturing.

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Notes

  1. 1.

    The data for patents come from the Intellectual Property Statistics for 2014 by the Korean Intellectual Property Office (KIPO 2015a), and the data for employees come from the Labor Demand Survey by the Ministry of Employment and Labor (MOEL 2015).

  2. 2.

    For multiple dimensions of agglomeration economies in general, see Park and von Rabenau (2011). They disentangle the externalities of agglomeration by agent, source, and spatial dependence.

  3. 3.

    The ICT manufacturing sector in this study refers to the industries assigned to the code C26 (manufacture of electronic components, radio, television, and communication equipment and apparatuses) by the Korean Standard Industrial Classification (KSIC), Rev. 9, which includes the manufacture of semiconductor (C261), electronic components (C262), computers and peripheral equipment (C263), telecommunication and broadcasting apparatuses (C264), electronic video and audio equipment (C265), and magnetic and optical medium (C266).

  4. 4.

    ICT manufacturing here refers to the industries assigned to the International Standard Industrial Classification (ISIC), Rev. 4 codes 261, 262, 263, and 268.

  5. 5.

    The exchange rate 1 USD = 1095.6 KRW is applied.

  6. 6.

    The other measure suggested by Crépon et al. (1998) is the share of innovative sales.

  7. 7.

    If it is not defined otherwise, innovation refers to the degree of innovativeness in this study.

  8. 8.

    The omitted six municipalities are Gapyeong-gun, Yeonsu-gu, Yangpyeong-gun, Yeoncheon-gun, Ganghwa-gun, and Ongjin-gun.

  9. 9.

    For an application, two addresses are reported: inventor’s and applicant’s. As the addresses for inventors include only those of the registered inventors such as institutions, we use the more comprehensive applicants’ addresses.

  10. 10.

    The level of significance may go up if we expand the time range back to the 1990s, as the earlier period within the birth stage may see higher effects of localization than the later.

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Author information

Authors and Affiliations

  1. Department of Urban Administration, University of Seoul, Seoul, Korea

    In Kwon Park & Gyuhwan Kim

Authors
  1. In Kwon Park
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  2. Gyuhwan Kim
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Corresponding author

Correspondence to In Kwon Park .

Editor information

Editors and Affiliations

  1. Department of Agricultural Economics and Rural Development and Research Institute of Agricultural and Life Science, Seoul National University, Seoul, Korea (Republic of)

    Euijune Kim

  2. Department of Agricultural Economics and Rural Development, Interdisciplinary Program in Agricultural and Forest Meteology, and Research Institute for Agriculture and Life Sciences, Seoul National University, Seoul, Korea (Republic of)

    Brian H. S. Kim

Appendix 1: Descriptive Statistics

Appendix 1: Descriptive Statistics

Variable

Mean

Std. dev.

Min.

Max.

Time periods

Number of obs.

innov

Period 1

−3.017629

1.513923

−5.639145

2.140066

3

180

Period 2

−2.744071

1.537157

−5.669881

1.676803

4

240

Period 3

−2.18766

1.680219

−5.512291

2.872134

4

240

Period 4

−1.906382

1.857345

−6.529544

3.351682

5

300

Whole

−2.389176

1.742652

−6.529544

3.351682

13

780

clu

Period 1

1.672744

3.234111

.0000933

21.42845

3

180

Period 2

1.46516

3.051903

.0000933

23.72123

4

240

Period 3

1.473138

3.324267

.0002175

25.09793

4

240

Period 4

1.412657

3.212534

.0001718

23.02446

5

300

Whole

1.493706

3.191456

.0000933

25.09793

13

780

div

Period 1

33.04492

7.313514

19.15775

47.08056

3

180

Period 2

34.50096

8.137966

16.69818

56.76448

4

240

Period 3

39.81731

8.535121

17.6746

57.33545

4

240

Period 4

40.06973

8.416427

18.48906

59.19137

5

300

Whole

37.25466

8.711706

16.69818

59.19137

13

780

div_mfg

Period 1

13.95222

6.362514

3.115928

27.11503

3

180

Period 2

13.00141

5.893449

3.013242

24.4449

4

240

Period 3

12.33691

5.896666

2.765624

26.09841

4

240

Period 4

11.60668

5.823097

2.727195

27.13635

5

300

Whole

12.56633

6.044792

2.727195

27.13635

13

780

div_ict

Period 1

2.779748

.7884301

1

4.680952

3

180

Period 2

2.617045

.7718202

1

4.717073

4

240

Period 3

2.695144

.829697

1

5.30042

4

240

Period 4

2.662623

.8617387

1

5.30042

5

300

Whole

2.684715

.8224017

1

5.30042

13

780

compe

Period 1

2.431592

2.497128

.1219435

17.69739

3

180

Period 2

2.709811

2.337954

.0978488

15.89858

4

240

Period 3

3.349214

2.949074

.0839257

15.89858

4

240

Period 4

3.923562

3.34462

.0907789

17.99758

5

300

Whole

3.215274

2.960445

.0839257

17.99758

13

780

large

Period 1

.2021439

.2691816

0

.8920141

3

180

Period 2

.1915671

.2825242

0

.9456964

4

240

Period 3

.1604602

.2770371

0

.926899

4

240

Period 4

.1486172

.2710214

0

.9233746

5

300

Whole

.1715199

.2745515

0

.9456964

13

780

emp_rat

Period 1

.3693149

.3609731

.1398799

2.780034

3

180

Period 2

.377474

.3661295

.1502432

2.780034

4

240

Period 3

.3946322

.3734753

.1502432

2.843038

4

240

Period 4

.424876

.3850713

.1583888

2.902833

5

300

Whole

.3967908

.3736912

.1398799

2.902833

13

780

ln_ictemp

Period 1

7.271445

1.718777

.6931472

10.32246

3

180

Period 2

7.218343

1.71977

2.079442

10.41286

4

240

Period 3

6.890221

1.871622

2.302585

10.38659

4

240

Period 4

6.703199

2.006158

2.302585

10.39336

5

300

Whole

6.980718

1.866508

.6931472

10.41286

13

780

res_rat

Period 1

.0023691

.0051609

0

.0393788

3

180

Period 2

.0031187

.0070078

0

.041866

4

240

Period 3

.0048024

.0101581

0

.0626197

4

240

Period 4

.0058194

.0123113

0

.087643

5

300

Whole

.0042705

.0096597

0

.087643

13

780

ln_pop

Period 1

12.64271

.6366047

11.16087

13.84792

3

180

Period 2

12.6699

.6375497

11.0101

13.88215

4

240

Period 3

12.70115

.6364824

11.0101

13.88611

4

240

Period 4

12.73901

.6271121

11.16447

13.95367

5

300

Whole

12.69629

.633718

11.0101

13.95367

13

780

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Park, I.K., Kim, G. (2016). Innovation of ICT Manufacturing and Agglomeration Economies: Evolution over the Life Cycle. In: Kim, E., Kim, B. (eds) Quantitative Regional Economic and Environmental Analysis for Sustainability in Korea. New Frontiers in Regional Science: Asian Perspectives, vol 25. Springer, Singapore. https://doi.org/10.1007/978-981-10-0300-4_4

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  • DOI: https://doi.org/10.1007/978-981-10-0300-4_4

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