1. Introduction

As globalization proceeds, industrialized countries tend to concentrate on knowledge-based industrial activities at home and to relocate simple and labor-intensive productions to developing countries. Such geographic realignment of industrial activities is led mainly by multinational corporations that are capable of integrating and coordinating each stage of value chains that are spread over many different regions.

Regional bases specialized in R&D activities, production based on skilled workers, and simple labor-intensive assembly production are emerging in the world, accruing from global network formed by multinational corporations. Although each regional basis is specialized in a function assigned in terms of global context, it is inclined to take the shape of regional cluster in order to enhance its core competence by interfacing intimately complementary activities within the region.

Accordingly, national competitiveness in the global economy is summarized to how many such competitive regional clusters a nation has that are capable of actively taking part in global networks.

2. Synopsis

The phenomenon of losing competitiveness of almost all U.S. industries took place in the 1970s. Consequently, entire industrial restructuring had proceeded in the 1980s along with the globalization of industry and the emergence of new industry, that is, IT industry, which brought about a very different industrial structure from the past.

Today, new generation businesses such as Microsoft, Intel, Cisco and Oracle are governing the market. Their business characteristics are quite different from the past predecessors, which were integrated vertically along value chains, from finished products to parts and components. They partition their value chains and are specialized in a specific activity.

These new generation businesses are able to specialize in their core competence activity through globally integrated production networks. A typical example is the IT industry of the U.S., which formed a global production system by collaborating with East Asian countries' firms. It is generally believed that without such globalization strategy, the U.S. IT industry could not have been sustainable.
In the past multinational corporations set up their offshore subsidiaries for the purpose of penetrating foreign market and utilizing low wages of local labor force. Nowadays, new generation firms establish global production networks even at the start-up stage in East Asia so that East Asian subsidiaries are able to be solely in charge of production.

In their search for partners of production networks in East Asia during the latter part of the 1980s, Korea was allegedly considered as a site. However, Korea failed to cozy up with these new IT companies, since Korea's electronics firms had concentrated on conventional technology products with a exclusive and closed tie between large and small firms. In contrast Singapore, which had endeavored to attract foreign investment early on, and Taiwan, which had abundance of small parts and components makers with high level of production technology and skill, could easily be selected as production bases for U.S. IT firms in East Asia.

Singapore did not only induce foreign investments but proceeded to relocate low technology production processes to neighboring countries such as Malaysia and Thailand so that its own production base could be rearranged into a high value-added industrial structure that could accommodate its high-risen wages.

Taiwan proceeded to relocate much of its production facilities to mainland China in an effort to counter rising wages from the late 1980s and to invite Taiwanese venture-business entrepreneurs working in the U.S., particularly in IT industry.

Successful industrialization of China accrued mostly to foreign direct investments of Taiwan and Hong Kong in the late 1980s. Japan and Korea also began to make direct investments actively in China in the early 1990s. As a result, Northeast Asia came to form an international production networks. Based on its low wage labor force, China was able to export assembled products to regions outside of Northeast Asia such as the U.S. and EU. Core parts and components of Chinese products are imported from Taiwan, Japan, and Korea.

The integration of the world economy has enabled multinational corporations to select the most competitive regional site for each industrial activity. Each region is to compete for joining global production network. Governments set priority of industrial policy on developing regional clusters that are competitive enough to be connected with global network.

Competitive advantage of region, especially the capability to create innovation, is said to be realized most effectively when clusters are formed, that is, firms and institutes such as universities and laboratories are agglomerated within a region so that they can compete and cooperate simultaneously.

Consequently, traditional industrial policies, which had sought economies of scale and scope through market protection such as import restriction is no longer kept up. They are to shift toward aggressive open policy through which linkages with international production networks are expected, and R&D policy, which support infrastructure for industrial and/or science parks to promote innovation capability of local firms.

Unlike other East Asia's new industrial countries that had shifted toward active open policy strategies since the late 1980s, Korea had maintained its closed industrial structure until the IMF crisis of 1997. Even in the era of globalization in the 1990s, Korea's imperative of economic growth relied on such traditional large-scale production as automobiles, shipbuilding, and semiconductor that had been developed in the era of industrialization. Instead of actively taking part in the global production network initiated by industrialized countries, Korea had been indulged in strengthening competitiveness in those traditional industries. Their efforts were centered on the development of technology for themselves that became difficult to acquire from abroad and also the improvement of productivity through factory automation in order to secure competitive advantage in price.

However, thanks to rapid industrialization of China, Korea began to take part in the formation of international production network in Northeast Asia by both supplying technology intensive parts and materials and expanding local production to China since the mid 1990s.
It is fair to say that, during the era of industrialization, Korea was active in international production networks with industrialized countries by exporting assembled products such as textile, footwear, electronics, and other products of OEM. However, Korean products rapidly lost their price competitiveness, and their role in international production networks became limited as new networks between industrialized countries and developing countries emerged in the late 1980s.

Korea's investment for overseas production in China implied that Korea was given a useful opportunity to regain the role in global production networks through China.

The nature of network between China and Korea is basically role division in production. Korean industries could supply core parts and components in which technology acquired from industrialized countries or accumulated through intense R&D efforts is embodied.

When the drain of technology and knowledge to China continues without Korea's refilling from abroad, sooner or later, reserve of knowledge and technology will be exhausted and the international division of labor between China and Korea will be difficult to maintain.

Recent decline of competitiveness of Southeast Asian countries IT industries shows that there is a limit to the strategy of relying solely on foreign technology. It is a natural consequence that when a nation, with poor national knowledge base, relies only on the globalization strategy of multinational corporations, its position is likely to become vulnerable. In the case of Southeast Asian countries, the China variable came into being so that their positions are being weakened gradually as multinational corporations' attention shifts more to China.

There remained a problem that Korea was not concerned with establishing regional clusters since export-driven industrialization by big firms was pursued by the central government. In Korea, critical policy agenda for regional cluster can be summarized as improving innovative capability of small and medium-sized enterprises (SMEs).

In order to promote development of innovative SMEs, foreign investments need to be enhanced to bring in advanced technology into regions so that they could be given greater opportunities to form production networks with foreign companies. When domestic small businesses are tied vertically only with domestic large firms, their opportunities for innovation capability are limited. Their businesses might even be in a position of shrinking as domestic large firms shift to overseas production.

At the same time it needs to greatly enlarge government's support for local co-operative R&D projects between local firms and institutes. It is expected that setting up local technology assistance facilities for nurturing technological capability of small businesses will be helpful.

So far, small businesses have kept their position as assembly vendors to support large firms' efforts of securing price competitiveness. As a result, they suffer from low profitability and productivity in value added terms. Under the present conditions, they do not have enough room or funds to increase R&D investments. Therefore, government support needs to be increased significantly.

For such support measures to be effective, however, there must be a demand-oriented technology support system that SMEs desire. Most desirable for this purpose would be that effective technology demand survey systems for local small businesses should be installed and they should be managed and monitored by local small businesses themselves. In case such a system is difficult to implement, technology demand surveys need to be performed and assessed from the viewpoint of small businesses so that the results are properly fed into operation of the government's support agency.

3. Conclusion

Korea's policy should focus on securing supply source of technology through foreign direct investments and absorbing cutting-edge technology by establishing technological bases in the U.S. and other countries. Korea's economic and social structure must also be transformed into an open form and its knowledge base system must advance to allow active learning and utilization of knowledge.

In addition, to open policy strategy to take part in international production networks, greater efforts are required to secure local competitive advantage. For such an end, forming regional clusters is necessary in order that innovative capacity of the region may be upgraded by the intimate linkage of local core competence.

제1부 동아시아 글로벌 생산분업의 기원과 특성

　제1장 IT산업의 글로벌화와 동남아지역의 생산분업 형성
　　1. 미국 IT산업의 경쟁구조 변화와 글로벌화 과정
　　2. 일본 전자산업의 동남아 생산분업 확대
　　3. 싱가포르의 글로벌 생산네트워크 편입
　　4. 동남아지역 글로벌 생산네트워크 확장

　제2장 중화경제권의 형성과 동북아지역 생산분업의 심화
　　1. 중화경제권의 형성
　　2. 대만 전자산업의 글로벌 생산 참여
　　3. 중국 전자산업의 발전
　　4. 동북아 역내분업의 심화

제2부 글로벌 경제통합과 지역혁신 경쟁

　제3장 지역클러스터의 조성과 혁신경쟁
　　1. 지역클러스터의 특성
　　2. 지역클러스터의 발전요인
　　3. 지역클러스터와 혁신의 학습화
　　4. 지역클러스터의 사례: 독일 Baden-Wurttemberg

　제4장 글로벌화가 지역클러스터에 미치는 영향
　　1. 글로벌화와 폐쇄적 클러스터의 변화
　　2. 지역클러스터의 변질화 사례

제3부 한국산업의 혁신제고를 위한 정책방향

　제5장 한국 전자산업의 수출구조와 정책적 시사점

　제6장 정책과제
　　1. 실질적 개방의 확대
　　2. 지역클러스터의 조성과 혁신 중소기업의 육성

보 론

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