Agglomeration effects in the industrial development of the Republic of Korea
DOI:
https://doi.org/10.21638/spbu05.2024.403Abstract
The article is dedicated to assessing the impact of agglomeration effects on various sectors of the South Korean economy and manufacturing at modern times. To do this, based on the analysis of theoretical approaches and empirical studies of agglomeration effects in other countries, the most appropriate assessment method was selected that uses the Cobb-Douglas function. The concentration of economic activity is expected to have a significant impact on productivity in most sectors of the Korean economy. At the same time, more high-tech industries should benefit more from agglomeration of urbanization, while others benefit from concentration in specialized areas. It was determined that agglomeration effects have a significant impact on Korean economy and manufacturing, comparable to the results of previous empirical studies in Europe and North America. The negative impact of agglomeration is observed in agriculture, and various services are practically not at all affected by agglomeration. Contrary to expectations, agglomeration in Korea does not have such a strong impact on the finance and insurance, as in other countries. The positive impact of Marshall (MAR) agglomeration economies, that is, due to the concentration of enterprises in one industry, is maximum for wholesale and retail trade, real estate, information and communication technologies (ICT) and the mining industry. Real estate and ICT also benefit the most from agglomeration of urbanization (Jacobs effects) — the concentration of firms from different industries. For the Korean manufacturing industry, agglomeration of localization is more important, especially for the chemical industry and metallurgy, while agglomeration of urbanization is significant only for more high-tech industries (electronics, transport engineering). The results are significant for the development of regional and sectoral development strategies for countries already using the Korean experience or wishing to adopt certain successful mechanisms for optimizing regional industrial development policy.
Keywords:
agglomeration externalities, MAR-effects, Jacobs effects, regression analysis, Republic of Korea, manufacturing
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