DISCUSSION PAPER Report rMo.: UDD-89 SPATIAL DISTRIBUTION OF INDUSTRIES AND IMiPORTANT LOCATION FACTORS IN THE SEOUL REGION by Sang-Chuel Choe and Byung-Nak Song Nqovember 1985 Water Supply and Urban Development Department Operations PolicV Staff The 'W,orld Bank The views presented herein are those of the aLithors, and they should not be interpreted as reflecting those of the .lorld Bank. 5) Dr. Sang-Chuel Choe, Dean of the Graduate School of Environmental Studies, Seoul National University, was the Local Director bf the 1 Industrial Location Policies Research Project. Dr. Byung-Nak Song . is a Professor of Economics at. Seoul National University. The authors would like to thank Dr. Kyu-Sik Lee, the Project Director, for his encouragement and support in preparing this paper. His contribution through this research project to the understanding of intrametropolitan locatioh problems and policies in Korea has been instrumental for rnaking a turning point of Korea's industrial location policies and for the creation of the Industrial Location Study Group in Korea. Research Project No.: RPO 672-91 Research Project Name: An Evaluation of Industrial Location Policies for Urban Deconcentration C.. Abstract This paper has been prepared as part of the World Bank's Industrial Location Policies Research Project (RPO 672-91). The main purpose of this study is to identify the locational forces that influence the manufacturing industry in the Seoul region where more than 45 percent of industrial establishments are located and industrial movement has been taking place most actively. The paper begins with the analysis of changing spatial distribution of manufacturing establishments and employment and documents spatial variations of location characteristics; then it shows certain regularities observed between the changing distribution of industries and spatial variations in location factors, and develops hypothetical postulations for further empirical analysis. Table of Contents page Part I IntrodLuction------------- ------------ ------- 1 Part II Changing Spatial Distribution of Industries --- - 4 1. Stage of Industrial Development and Overall - - - 4 Locational Changes 2. Locational Changes of Manufacturing Industries - - C in the Seoul Region A. Seoul versus Gyeonggi- 8 B. Southward versus Northward ---12 C. Moving Distance and Directions - - ------ --- 17 D. Government Policies and Plans - - - - - - - - 24 Part III Spatial Variations in Location Characteristics - 32 1. Classification of Location Characteristics - - - - 32 2. Some Quantitative Measurements and Appraisal - - - of Locational Factors A. Transportation- - --------------- 41 B. Industrial Land ------------- ---------- 46 C. Public Utilities and Telecommunications - - - 49 D. Urban Services - - - ----- ----- ------- --- - 53 Part IV Summary of Findings and Concluding Remarks - ----- --- 57 1. Intrametropolitan Movement------ ------- - - - 57 2. Push and Pull ---- ---- - ------- ---- --------- 58 3. Step-wise Cecision of Industrial Location - - - - 60 4. Push Factors-Land Constraints - - - - - -- ----- - 61 5. Pull Factors- Improved Accessibility - - -------- 62 6. Locational Differences by Industries and Size - - 63 7. Urban Services and Industrial Location ------66 8. Further Studies - - - - - - - - - - - - - - - - - 68 Appendix - - - - - - - - - - - - - - - - - - - - - - - - ----- 10 References - - - - - - - - - - - - - - - - - ------------- 81 List of Tables page Table 1. Changes in Manufacturing Employemnt in the Seoul Region - - - - 9 (1913-1981) Table 2. Changes in Number of Establishments in the Seoul Region - - - - 11 (1973-1981) Table 3. Structure of Manufacturing Industries in the Seoul Region - - 13 Table 4. Location Indicators for Major Cities and Counties in the - - - -15 Seoul Region Table 5. Changing Distribution of Manufacturing Establishments and - - - 20 Employment by Rinqs Table 6. Changing Distribution of Manufacturing Establishments and - - - 21 Employment by Sectors Table 7. Changes in the Distribution of Manufacturing Industry 26 by Three Zones of the Industrial Location Act Table 8. Changes in the Distribution of Manufacturing Industry by - - - -30 Five Planning Zones of the Development Plan for Seoul Region Table 9. Typology and Measurements of Location Characteristics - ----- 38 Table 10. Changes in the Distribution of Manufacturing Industry by - - - 42 Accessibility to Express Highway Table 11. Distribution of Manufacturing Industrial Establishments - 45 and Employment by Commuting Mode Table 12. Industrial Land Price by Sub-region---- - - - -- - - - - - 50 Table 13. Price System of Industrial Water by Sub-region ------------ 52 Table 14. Industrial Movements in Three Metropolitan Regions - - - - - - -58 Table 15. Average Firm Size by Rings ------61 Table 16. Number of Relocated Establishments by Industries - - - - ---- 64 List of Maps page Map 12. Concentration of Industries in the Seoul Region - - - - 16 Map 2. Areal Dilineation of Rings by Sub-regions --- - - - - - '18 Map 3. Areal Dilineation of Sectors by Sub-regions - - - - - -- 19 Map 4. Three Development Zones by Industrial Location Act - - - 25 Map 5. Five Planning Zones by Seoul Metropolitan Region - - - 29 Development Plan Map 6. Accessibility to Interchange of Express Highway - - - - 43. Map 7. Time Distance by Railroad - - - - - - - -- ----- ---- 44 Map 8. Sub-regions Served by Seoul City Bus and/or Rapid Transit-47 Map 9. Time Distance from Seoul by Local Bus - - - ---- --- -- 48 Map 10. Residential Land Price by Sub-region - - - - - -- - - - - 55 Part I, Introduction The spatial redistribution of population and industry has been a crucial developmental issue in Korea since the early 1960's. The high primacy rate of Seoul, regional disparities and associated regional rivalry detrimental to national integrity, and the concern about national security have given the government a strong impetus in taking action toward solving the nation's spatial imbalance, and in particular toward the dispersal of industry from Seoul and its surround- ing areas to the other parts of the nation. Throughout the relatively short but compressed histroy of these decentralization efforts, indus- trial location policies and programs have been highlighted as being of major importance. The reasons for choosing an industrial location program as the strategic means for spatial redistribution are well known. The Korean experience draws a particular attention because policies have been heavily enforced and implemented. There are very few countries aside from Korea which have actually brought in and implem- ented an industrial location program for spatial distribution. There is an increasing awareness by policy makers and academicians of the need to evaluate the multi-dimensional consequences of industrial -2- location policies and their impacts on the overall regional development. -/ In the first phase of the present study, Choe and Song reviewed the historical evolution of Korea's industrial location policies and their policy instruments, attempting to make some qualitative evalua- tions of the effectiveness of policy instruments. It also highligh- ted the current policy situation and identified further research needs. .However, the findings were only intended to serve as a historical and institutional basis for the empirical formulation of policy analysis. 2/ This study's primary purpose is to contribute to the knowledge and understanding of locational forces acting on the manufacturing indus- try in the Seoul region where 45.2 percent of industrial establishments is located and industrial movement has been taking place most actively. Another rationale for choosing the Seoul region is that industrial location policies that have evolved in Korea centered around the attempts to move the manufacturing industry from Seoul and its adjacent areas to peripheral areas. Locational forces are revealed most clearly at the time of industrial movement, whether in the case 1/ (1) Office of the Minister Without Portfolio, A Study on oolic' Effectiveness of the Population Readistmri m the Se-oul Meropolitan Regin 17,(in K-orean) (2) Won-Yong Kwon, "A Study of Economic Impact of Industrial Reloca- tion: A Case Study, Urban Studies, No. 18, 1981, and Sam Ock Park, Locational Change in Manufacturing: A Conceptual Model and Case Studies, Ph. D. dissertation submitted to University of Georgia, Athens, 1981. 2/ Sang-Chuel Choe and Byiung-Nak Song, An Evaluation of Industrial Locational Policies for Urban Deconcentration in Seoul Region, Report No. UDD-7, Water Supply and Urban £Development Department, The World Bank, 1982 -3- of relocating existing plants to new sites or opening of branches away from parent plants. To this end, the present study begins with the analysis of the changing spatial distribution of manufacturing establishments and employment and the moving patterns of manufacturing establishments by geographical delineation of distance, direction, anld development zoning. The next part touches upon the definitional and taxonomic issues of location characteristics by sub-regions in the Seoul Region. The final section attempts to observe a certain regularities between the changing distribution of industries and spatial variations in location characteristics, with the expectation of generating a set of broad hypotheses for further empirical analysis. -4- Part II. Changing Spatial Distribution of Industries 1. Sta.-, of Industrial Development and Overall Locational Changes The beginning of the period of rapid industrial growth in Korea is usually dated from 1963 when the economic growth rate marked about 9 percent at the beginning of the First-Five year Economic Plan. The economic growth rate was on the average only about 3 percent in the preceding years. Most Korean firms around 1963 were of the small size and also of the single proprietorship type. Location or relocation of these small firms w.as only a minor economnic issue. As the economy and industries continued to grow rapidly, location and relocation became an important issue, from the point of view of both the rapidly expanding individual firms and the regional distribu- tion of industries. In the late 1960s continuous industrialization started to create various problems associated with industrialization, namely, rapid urbanization, congestion, pollution, shortage of infrastructure facili- ties, and the need for development of industrial sites. Thus, the spatial distribution of industries in Korea emerged as a national issue in the l a-t 1960s. For the discussion of the pattern and stage of industrial development, -5- we follow the framewark suggested by Chenery and Taylor 3/. They classified industries according to the stage of development as 'early industries', 'middle industries', and 'late industries', Early indus- tries are those producing foods, textile, wood products and leather goods with income elasticities of demand of usually 1.0 or less and which provided the essential demands of developing countries at an earlier stage of development. M4iddle industries are those producing rubber products, nonmetallic minerals, and chemicals and petroleum refining. Finished products of these industries usually have income elasticities of 1.2 - 1.5. Their share of gross national product increases rapidly until income reaches about $400-$500 (1976 prices), but relatively little thereafter. Late industries are clothing, printing and publishing, basic metals, paper and paper products, and metal products, which have high income elasticities and continue to grow faster than GNP up to the highest GNP levels, In Korea the period 1963-73 appears to be the stage of early industries. During this period early industries such as textiles, plywood, etc., led the growth of the economy and dominated the pattern of industrial location. Because p,ywood and other wood products industries relied on foreign countries for both raw materials and 3 / H.B.Chenery and L. Tayor, "Development Patterns: Among Countries and Over Time", The Review of Economics and Statistics Vo. A, No. 4 (Nov. 19 68 pp. L09-412 -6- markets, international ports such as Incheon and Busan played a crucial role in the location of these industries. Thus, most export-oriented, and large wood products companies during this period were located in either Busan or Incheon. There is no doubt that for location of heavy and bulky products such as plywood, transportation plays a dominant role. However, for the location of light, export-oriented industries such as textiles, both international ports and large domestic markets such as Seoul and Busan appear to have played an important role. Such industries were usually located in the Seoul-Incheon region and the Busan region. Wood products industries locate very close to ports, whereas 'textile industries need not locate so close. However, many wood product industries in the 1970's and 1980's manufactured furniture for domestic markets and tended to locate cl.oser to markets such as Seoul and Busan. The period of growth for middle industries such as chemicals in Korea were the years 1971-1977. Although the year 1972 is the year officially declared as the starting point for heavy industries, the rapid growth of heavy industries did not occur until. 1977 when the so-called Middle-East boom boosted by construction exports necessitated the rapid development of heavy industries. Thus, the growth of indus- tries during the years 1972-77 can be said to have been dominated by middle industries. For the development and location of middle indus- tries many industrial estates such as the Ulsan and Changweon industrial complex w.ere created. - 7 - Late industries such as machinery and metallic products started to grow rapidly from 1977 with the rapid growth of the economy and as the rapid expansion of construction exports to the Middle East necessitated the rapid developme, ' of various types of constriuction equipment. The other major factor that promoted the rapid develop- ment of heavy industries may be the nation's self-reliant defense policy, which resulted in the industrial development of various defense equipment and machinery. As the Busan region or the coastal industrial complex along the south-eastern coast zone was considered the most favorable industrial location for heavy and defense industries, the development of those industries may mark the turning-point in the location and spatial distribution pattern of Korean industries. Prior to the era of heavy industries, Seoul and the Seoul region were. the only areas for most Korean firms to locate. However, with the grc .rth of heavy and defense industries, the south-eastern coastal region emerged as the second largest industrial area. From these facts we may find that industrial location in countries, such as Korea, undergoing a very rapid transformation of economic structure, is greatly dictated by the changing pattern of industrial structure itself. So far, we have glanced through the macro-structural change of Korea's industrialization and its locational adaptation of early, middle and late industries. In summary, the Seoul region and the south-eastern coastal region have been the locational embryos of Korea's industrial development. Especially, the Seoul region has experienced a drastic -8- structural and spatial change and is still very much in the process of change. Thus, as part of the on-going World Bank-SNU study on the Seoul region -his paper is devoted to the descriptive ananlysis of changing pattern of industrial composition and location in the Seoul region. 2. Locational Changes of Manufacturing Industries in the Seoul Region A. Seoul versus Gnyeonggl According to the 1981 manufacturing survey, about 45 percent of 2.1 million Korean manufacturing workers were located in the Seoul region. The share of manufacturing employment in Seoul in 1981 was 21.2 percent while 23.8 percent worked its peripheral reqion, Gyeonggi province, as shown in Table 1. In 1973 the same figures were 33.7 percent and 14.1 percent respectively. The national share of manufac- turing employment in Seoul has therefore substantially decreased since 1973. Gyeonggi province shows the opposite pattern. The annual growth rates of manufactuirng employment between 1973-1981 ,.were 0.7 percent for Seoul and 14.0 percent for Gyeonggi provincei/ I For more detailed analysis, see Donq-Hoon Chun and K.S. Lee. Changin Location Patternts of Population and 7F-Hployrnent in the Seoul Leion WSUDP, Th_e Wo_rld aank, Discussion Paper No DD 5 Table 1. Changes in Manufacturing Employment in the Seoul Region, 1973-1981. 1973 1978 1981 Annual Average Growth Rate (%) Number % Nuimber % Number % ('73-'81) Seoul 409,916 70.6k 33.7X 539,192 52.3 25.1 433,493 47.1 21.2 1 0.7 Gyeonggi 170,844 29.4 14.1 492,136 47.7 22.9 486,526 52.9 23.8 14.0 Incheon 67,825 11.7 166,576 16.2 148,391 16.1 10.3 Suweon 15,746 2.7 33,838 3.3 34,766 3.8 10.4 Seongnam 12,118 2.1 43,217 4.2 40,214 4.4 16.2 Eu1jeongbu 5,8b2 1.0 11,788 1.1 6,865 0.7 2.0 Anyang 20,616 3.6 40,184 3.9 31,361 3.4 5.4 Bucheon 7,147 1.2 45,012 4.4 44,394 4.8 25.6 Banweol - - - - 13,451 1.5 - Subtotal 129,314 22.2 340,615 33.0 319,442 34.7 12.0 Rest of 41,614 7.2 151,521 14.7 167,084 18.2 19.0 Gyeonggi SMR Total 580,844 100.0 47.8 1,031,328 100.0 48.0 920,019 100.0 45.0 5.9 Korea Total 1,216,389 100.0 2,150,971 100.0 2,044,269 100.0 6.7 X % of SMR Total, xx % of Korea Total Data Source: Economic Planning Board. NBS, Mining and Manufacturing Surveys, 1973, 1978, and 1981. SlR- Seoul Mletropolitan Region, i.e., Seoul and Gyeonggi - 10 The annual growth rate of Seoul's manufacturing employment, 0.7 percent, is much lower than the national average of 6.7 percent, and the growth rate of manufacturing employment in Gyeonggi province is almost twice as hiigh as the national average. This indicates a drastic change in the spatial distribution of manufacturing employment between the central city and the periphery. Seoul's share of manufac- turing employment in the Seoul region decreased between 1973 and 1981 from 70.6 percent to 47.1 percent. This change is matched by the rapid increase in the share of manufacturing employment in Gyeonggi province from 29.4 percent to 52.9 percent during the same period. Of the 52.9 percent of manufacturing employment, seven cities (Incheon, Suweon, Seongnam, Euijeongbu, Anyang, Bucheon and Banweol) in Gyeonggi province amounts to 34.7 percent. The rest of Gyeonggi province shares about 18.2 percent. Although the share of manufac- turing employment in the rest of Gyeonggi province is as low as 18.2 percent, it shows an increasing trend. The same figure for 1973 was only 7.2 percent as shown in Table 1. The number of manufacturing establishments in the Seoul region * was 15,119 in 1981. The shares of Seoul and Gyeonggi were 57.9 percent and 42.1 percent respectively. The comparison between the shares of manufacturing employment and establishnients indicates that Seoul has relatively smaller firms than Gyeonggi province does. Table 2. Changes in Number of Establishments in the Seoul Region, 1973-1981. 1973 1978 1981 Annual Average - _____- Growth Rate (%) Nuinber % Nuniber % Number (% (73-'81) Seotil 5,832 70.5* 25.0** 7,752 59.7 26.0 8,753 57.9 26.2 5.2 Gyeonggi 2,437 29.5 10.5 5,229 40.3 17.5 6,366 42.1 19.0 12.8 Incheon 610 ! 7.4 1,458 11.2 1,421 9.4 11.1 Suweon 245 1 3.0 247 1.8 233 1.5 -0.6 Seongnam i 73 I 0.9 350 | 2.7 459 3.0 25.8 Euijeongbu 122 1.5 175 1.4 146 1.0 2.3 Anayang 139 1 1.7 299 | 2.3 290 1.9 9.6 Bucheon 145 i 1.8 604 l 4.7 875 5.8 25.2 Banweol - - - - 178 1.2 Subtotal 1,334 1C.3 3,133 24.2 3,602 23.8 13.2 Rest of Gyeonggi 1,103 13.3 2,096 16.1 2,764 18.3 12.2 SMR Total 8,269 100.0 35.5 12,981 ,100.0 43.5 15,119 100.0 45.2 7.8 Ntation Total 23,293 J 100.0 129,864 - 100.0 |33,431 | 4.6 SIIR-Seoul Mletrooolitan Region, i e. Seoul and Geyonggi * % of SMR Total, ** % of Korea fotal Cource: Econoimic Planniing Board NWBS, Mininq and Manufacturing Surveys, 1973, 1978, and 1981. - 12 - The size of firms in Seoul and Gyeonggi were about the same in 1973, but became substantially different in 1981. This may indicate that larger firms moved from Seoul to Gyeonggi province while small firms conti nue doi ng busi ness i n Seoul . As shown in Table 3, the types of manufacturing industries located in the Seoul region as of 1981 are (in descending order of share of employment), textiles and leather (30.1%), fabricated metals (30.0%), chemicals (9.3%), food beverages and tobacco (7.1%), paper and publish- ing (6.4%), nonmetallic (4.5%), wood and wood products (3.7%), and other manufacturing (6.0%). Of these industries, textiles, paper and publishing, and food and beverages are relatively more concentrated in Seoul. But the level of concentration is not very substantial. Industries such as fabricated metals, non-metallic products and metals are relatively more concentrated in Gyeonggi province than is Seoul. Two industries, textile and fabricated metal, are the largest employers accounting close to 60 percent of total manufacturing. This was true for Seoul, Geonggi as well as Korea as a wJhole. It should be noted that the relative share of textile increased in Seoul while that of fabricated metal decl i ned! i ndi cati ng the f abri cated metal i ndustri es shifted locations from Seoul to Gyeonggi. B. Southward versus Northward One special feature of industrial movement in the Seoul region can be described as the southwards movement. This has been facilitated by Table 3. Structure of Manufacturing Industries in the Seoul Region ___ ___ 11913 1978 1981 __Seoul Gyeonggi Korea Seoul Gyeonggi Korea Seoul Gyeonggi Korea Food & Beverage 8.9 8.2 11.7 715.1 7.9 8.1 6.3 8.4 Textile & Leather 30.7 31.8 34.1 30.1 25.0 32.1 35.2 25.6 32.0 Wood 1.1 9.3 4.4 J 1.7 6.4 3.8 1.6 5.6 3.1 ingr&Pulih Pae uls-8.1 5.4 4.9 7.3 3.5 4.1- 9.7 3.6 4.4 ing Chemical 11.2 7.5 12.1 11.0 9.0 12.1 9.3 9.4 12.8 Nonmetal 2.5 5.9 3$ j 2.9 6.2 4.4 2.5 6.3 4.5 Metal 2.4 4.6 3.3 2.3 4.0 4.1 1 2.1 3.4 4.3 FabricatedI Mtl26.5 21.2 20.7 30.8 35.9 28.1 25.3 34.0 26.6 Other 8.8 6.2 4.8 6.2 4.9 3.6 6.3 5.8 3.8 Total 100.0 100.0 100.0 100.0 100.0, 100.0 j100.0. 100.0 100.0 Note :Employment of establishments with 5 or more employees Source :EPB, National Bureau of Statistics, Mining and Manufacturing Surveys, 1973, 1978 and 1981. - 14 - the extensive transport network developed in the southern part of the Seoul region. The relocation of population and economic activities from northern Seoul, that is north of Han River, to southern Seoul was considered to be the government's policy objective throughout 1970s. However, the southward redistribution of population and industries became active in the late 1970s. When the plan for developing a new capital city was announced by the government in 1977, Which is withdrawn for the .ime being, both businessman and government officials started to consider seriously the relocation of population and industries from the northern to the southern parts in the Seoul region. Thus, southern rural counties such as Hwasung, Yongin, Pyeongtaeg, Siheung were considered to be good locational choices for manufacturing industries. Thp manufacturing employment in Gyeonggi province is heavily concentrated in seven satellite cities of Seoul (Incheon, Bucheon, Seongnam, Anyang, Suweon, Euijeongbu, and Banweol) and six counties (Siheung, Hwasung, Yongin, NIamyangju. Gwangju, and Pyeongtaeg). The share of manufacturing employment in those localities amounted to about 47 percent of total Gyeonggi province in 1981. Together with Seoul, these localities vihose administrative boundaries are mostly bordered by Seoul share about 94.3 percent of total manufacturing workers of the Seoul region (M"ap 1 ar,d Table 4). This fact may indicate the extreme importance of accessibility to the location of manufacturing Table 4. Location Indicators for Major Cities and Counties in the Seoul Region Manisfacturi ng MAnufacturi ng Employment (1,000 persons) Establ ishment 1973 (%) 1978 (%) 1981 (%) 19- (%) 1978 (%) 1981 (%) 1. Cities - . Seoul 409.9 (70.6) 539.2 (52.3) 433.5 (47.1) 5,832 (70.5) 7,752 (59.7) 8,753 (57.9) Incheon 67.8 (11.7) 166.6 (16.2) 148.4 (16.1) 610r ( 7.4) 1,458 (11.2) 1,421 ( 9.4) Suween 15.7 ( 2.7) 33.8 ( 3.3) 34.8 ( 3.8); 245 ( 3.0) 247 ( 1.9) 233 ( 1.5) Seongnam 12.1 ( 2.1) 43.2 ( 4.2) 40.2 ( 4.4)j 73 ( 0.9) 350 ( 2.7) 459 (-3.0) Anyang 20.0 ( 3.5) 11.8 ( 1.1) 31.4 ( 3.4) 139 ( 1.7) 299 ( 2.3) 290 ( 1.9) Bucheon 7.1 ( 1.2) 45.0 ( 4.4) 44.4 ( 4.8)| 145 ( 1.8) 604 C 4.7) 875 ( 5.8) Banweol - ( - ) - ( - ) 13.4 ( 1.5) - ( - ) - ( - ) 178 C 1.2) 2. Counties Namyangju - - ) 19.8 ( 1.9) 16.7 ( 1.8)1 -i ( - ) 249 ( 1.9) 281 C 1.9) Hwasung 5.0 ( 0.9) 24.4 ( 2.4) 23.8 ( 2.6) 92 ( 1.1) 186 ( 1.4) 247 ( 1.6) Siheung 8.7 ( 1.5) 39.2 ( 3.8) 29.8 ( 3.2) 148 ( 1.8) 309 ( 2.4) 245 C 1.6) Gwanoju 3.6 ( 0.6) 9.7 ( 0.9) 11.3 ( 1.2) 61 ( 0.7) 138 ( 1.1) 220 ( 1.5) Yongin 2.4 ( 0.4) 20.2 ( 2.0) 22.7 ( 2.5) 39 ( 0.5) 162 ( 1.2) 244 ( 1.6) Pyeongtaeg 1.8 ( 0.3) 4.5 ( 0.4) 8.5 ( 0.9) 133 ( 1.6) 1llI 0.9) 116 C 0.8) 3. Rest of Gyeonggi 26.9 ( 4.6) 73.9 ( 7.2) 61.1 ( 6.6) 752 ( 9.1) 1,116 C 8,6) 1,557 (10.3) 4. Seoijl & Gyeonggi 580.8 (100.0) 1,031.3 (100.0) 920.0 (100.0) 8,269 (100.0) 12,981 (100.0) 15,119 (100.0) Source: EPB, Nlational Bureau of Statistics, Mining and Mlanufacturing Surveys, 1973, 1973, and 1981. Map 1. Concentration of Industries in the Seoul Region. -J tp tx1 :y "~31'40' ' 3141( -t - j -- r I /- - . 3 1 3 7 z ( ,7' 313348\-\ws)2 Ir t S . WX31'3/ City - ___ Countyr 314 11122 - 4 3~' ; 131141 4i I- < ,--3144 5 5----------- -- - 1: E .-.- r-- -- ---- 1118 -.,., ...9 g->---~ B; ?t. 111 9 -1. .. s .#*l\ /^-k ! f 4 ~~~~ S t . *,Ns~-f - 17 - industries in the Seoul region. Other localities such as Hwas'ung, Yongin, Pyeongtaeg and Suweon which are not adjacent to Seoul are also characterized by extremely good accessibility to Seoul as will be further explained later. For instance, Suweon is connected to Seoul by the Seoul-Suweon rapid transit system and the Seoul-Suweon highway as well as the Seoul-Busan Expressway. Hwasung and Pyeongtaeg are connected to Seoul by both the Seoul-Busan expressway and the Seoul-Busan railroad. Yongin is also connected to Seoul by both the Seoul-Susan expressway and the Seoul-Gangreung expressway. C. Moving Distance and Directions In'this part of the study the sub-regions are grouped by five rings and seven sectors for analytical purpose as shown in Map 2 and 3. The concept of rings is introduced to find spatial regulari- ties in terms of distance from Seoul while the concept of sector is to permit the analysis of the directionality of industrial location. Although physical distance does not always coincide with time distance, depending on the quality of transportation route and the affordability of specific transportation mode, it is assumed that the concept of ring roughly represents time distance from Jeoul. As shown in Table 5 , most rapid growth in the number of establish- ments has taken place in Ring IV throughout the period from 1973 to 1981. This also indicates that larger establishments in terms of employment Map 2. Areal Delineation of Ring by Sub-Regions - j \3n8 - I 31314 3102 / yjX > ) *m 12 a '- 31l4 \ ( 3112 -L 14 s3149 '( illS b"-,o.. r-;..3i 6 ' 1117 ~;2 14 1116 3- -121 - ) 1i2 &911. , - '.. ' =; - 1-44 > ,,22 w. .-J - - 3!45 ' 3-4 ) 1124 "125 - 3-5 I 11ˇ7 - 2- *<-<- * v - '-'.-t ' / ' t i -.- i t \. -Z Map 3. Areal Delineation of Sectors By Sub-regions 314" 340 '314 3137 314 - J'\ 5i° ( ,8 < " 7 "z8'2 till AItD 1101 -o rl / r VJ ,. 115 1112 3 14 1113 112 1114 '34 1116 u 1117 DbO.... 1119 3111 1121 S3144 1123 - 1124 . 1125 . V 126' 1127 . 3102 310i 31 ;1J N346 4 Table 5. Changing Distribution of Manufacturing Establishmentsand Emnployment by Rings Rings Establishinent Employment 1973 % 1978 % 1981 % 1973 % 1978 % 1981 % Ring I 1,566 ( 18.9) 1,144 ( 8.8) 1,398 ( 9.2) 45,224 ( 7.8) 30,381 ( 2.9) 28,985 ( 3.1) *(100.0) ( 73.1) (89.3) (100.0) (67.2) (63.9) Ring II 2,789 C 33.7) 3,091 ( 23.8) 3,376 ( 23.8) 162,403 [ 28.0) 167,960 ( 16.3) 146,719 ( 15.7) (100.0) (110.9) (121.2) (100.0) (103.4) 9 90.3) Ring III 1,479 ( 17.9) 3,315 ( 25.5) 3,979 ( 26.3) 202,289 ( 34.8) 340,826 ( 33.0) 257,879 ( 27.7) (100.) (237.7) (269.0) (100.0) (168.5) (127.5) Ring IV 1,829 ( 22.1) 4,248 ( 32.7) 5,077 ( 33.6) 155,351 ( 26.7) 425,000 ( 41.2) 414,458 ( 44.5) (100.0) (161.3) (311.5) (100.0) (430.9) (266.8) Rins V 608 ( 7.4) 981 ( 7.6) 1,287 C 8.5) 15,577 ( 2.7) 67,136 ( 16.5) 83,647 ( 9.0) (100.0) (161.3) (212.0) (100.0) (430.9) (536.9) ° Total 8,271 (100.0) 12,979 (100.0) 15,117 (100.0) 580,844 (100.0) 1,031,303 (100.0) 931,598 (100.0) (100.0) (156.9) (190.0) (100.0) (177.6) (160.4) * % of row : 1978 and 1981 figures as percent or 1973 base. ** % of column Source: EPB, National Bureau of Statistics, Mining and Manufacturing jurveys, 1973, 1978, and 1981. Table 6. Changing Distribution of Manufacturing Establishments and Employment by Sectors Establishment Emnployment Sectors 1973 % 1978 % 1981 % 1973 % 1978 % 1981 % Sector I 1,566 t 18.9) 1,144 ( 8.8) 1,398 ( 9.2) 45,224 ( 7.8) 30,381 ( Z.9) 28,895 ( 3.1) *(100.0) ( 73.1) ( 89.3) (100.0) ( 67.2) (63.9) Sector II | 614 1 7.4) 687 ( 5.3) 700 ( 4.6) 27,435 ( 4.7) 28,125 ( 2.7) 25,776 ( 2.8) (100.0) (111.9) (114.0) (100.0) (102.5) (91.6) Sector III j 835 10.1) 1,400 ( 10.8) 1,562 ( 10.3) 52,554 ( 9.0) 73,283 ( 7.1) 64,309 ( 6.9) (100..) (167.7) (111.0) (100.0) (139.5) (87.8) Sector IV 551 ( 6.7) 990 ( 7.6) 1,213 ( 8.0) 28,091 ( 4.8) 58,614 ( 5.7) 57,605 ( 6.2) r (100.0) (179.7) (220.1) (.00.0) (208.7) (205.1) Sector V 1,313 C 15.9) 2,208 ( 17.0) 2,763 ( 18.3) 93,329 ( 16.1) 172,502 C 16.7) 161,832 ( 17.4) (100.0) (168.2) (208.4) (100.0) (184.8) (173.4) Sector VI 1,209 C 14.6) 1,769 ( 13.6) 2,104 ( 13.9) 90,138 C 15.5) 175,564 C 17.0) 183,369 C 19.7) (100.0) (145.6) (174.0) (100.0) (194.8) (203.4) Sector VII 2,180 C 26.4) 4,790 (36.9) 5,406 ( 35.8) 244,073 ( 42.0) 492,834 ( 47.8) 409,812 C 44.0) (100.0) (219.7) (247.9) (100.0) (201.9) (167.9) Total 1 8,?68 (100.0) 12,979 (100.0) 15,118 (100.0) 580,844 (100.0) 1,031,303 (100.0) 931,598 (100.0 (100.0) (157.0) (182.8){ (100.0) (177.6) (160.4) * % of row: 1978 and 1981 figures as percent of 1973 base; ** % of column. Source: EPB, National Bureau of Statistics, Mining and Manufacturing Surveys, 1973, 1978, and 1981. - 22 - locate in Ring IV. Ring I has experienced an absolute loss both in the number of establishments and employmnent. Employment loss has been more severe than establishment loss, indicating that small firms tend to stay in Ring I. Ring II shows a mixed blessing which is characterized by establishment gain and employment loss. Only Ring V has experienced most rapid growth in employment, indicating that larger firms tend to move farther away. On the whold, the evidence shows a strong decentralization of manufacturing employment in the region. In search of a new industrial location, directional orientation seems to play important role i.n the Seoul region, As shown in Table 6, about 81 percent of total employment is concentrated in south and south-westerl sub-regions or Sector V, VI and VII. In 1973, their share of employment was 73.6 percent but had increased to 81.0 percent by 1981. Several explantions for this trend can be found. First, the south-western sub-regions or Sector VI and VII were endowed by initially preferrable conditions such as an existing port, Incheon a well-developed transportation network, and an urban corridor in which industrialists could provide agreeable living amenities such as school and mass transit to their employees. Secondly, government policies discouraged newfirms to locate in other sub-regions. The location of new firms and/or even the expansion of existing plants within the northern area of the Han river were prohibited actually in 1978 by Industrial Location Act. The northern part of Seoul (Sector II and III) lacks developmental poten- tial in terms of accessibility and is also a strategic area in the path - 23 - of North and South Korea confrontation. Therefore, Sector II and III experienced absolute or relative decline in the number of employ- ment although a meager increase in the number of establishment was shown. Sector IV is considered to be one of the most attractive locations having the advantage of plentiful water resources and good accessibility to railroad and arterial national highways. However, new industrial location was strongly criticized by environmentalists because the areas are an up-stream providing the portable water in-take for the 12 million inhabitants in the Seoul region. The sub-regions in Sector IV were designated as environmental conservation zones by the Seoul Metropolitan Region Development Plan of 1981, Location of new firms was thereafter stri ctly control 1 ed. Finally, in addition to the initial advantages, locational pressure for the opening of new plants and the expansion of existing plants led firms to the southern and south-western sub-regions. Industrial growth in Sector V3 VI and VII has been partly encouraged by the construc- tion of the new industrial city, Banweol and the designation of the sub- regions as a development inducement zone by the Seoul Metropolitan Region Development Plan. Although major agglomeration diseconomies like the soaring land price and the scarcity of industrial land begin to appear, one of the most important reasons for reinforcing industrial growth in Sector V, VI and VII has been the constrtiction of Seoul-Incheon and - 24 - Seoul -Busan Expressways. These regions thus fell within a thirty minute traveling time from Seoul, becoming in fact a part of the City of Seoul proper. Recently, the south and south-western areas have come within the zone of commuting from Seoul due to the opening of two rapid transit lines since 1974. This will be further discussed in the following chapters. D. Government Policies and Plans Government policies and policy measures could have a significant impact on the search for a location before industrialists go through the direct process of choosing the final site of a new plant. Among many policies and regulatory provisions, the Industrial Location Act of 1978 by which three industrial zones, dispersal zone, status-quo zone and inducement zone as shown in Map 4, had special implications for the explanation of locational changes in the Seoul metropolitan region. However, a three-year time span was too short a time to draw a meaningful conclusion about impact on industrial location. Also it is even more difficult to separate the market driven trend of industrial spillover towards the periphery from the policy impact zwithout an in- dept study. The manufacturing census statistics support that to a certain extent government policies might have superficially achieved some policy objecti- ves. As shown in Table 7, the inducement zone has experienced impressive Map 4. Three Developw~ent Zonies by Industrial Location Act 3141 >~31f K~ ~31q8 iiI2. IfIN LEGEND L :1112 11156 , - - ~STATU S-QUO 11 oc.~(--.ln. ZONE 3119 .120 INDUCEMENT ZONE 1212 3144 1124 3 11245 p 1126, 1127 33102 01 3101 3 3104 Table 7. Changes in the Distribution of Manufacturing Industry by Three Zones of the Industrial T'cation Act Zone E s tabl i shm ent Employment 1973 1978 1981 1973 1978 1981 Dispersal Zone 6,147 8,458 9M557 425,525 581,782 472,042 (100.0)* (137.6) (155-5) (100.0) (137.6) (110.9) ( 75.23( 65.2) ( 64.2) ( 73.3) ( 56.4) ( 51.3) Status-quo Zone 1,321 3,4L0 3,921 135,796 378,150 360,610 (100.O) (258.1) (296.8) (100.0) (278.5) (265.6) ( 16.2 ) ( 26.3 ) C 26.3 ) ( 23.4 ) ( 36.7 ) ( 39.2 ) Inducement Zone 701. 1,113 1,419 19,533 71,396 87,347 (ioo.o) (158.8) (202.4) (100.0) (365-5) (447.2) (8.5) ( 8|.5 ) ( 9.5) ( 3.4 ) ( 6.9 ) ( 9.5 ) Total 8,169 12,981 14,897 580,854 1,031,328 919,999 (100.0) (158.9) (182.4) (100.0) (177.6) (158.4) .-llo.n. -0 .10 Q*O . 0 0L IIIQ-.ALTh- - 10 0J 201& Ln - . -L * % of row ** % ,' column Source: EPB, National Bureau of Statistics, Mining and Manufacturing Survey, 1973, 1978, and 1981. - 27 - growth in the number of establishments and employment while the dis- persal zone has experienced an absolute decline. Of course, part of this should be attributed to the business cycle as 1980 was the worst recession year in decades. The status-quo zone has shown highest growth in the number of establishments and medium growth in employment. Although the preceding observations do not necessarily mean that government's location policies have been successful, it would not be too inaccurate to say that industrialists tend to comply with governmental policies in the initial stage of search process for new locations if other conditions are the same. It is the intention of the next phase of the present study to highlight how a variety of policy measures specified in the Industrial Location Act and other location policies have worked out in locational behavior in the real situation of the Seoul region, (Lee, 1985). There was another recent development which is especially relevant to understanding the overall spatial.and locational strategy for the Seoul region. This was the Seoul Region Development Planning Act of 1983. The Act confronts not only industrial location problem but also many other metropolitan development issues and empowers the Ministry of Construction to plan and coordinate such issues in the Seoul region. Even though the Act was enacted in 1983, the Seoul Metropolitan Region Development Plan (1982-1991) being prepared by the Korea Research Institute for Human Settlements has been widely publicized since 1981, and was formally accepted as 'he government's official plan in 1984. - 28 - According to the plan, the Seoul region was divided into five zones according to the range of perrnitted manufacturing industries as shown in Map 5, although these five zones overlap with the three zones designated by the Industrial Location Act without the necessary provisions stipulating the relationship of two kinds of zones. The development restricition zone which covers the old central part of Seoul does not permit any new location of firm or the expansiun of an existing plant. The development reservation zone, environmental conservation zone and selective development zone are also subject to strong scrutiny of one kind or another before being granted an indus- trial permit. Only in the development inducement zone is new indus- trial development allowed. As shown in Table 8, the most striking growth of manufacturing employment has occUred in the development inducement and the environ- mental conservation zones respectively by 592.6% and 519.5% during 1973-19381, indicating that the latter had been attracting industries as the former during this period. The development restricition zone which shares a boundary with the dispersal zone of Industrial Loca- tion Act has experienced very slow growth of 111.0%. At the first glance, it may suggest compliance with the government's policies and plans. Howiever, vie can not say anything about the impact of the 1983 Act, since the data cover up to 1981, but our sesults indicate the need for providing rationale for the stipulation of the five zones. MW- 5. Five Planning Zones by Seoul Metropolitan Region Development Plan. 17N) .... .... .... . .. ............. f-.... DVELOPMENT 111 2 FIESFHCTOLDN ZONE 11,17 UM-. 1119 ElWl NVIRONMENTAL ': LiluiCONSERVATION ZONE 1121 11221 SLCTIVE - 123 V, DEVELOPMENT ZONE 1124 1.26 DEVELOPMFNT 1127 I NOUCEMENT ZONE 3101 3102 . ~ .~~22 ~ ?r - <7~ N Table 8. Changes in the Distribution of Manufacturing Industry by Five Planning Zones of the Development Plan for Seoul Region Establishment Employrnent Zones 1973 1978 1981 1973 1978 1981 Developme'nt Restric- 6,147 8,458 9,557 425,525 581,782 472,042 tion Zone (100.0) (137.6) (155.4) (100.0) (136.7) (111.0) Development Reserva- 1,430 3,563 4,111 139,950 382,664 367,534 C tion Zone (100.0) (249.2) (287.5) (100.0) (273.4) (262.6) Environmental Censer- 94 127 158 1,442 3,617 7,491 vation Zone (100.0) (135.1) (168.1) (100.0) (250.8) (519.5) Selective Development 145 250 281 3,275 9,124 9,750 Zone (100.0) (172.4) (193.8) (100.0) (278.6) (297.7) Development Induce- 353 583 790 10,662 54,141 63,182 ment Zone (100.0) (165.2) (223.7) (100.0) (507.8) (592.6) Source: EPB, National Bureau of Statistics, Mining and Manufacturing Surveys, 1973, 1978, and 1981. - 31 - As an industrial move implies deliberate locational decisions, it is useful to consider some of the factors that influence firms' locational choice, and to assess the observed trends of the Seoul metropolitan region. Part III is an attempt to document such locational factors that might have influenced the observed patterns. - 32 - Part III. Spatial Variations in Location Characteristics 1. Classification of Location Characteristics Industrial movement is not only an outcome of firms' response to market signals, but also an adaptive process to a variety of governmen- tal intervention. It is not easy to disaggregate the complexity of those locational factors into operational concepts for analysis,, Keeping the purpose of the present study in mind, ie., to observe certain regularities between industrial movement and location charac- teristics, we have however introduced two kinds of locational deter- minants., First, central and local governments have intervened to influence industrial location through a variety of policy measures. Some are indicative without necessary power for implementation while others are coersive. Some are promotional while others are punitive. Provisions for these four types of policy measures are written in a number of laws: the Industrial Location Act, the Local Industrial Development Act and the Seoul Metropolitan Region Development Act. 5/ These laws and their associdted policy directions, plans and programs should have 5/ Sang-Chuel Choe and Byung-Nak Song, An Evaluation of Industrial Location Policies for Urban Deconcentration in the Seoul Region, WSUDD, the World Bank Discussion Paper Report No. UDD-7, 1982, pp. 44-52. - 33 - contributed to shaping the locational terrain of manufacturing industry in the Seoul region. Each sub-region is characterized by a mixed com- bination of the four types of governmental intervention with different intensity and policy objectives. Second, the degree of willingness on the part of industrialists to move or choose a new site is essential. An array of location fac- tors can not be exhaustive.. Econonmic theory rc:garding the choice of manufacturing location is usually based on profit maximization assump- tion. Although a theoretical inquiry into the economics of industrial location is beyond the scope of this paper, it is widely held that empirical implementation of theory is not easy.- The final location chosen may not nesessarily be the result of a detailed consideration of a complete set of location factors. One factor may predominate over all the others, such as the availability of space to move into immedia- tely. Many other considerations may be so obvious one way or another that they may be passed over without careful calculation. For many categories of industry, the choice of location can be footloose and firms may find indifferent among althernative sites based only on cost considera- tion. For analytical purpose, location characteristics can be classified by the level of spatial aggregation, i.e., area-wide, site-specific, and privately provided factors. . Although some of the area-wide location 6/ For an example of such a model, see Kyu Sik Lee, "A Mlodel of Intraurban Employment Location: An Application to Bogota, Columbia", Journal of Urban Economics Vol.12 (Nlov. 1982), pp. 263-79. - 34 - characteristics tend to be associated with national or local govern- ment programs, area differences in charges or prices for public services are quite negligible in a particular region. In this regard, the location characteristics of a region as a whole may be more important for the firm if site characteristics are location-invariant. In other words, area-wide characteristics are a sub-region's aggregate environment for industrial location, determining the general direction and the extent of the industrial movement. Contrary to area-wide factors, site-specific location factors are generally provided by a single local government and their spillover effect beyond local jurisdiction is quite negligible. Site-specific factors usually includes the general category of local services like public utilities and socio-cultural facilities which are invested and administrated by a municipal or county government. There is still another category_of location factors: private services such as restaurants, hotels, shopping facilities and banking service that largely remain within the dorimain of, private economic activitCies in terms of investment and locational choice. Another useful classification of location factors is whether they are mobile or immobile. Mobile location factors are defined by the transportability of such factors as labor Forces, materials and capital, while immobile ones are featured by their lack of mobility, for example, land, mines, river, highway, and natural amenities. As mobile location factors can be transferred from elsewhere in spite of - 35 - transport costs involved, immobile ones are taken to be more crucial for the final selection of plant location for many industries. There is yet another type of classification of location factors; the distinction between person-oriented factors and firm-oriented factors. Person-oriented factors are housing, educational institutions, drinking water, shopping facilities and so on. Firm-oriented factors include industrial building sites, industrial water, port, and industrial land. This distinction is menaingful for understanding the locational behavior of manufacturing industries. A firm is not an abstract entity of buildings and machinery but composed o'f employees and their families whether they are managerial or menial workers. Beyond meeting the locational requirements for a firm., locational attractiveness on the part of employees should not be underestimated. In the Seoul region, industrialists may easily find the labor force which they need, although higher wages or some other costs such as a commuting-bus service and housing allowance are involved to recruit workers from the central city where they used to live. Except for a small number of managerial workers and qualified technicians, many workers are ready to trade-off living ainenities for a job opportunity away from Seoul. In this respect, the theory of "people-to-job" may be better supported than that of "job-to-people" in the analysis of employment- residential location nexus. Locational dynamics between firm-oriented and person-oriented locational factors are to be given special attention. Even if the difficulty of identifying location factors according to - 36 an analytical typoloqi can be overcome, the key issue is how to measure tl,cse factors. Various locational characteristics and their measuremleiii are so varied that the evaluation of locational attrac- tiveness does not always allow for a uniform scale of measurements. Locational advantages and disadvantages of a sub-region are quite often impossible to evaluate in precise quantitative terms. Four types of measurements can be considered although they are not easily comparable in quantitative terms. They are availability, quantity, quality, and cost. In order to highlight locational aspects, the availability of a certain type of services can be translated into accessibility of such services. Accessibility then can be roughly measured by relative distance,given that the source of such a service already exists. For example, an express highway is hardly expected to go through the very plant site, but it is, in most cases, accessible through a highway interchange. In this case, the availability of an express highway can be m4.iasured by distance from the interchange to the plant. On the other hand, in the case of an advanced tele-communi- cation network the actual availability of service and charge are more relevant than the distance. Likewise, other location factors can be measured differently. Favorable and unfavorable location factors are not always additive. A combination of unfavorable factors may- have a cumulative discounting effect, even through each factor by itself would be of minor consequence. In reality, subjective feelings among industrialists with limited - 37 - information about locational attractiveness quite often dictates location decisions. Furthermore, the information necessary for measuring locational attractiveness is seldom available and the sub-region is too large to evaluate with a single quantitative or qualitative measurement. For example the accessibility of a county or a municipality government office may greatly differ from one place to another within the same jurisdiction. Given these analytical difficulties, the typologies of location factors and a unit of measurement are introduced in-Table 9. Table 9. Typology and Measurements of Location Characteristics Typol ogy Measurements Public/Private Spatial Location Availability Quantity Quality Cost Pu l c Pr v t Aggregation Factors _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Area-wide Highway, Express highway, Railroad, Rapid transit, factors Port, Electricity, Tele-commu- nication, Industrial water, Higher educational institution Public and etc. length maintenance capacity frequency Services Site-specific Local street, Local bus service, accessibility acreage comfort toll number of reliability fare Drinking water, Sewerage availability students purity charge factors treatment, Garbage collection, affordability buses prestige tax Public housing, Middle and high dwel coverage prc i school, Industrial Land, units cosene tuitio Social welfare facilities, units closeness tuition I Cultural facilities, banks variety Fire and police station, facilities sophistication Post office etc. enst.tutions etc. 4 - -etc. Private I Shopping facilities, Recreation and aniusenient, Medical facilities Services I Private housing, Banking service, etc. - 39 - 2. Some Quantitative Measurements and Appraisal of Locational Factors Considering the above typology and measures, the data on the mmajor locational characteristics have been complied for sub-areas from existing statistics and field surveys. Profil es of locational characteristics for each sub-area are summarized in the Appendix. As observed in the preceding discussion, the trend toward decentrali- zation of manufacturing activity from the central city to periphery in the Seoul region has been underway. One of the most widely known premises explaining the phenomenon is push-pull theory. 7 It is quite clear that push and pull factors have an impact upon the movement of manufacturing establishments although the push versus pull controversy is difficult to differentiate. Among the factors which constitute the push that forces manufacturing activity to move out into periphery must be included in the following the soaring land price of the central city, the difficulty of securing land properly zoned for industrial use which is tightened by the increasing awaremess of environmental protection, and various governmental actions toward dispersing manufacturing employment from Seoul. 7/ Benjamin Chinitz, "City and Suburb," in B. Chinitz ed., City and Suburb; Economics of Metrooolitan Growth, Prentice Hall, 1964, pp. 5-6, and James Heilbrun, Urban Economics and Public Po New York; St. Martin's Press, 1981, pP.37-51. - 40 - On the other hand, there are many pull factors lying behind the trend. The main cause of dispersing manufacturing activity has unquesticnably been the development of new modes of transportation. In the days when rail and waterways were the most efficient means of moving both people and goods from one place to another, it was not only natural but essential for manufacturing activity to cluster at the nodal points of these transport systems. With the advent of auto- mobile and truck and the development of an increasingly wide-spread network of highways, the situation has been changing rapidly. Freed from their dependence on fixed line of transportation, manufac- turers are able to consider other factors in choosing locations, and in many cases these other considerations lead them out of the central city into non-central. city parts of a metropolitan region. Other pull factor attracting manufacturing employment into the peripheral areas of the Seoul metropolitan region is a steady rise of living amenities of the non-central city parts as compared to the central city, although it is undeniable that an absolute gap between the center and the periphery still exists. However, the introduction of rapid transit network and the integrated development of public utilities covering the entire metro- politan region like water supply and teleghone system has made less difference in one place to another in the Seoul region. In this background, four location factors among many factors in the analytical typology are highlighted in the following discussion. - 41 - A) Transportation The largest impetus of outward industrial movement may have resulted from improved accessibility through the construction of express highways and the alignment and pavement of existing highways. Roughly 80 percent of the relocations have taken place in the sub- regions along the main route toward the south and south-west which is served by the Seoul-Busan and Seoul-Incheon express highways. Among many modes of transportation, access to a highway or an express highway has apparently played the most important determinant for industrial location. As shown in Table 10, and Map 6, about 60 percent of the industrial establishment and 72 percent of employment was located in a corridor within 20 minutes of the two express highways according to the 1981 statistics. But it should be noted that the proportions of both establishments and employment located in the less than 10 minutes area declined during 1918-1981, indicating further dispersion of industries from the highway network. Time-distance from Seoul by railroad is shown in Map 7. In a small country like Korea, the distance of railroad transportation tends to be less attractive except for single-and-bulky commodities such as coal and cement. As industries in the Seoul region are characterized by using raw materials of various origins and multiple product destinations, they are less dependent on rail transportation. Another transportation factor in relation to industrial location is journey-to-work. As shown in Table 11 about 40% of the manufacturing TablelO. Changes in the Distribution of Manufacturing Industry by Accessibility to Express Highway Accessibility Establishments Employment in Minute 19/3 19/8 1981 19/3 1978 1981 1 - 10 1,183 2,908 39398 106,125 312,415 299,207 (48.5 ) (65.8 ) (53.4 ) (62.1) (63.5) (61.5) 11 - 20 331 495 447 11,396 46,554 48,641 (13.6 ) (11.2) (7.6) (6.1) (9e5) (10.0) 21 - 30 322 866 1,115 30,127 81,906 79,684 (13.2 ) (19.6 ) (11.5 ) (11.6 ) (16.6 3 (16.4) 31 and over 601 960 1,,406 23,280 51,261 58,994 (24.7 ) (21.7) (22.1) (13.6) (10.4) (12.1 ) Total 2,43/ 4,419 6,366 170,928 492,136 436,525 (100.0) (100.0' (100.0) (100.0) (100.0) (100.0) Source Econof1,ic Planning Board, National Bureau of Statistics, flining and Manufacturing Surveys, 1973, 1978, and 1981. Map 6. Accessibility to Interchange of Express Highway (Unit: Minute) 17x '11 LEG END 1111 *3 1117 ...... 1-5 1119 16-20 11216 1128 120 ,..... .126 2 6-30. 1127 3112 21-25 1123 - Map 7. Time Distance by Railroad (Unit: Minute) 7 GYEONG-WEOMT LINE ( 3140 / rk0 *- ^ <-' - GYEONG-EUI LINE 3141 \51- GYEONG-CIIUN LIKE 0 14 3144 LEGEND | f -j all il 1112 -12 RAPID TRAIP'SIT 1114 - 3149' 120 1116 t ~-I III JUNGCAN LINE RAIL ROAD J121 1121 M4 1122 3145 1123 - 1124 1125 -M 1126 1127 I 3101 \ 31023 -3104 l 3146 \YrONG-BU LINE Table 11. Distribution of Manufacturing Industrial Establishments and Employment by Commuting Mode Establishments Employment 19/3 19/8 1981 1973 19/8 1981 City Bus 276 941 1,101 21,036 82,225 69,160 Operation Zone (11.6) (24.5 ) (26.4 ) (14.9 ) (20.2 ) (19.6 ) Rapid Transit 1,000 2,309 2,529 90,129 245,426 221,551 Operation Zone (64.0 ) (59.8 ) (60.1 ) (64.3 ) (60.3 ) (62.4 ) City Bus 28/ 608 535 29,300 19,338 68,090 and Rapid Transit (18.4 ) (15.1 ) (12.8 ) (20.8) (19.5 ) (18.0 ) Operation Zone 1,56/ 3,864 4,165 141,065 406,989 364,801 Subtotal (A) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) Seoul Region 8,211 12,9/9 15,111 580,844 1,031,303 931,598 Total (B) A/B 18.9 29.8 26.5 24.3 39.5 39.2 Source: EPB, National Bureau of Statistics, Mining and Manufacturing Surveys, 1973, 1978, and 1981. - 46 - employment in the Seoul region resided in the areas which are accessible by mass transportation in 1981, especially by rapid transit along the Seoul-Suweon and Seoul-Incheon lines. Of course, the most favorable areas for industrial location, whether a new location or relocation, are areas accessible by Seoul city bus and rapid transit as shown in Map 8. In the absense of mass transportation, the critical range in commuting time from outlying areas to Seoul's CBD seems to be about 70 minutes, by a less frequent or slower local bus as shown in Map 9 B) Industrial Land Land input as a locational factor can be characterized by two condi- tions : the availability of space properly prepared for industrial use, and the price of land. First, the availability of industrial land is becoming one of the most severe constraints for firms' location choice in the region. Regional and municipal land use zoning has been revised to restrict industrial use as a part of overall national decentralization policies from the Seoul region. There is no doubt that land use control has been one of the most effective means for industrial redistribution, Strict enforcement of non-conforming use works as a push factor from Seoul, while the expansion of industrial land use outside Seoul and the development of a new industrial city is intended to be instrumental in attracting new establishments. Besides the scarcity of industrial land, the price of land is also Map 3. Sub-regions Served by Seo,'1 City Bus and Rapid Transit r. ....... .... ............ .= ,1e4 Illr9.~~~~. ,,, ->' G - $ t7 4-' 22-A ; 14 3143 14' CTBU 1124 tc)~~ r N. ¶12 -;- t, ) '<2 t-('N 0 3143 .\j (iso 5 II I rI= I LEGES ND Ii AP I T1112 __T 1J9 OPRA-TION ZONE, 1123 1126 104W I3144 CIYBSAD 1128 314 OPERAION ZNE * 1120 . 112 t - 3 3511 T 2 1122 6 1127 31101 310134 Map 9. Time Distance from Seoul by Local Bus (Unit: Minute) ~L-r *142 * * 1 3104 312 bl3 os-o k 31354 -tX 112714 " < s -\ y / Ils101 -, \{/ 31021 1 79iz t 3104os-z t.t.^n-.) t > e *v>' S - 49 - important in inf'luencing the firm's location choice. As given in Table 13, variations in land prices are great, ranging from 400,000 won per pyeong in Seongdong in Seoul, highest in the region to 10,000 won per pyeong in Icheon. Thus the hightest land price is about 40 times that of the lowest one. Land factor in industrial location seems to have a different implica- tion by the type of firms, i.e., relocated, newly established on-site expansion. Relocation is usually synchronized by expansion, the ter- mination of lease and the conversion of induqtrial land to other intensive urban uses, such as housing and commercial premises. The land factor is even more severe for on-site expansion both in terms of space and price. Because the price of industrial land is so high in the central city, the cost of relocation is covered by selling the old site while relocating a firm in a fringe area through improved accessibility to highways. C) Public ,tilities and Telecommunications The necessary quantity of industrial water is quite evenly available in the Seoul region either through a piped system or the on-site tapping of underground water. The price for industrial water is different from one locality to another, depending on the distance from the source of water, the cost of treatment, and local rate.ordinance. The price per unit of industrial water is composed of two components, i.e., base and - 50 - Table 12. Industrial Land Price by Subregion Average Price of Industrial Land (Unit: 1000 Won) Geocode Name of Areas per Pyeong High Middle Low 1111 Jonglo - - 1112 Jung - - 1113 Yongsan 1114 Seongdong 400 300 270 1115 Dongdaemun - - - 1116 Seongbug - 1117 Dobong 280 1118 Eunpyeong - 1119 Seodaemun '1120 Mapo 1121 Gangseo 200- 300 150 - 250 150- 200 1122 Guro 25:1 - 350 250 - 1123 Yeongdeungpo 350 - 43 300 - 1124 Oongjag - - 1125 Gwanag 1126 Gangnam 1127 Gangdong 3101 Incheon-Jung 150 80 - 120 60 3102 Incheon-Dong 130 - 150 10'J - 120 - 3103 Incheon-Nam 150 100 - 3104 Incheon-3ug 120 - 150 90 - 120 - 3111 Suweon 100 - 130 80 - 100 - 3112 Seonganm 130 - 200 100 - 150 3113 Euijeongbu 50 30 - 3114 Anyang 120 - 10 100 - 3115 3ucheon 180 - 200 130 - 150 - 3131 Yangju 50 40 20 3132 Namyangju 3133 Yeoju 3134 Pyeongtaeg 40 - 50 25 - 40 - 3135 Hwaseong - - - 3136 Siheung - - - 3137 Paju - - - 3138 Goyang - - - 3139 Gwangju - - - 3140 Yeoncheon - - 3141 Pocheon - - - 3142 Gaoyeong - - - 3143 Yangpyeong - - - 3144 Icheon 25 - 40 12 - 30 10 - 12 3145 Yongin 3146 Anseong 40 - 50 25 - 30 - 314J Gimpo 60 - - 3148 Ganghwa - - - 31d9 Ongji- - - 3150 Banweol 61 - - * Pyeong = about 3 square meters. Source: Korea Board of Aopraisal, National Land Price Survey, 1982. - 51 - incremental rates. Seoul is the most expensive place. Generally speaking, the rates of industrial water in municipalities except Suwaon are higher than rural counties as shown in Table 13 . The high prices of industrial water in the cities are largely due to their costlier construction and maintenance in urban areas than that of rural areas. The high price of Sihueng is also partly explained by the fact that Sihueng is the most urbanized county in the region. Electricity is important for industrial location but location- invariant; there is excess capacity sufficient to meet a modest increase. in demand in the Seoul region. Existing high voltage trans- mission lines for industrial use which are integrated with the region- wide and national power system do not act as a constraint for the Seoul region. Thus, the availability of electricity is not critical as a locational determinant for most types of manufacturing industries. As the price of electricity is uniform over the region and the installa- tion of power supply lines can be easily done on the request of user, electricity is therefore not a critical deterrent for industrial location. A good telephone system is a necessity for plant location to over- come distance friction between headquarters and subsidiaries and between sellers and buyers, especially for the industries which tend to agglomerate in and around a large metropolis. Poor telecommunication systems have been the object of complaint on the part of industrialists in some rural counties of the region. However, it would have not been a critical constraint for industrial location except for the inconveniences of longer - 52 - Table 13. Price System of Industrial Water by Sub-region. Sub-region Base Rate up to Incremental Rate 200 M/T per M/T Cities Seoul 77,970 .550 Incheon 1 32,000 1 325 Suweon j 19,965 180 Seongnam 36,r830 f 280 Euijeonogbu 37,660 220 Anyan- 47,520 355 Bucheon I 45,145 355 Gwangmyeong 37, 800 325 Songtan 1 30,295 155 Dongducheon 26,915 155 Banweol. 32,000 180 Counties Yangju 26,915 j 155 Namyangju 21,465 190 Yeoju 21,740 125 Pyeongtaeg 29,700 155 Hwaseong 22,685 155 Siheung 1 47,520 355 Paju 26,930 155 Gwangju 29,700 225 Yeoncheon j 27,325 250 Pocheon 29,470 145 Gapyeong 21, 920 135 Yangpyeong 26,700 165 Icheon 26,395 150 Yongin 28,465 250 Anseong 26,920 I 155 Gimpo | 26,910 160 Ganghwsa 26,91 5 | 155 - 53 - waiting times and frequent interruptions. But this problem has been gradually resolved by the completion of the integrated direct dialing system covering the Seoul region. 0) Urban Services The urban services that have the greatest effects on industrial location appear to be those related to Hirschman's social overhead capital, - namely, those related to transportation, communication, electricity and water which have been discussed in the preceding section. While these transportation and public utilities have a direct impact oh industrial location, other urban services that have had an indirect impact on industrial location in Korea appear to be housing, educational and medical services. According to the Urban Household Survey of 1983 compiled by the National Bureau of Statistics,- the importance of those urban services are ranked as housing, education, and medical services in terms of household expenditure. Urban services related to housing, education and medical services which fall into the category of urban economies have direct impacts upon the location of workers and entrepreneurs and, thereby, influence the location of indus- tries. As Koreans place great importance on housing and education, 8/ See Albert 0. Hirschman, The Strategy of Economic Development, Yale University Press, 1958. M/ National Bureau of Statistics/Economic Planning Board, Annual Re on the Family Income and Expenditure Survy, 1983. - 54 - these two services become important determinats of the location of employees as well as employers. It has been attempted-to quantify various urban services, both public and private, by sub-regions in the Seoul region as shown in the Appendix. The major problem in quantifing urban services apper to be the measurement of quality of urban services. The comparison indicates that large cities in the Seoul region, namely, Seoul, Incheon, and Seongnam have better urban services than other localities. This coincides with Professor Mills' findings that urban services are better in larger cities in developing countries.10/ Housing problem is generally more severe in the cities and highly urbanized counties like Sihueng and Namyangju. Beyond the sheerhousing shortage in the number of dwelling units, the price of housing and rent is also much higher in those sub-areas comparab,le to the degree of differences in land price as shown in Map 10 . Highest land price for housing is more than 2 million won per pyeong in Jonglo and Jung-ku, Seoul's CBD. Residential land with the price of below 300 thousand won per pyeong is not available in Seoul, resulting in the consequent rise of housing price. Althouqh how housing affordability and price act on industrial location is not well known in the Seoul region, housing itself as an industrial location factor can hardly be meaningful without concomittant consideration of accessibility to educational facilities for Koreans who place much higher priority on education than housing. 10/ See Edwin S. Mills, 'Government Procrams- to Control Sizes of Large Cities, "Paper Presented at Conference on Urbanization and National Development, East-West Center, Honolulu, Hawaii, January 25-29, 1982. Map 10. Residential Land Price by Sub-region '~- / ,( 3J4 LEGEND (Unit: 1,000 Won) Missing less than 50 300-300 - 5Q0-750 750-1,000 1,000-2 *000 more than7 or equal to 2,000 1112 1116 . 1117413 1116k 1119 _ - 1120 1121 1122 123 .,~ 11.24 _____________________________________ 1125 I?6 .... 1127 3102 ____ 3 > 3 - 56 - Better educational institutions in terms of academic attainment are largely concentrated in the large cities like Seoul, Suweon and Anyang. This means that the two urban services i.e., housing and education are in direct conflicts in that better education is available where housing is more scarce. Therefore, their locational impacts tend to offset each other. The trade-off between the two, however, usually favors education. - 57 - Part IV. Summary of Findings and Concluding Remarks This paper was intended to summarize the aggregate patterns of industrial distribution and to identify important locational factors contributing to the explanation of changing distribution of industries in the Seoul region. It is also hoped to draw some hypothetical postula- tions for further analysis in the research project. 1. Intrametropolitan Movement The first census enumeration of industrial movement conducted by the National Bureau of Statistics in 198111/ has shown how influential industrial movement has become in altering the spatial distribution of manufacturing industries. About 16 percent or 5,313 firms out of 33,431 firms in Korea experienced locational changes. However, the locational change was highlyconcentrated within the three metropolitan regions of Seoul, Busan, and Taegu, where 79 percent of industrial movement took place as shown in Table 14 This means that interregional or long-distance industrial movement was a phenomenon of relatively little significance. Nearly 80 percent of industrial movement had been featured by intra-metropolitan or short-distance industrial movement in Korea. 12/ Of 5,313 firms which had relocated by 1981, 2,865 firms or 54 percent moved within the Seoul region. The Seoul region accounts for more than two thirds of industrial -mi-graticn within thle three metropolit.an regi ons. 11/ Conducted by the National Bureau of Statistics as part of the IBRD-SNU Industrial Location Policies Research Project (IBRD RPO 0672-91) 12/, See, K.S.Lee (1985) fo. more detailed analysis of the nianUfacturing Census data. Table 14. Industrial Movements in Three Metropolitan Regions No. of Relocated Firms Percent Nation Total 5,313 100.0 Three Metropolitan Regions 4,198 79.0 100.0 Seoul Region 2,865 53.9 658,2 Pusan Region 831 15.6 19.8 Taegu Region 502 9.5 12.0 Other Regions 1,115 31.0 Unfortunately, very little has been known about intra-metropolitan industrial location in Korea. For the formulation and effective imple- mentation of industrial location policies and programs more attention should be given to intra-metropolitan industrial movetment and the conse- qennces of industrial location policies in the Seoul region. Changing location patterns of manufa.cturing industries in the Seoul region have been characterized by the strong trend of decentralization from center to periphery and from the niorth to the south. Given this general flow in the Seoul region as a whole, the industrial locations of newly created anid relocated firms have selectively taken place in some localities of seven cities (Iricheon, Bucheon, Songnam, Anyang, Suweon, Euijeongbu and Banweol) and six counties (Siheung, Hwasung, Yongin, Namyangju, Gwangju and Pyeongtag) which are bordered either by the City of Seoul or are easily accessible by expressways and/or rapid transit system. 2. Push and Pull in relation to industrial location in the Seoul region, two kinds of conditions are reinforcing the trend toward decentralization. The first - 59 - can be called the 'push factors' which are largely determinied by the conditions at the place of origin. They may include a prohibitive land price for on-site expansion, difficulties of obtaining land in terms of space and proper zoning, outmoded plant and equipment at the old city locations, reinforced environmental control and legal enforce- ment of non-conforming uses. 'Push factors' can be classified into two kinds; nattjral market forces and governinental regulatory measures. For example, the former is the termination of tenure for an industrial premise and the latter is a mandatory order to relocate the plant by reason of being a public nuisance. The second category consists of the so-called 'pull factors' which are conditioned by the attractiveness of the place of destination. An outlying area may offer relatively cheap land properly developed for industrial use. Technological advances in transportion and communication lessen the need for close proximity to markets. Changes in production technology, which demand a predominantly horizontal layout often of special design, tend to move industrial establishmens from congested inner-city locations to the spacious metropolital fringe. Governmental policies coincide with the trend of industrial dispersal and quite often reinforce it by means of various kinds of incentives such as a relocation subsidy, preferential loans, the designation of an inducement zone and the development of a new industrial city to accomodate relocated plants. Push and pull factors do not work independently but are reinforcing. In reality, the identification of locational advantages and disadvantages is not only a complex problem but also involves a considerable degree of - 60 - uncertainty with limited information about locational characteristics. The final locational choice is usually made upon a consideration of both push and pull factors. 3. Step-wise Decision of Industrial Location The choice of location by a firm is usually made in two steps. A firm may first choose a region for its new plant or branch and then select a site within that region.13/ As discussed earlier, location factors are considered first for area-wide characteristics and second for site-specific characteristics. Area-wide characteristics determine the general preference toward direction or distance of movement based on an overall evaluation of a region, while site-specific characteristics tend to influence the selection of a site to locate a plant. In terms of area-wide characteristics, the Seoul region has been the most attractive region in Korea since the region can enjoy the externali- ties which Seoul with a population of ten millions may offer. The best banking services, medical facilit:ies, higher educational institutions and cultural facilities are readily available within thirty minutes traveling distance to Seoul. Therefore, the consideration of the site-specific factors has become less critical as long as the site is within the metro- politan shadow of Seoul. Locational deficiencies caused by the lack of site-specific factors could have been simply tolerated at the cost of inconveniences and might have not led to locational disqualification. However, the availability of industrial land and water and an easy access 13/ D.J. Spooner, "Industrial Movement and Rural Periphery: The Case of Devon and Cornwall, "Regional Studies, Vol. 6, 1972, p. 2C6. - 61 - to major transportation network are assumed to be of critical importance in choosing the final site of the plant in the Seoul region. This hypothesis has been supported by the establishment survey results (Lee and Choe, 1985). 4. Push Factors - Land Constraints The rapidly rising price of land in Seoul would have played as a strong push factor. The limIted availability of industrial land properly zoned for industrial use has also played an important role in the location of new firms and the relocation of especially large firms. This may be partly supported by the fact that the size of plants located on the periphery of Seoul is larger than those located in the central part of Seoul and that the size of plants located in Gyeonggi province is larger than those located in Seoul. As shown in Table 15 , the average size of employemnt per firm increase from 20.7 in Ring I to 81.6 in Ring IV in 1981. Firm size in terms of employment in Ring I, II and III, which constitute the boundary of the City of Seoul has consistently become smaller from 1973 to 1981, while firm size in Rinq IV and V Tends to increase. Table 15. Average Firm Size by Rings (Unit: Persons) Rings 1973 | 1978 1981 Ring I 28.9 26.6 20.7 Ring II 58.2 54.3 43.5 Ring III 136.8 j 102.8 64.8 Ring IV 84.9 100.0 81.6 Ring V i 25.6 68.4 65. 0 Total 70.2 J 79.5 61.6 - 62 - 5. Pull Factors - Improved Accessibility The most important pull factor for changing industrial location patterns in the Seoul region seems to be improved accessibility to Seoul. Industrial sites, whicfi are moqst accessible to both the largest domestic market in the nation and the source of imported inputs via the port of Incheon, are those located along the Seoul-Incheon corridor which is merging into a megalopolis by the Seoul-Incheon expressway and the Seoul-Incheon rapid transit line. The City of Bucheon which is located in the Seoul-Incheon corridor is one of the cities that has grown most rapidly in Korea since 1970's. Bucheon is in sharp contrast with Banweol which was created from by the government to accomodate industries to be relocated from Seoul. The growth of Banweol had been very slow up until the end of 1982. Although Banweol's growth has speeded since then, it has been hardly comparable to the growth of other cities close to Seoul like Bucheon and Anyang. The main development axis of Seoul is characterized to a large extent by the 'east-west transport route' connecting Yeongdeungpogu-Mapogu- Jonglogu and Junggu-Dongdaemungu. As this transport route is extended to the Seoul-Incheon corridor, the whole of the Seoul region's accessibility is affected substantially by this east-west corridor. In addition to the east-west corridor, the north--south corridor connecting Seoul-Anyang-Suweon is shaping the spatial distr4bution of the Seoul region. These two corri- -dors provide industrial location which are easily accessible to Seoul by expressways and rapid transit system. - 63 - The influence of the transportation factor has been significant. Its strength in Korea may be at least as great as that found in the metropolitan areas of advanced countries. This may be due to the fact that the major improvement of transportation in Korea in the 19lOs has been spatially confined within the Seoul region. Thus, most of the decentralized industries tend to locate in areas close to Seoul and a few large cities. 6. Locational Differences by Industries and Size Industrial mobility may differ among industries. In other words, certain industries are more mobile than others. As shown in Table 16 , fabricated metal, machinery, and equipment industries are distinguished by the highest mobility rate of 24.4 percent as compared with 15.9 percent for the sector as a whole. The textile, apparel,, and leather industries appears to be relatively immobile with a 13.2 percent. Reasons for the high mobility of the fabricated metal industry may be explained from that this industry is a rapidly growing sector and a need to relocate for expansion. The low rate of relocation for the textile, apparel, and leather industry can be explained by the fact that the industry is highly depedent on external economies which the central city location provides. Locational pressue to move for expansion depends not only on locational conditions but also on the business prospects of individual industries. Prospects for the textile, apparel, and leather industries has, in the recent past, become less bright, and potential movers have some reservations about taking the great risks associated with relocation, while fabricated - 64 - Table 16. Number of Relocated Establishments by Industries No. of (A) No. of Relocated (B)1 B/A (%) Establ ishments Establishments w - I Manufacturing Total 33,431 5,313 (100.0) 15.9 Food, Beverage & 4,261 303 ( 5.7) 7.1 Tobacco Textile, Wearing Apparel 8,488 1,120 C 21.1) 13.2 and Leather Wood, Wood Products 2,294 245 ( 4.6) 10.7 Paper, Paper Products 2,587 534 ( 10.1) 20.6 Printing & Publushing Chemicals, Petroleum 3,231 621 ( 11.7) 19.2 Coal, Rubber & Plastic Non-metallic Mineral 2,626 251 C 4.7) 9.6 Products I Basic Metal 981 177 ( 3.3) 18.0 Fabricated Metal 7,433 1,811 ( 34.1) 24.4 Other Manufacturing 1,210 251 (4.7) 20.7 Source: National Bureau of Statistics, Economic Planning Board, Mining and Manufactiurina Survey, 1981. 65 - metal, machinery,and equipment industries are preparing for a boom period ahead and therefore looking for new locations. As generally known in the 'incubator hypothesis', industrial mobility may be different by firm size (Lee, 1985). The locational choice for larqe firms appears to be different from that of s,mall firms in Korea. The locations of key industries such as petro-chemical, ship-building and steel industries have been made at the national level. Those industries which are usually more export-oriented' tend to choose locations closer to international ports for the transportation of both materials and products. Seoul's share of those industries has declined with the rise in the size of Seoul. This is already supported by Henderson's observation that the share of resource-bound manufacturing appears to decline with city size and also that footloose activity, relative to resource-bound activity tends to cluster in a large metropolis. 14/ Small firms tend to reduce the risk associated with their relocation by remaining in their old location or by a short-distance move from a metropolis. Uncertainties of various types will be less in areas with conglomerations, through the greater availability of private, public and visual information, the wide array of external economies, and proximity to competitors and business establishments in general.1-5/ This general observation has been substantiated by the establishment survey in this project (Lee and Choe, 1985). The direction of movement from the congested central city location to surrounding metropolitan fringe 14/ J.V. Henderson, "Industrial Bases and City Sizes," American Economic Review, May 1983, p. 167. 15/ A. Pred, Behaviour and Location: Foundations for a Geographic and Dynamic Location Th land Studies in'Geography Series B, 1967, p. 27. - 66 - is consistent for both small and large firms. Although technological advances in transportation and communication lessen the need for close proximity to markets, suppliers and business services, it is still true for small-arid-medium size industries, which seek to minimize the risk involved in a locational decision, thereby clustering around the areas which are not too far from and not too close to the city center. 7. Urban Services and Industrial Location Of various urban services that influence industrial location in the Seoul region, educational services, especially those related to primary education seem to have strong implications. This may be explained by the following two factors. One is that Koreans put great emphasis on the education of their children requiring primary education. As young childern may not commute long distance, primary education must be provided close to where workers live. The second is the fact that because most localities in the Seoul region are within arelatively short travel dis- tance, people heavily rely on Seoul, Incheon, or other big cities in the region for other urban services such as medical treatment and entertain- ment. Thus, educational services for workers' childern appear to be the dominant factor influencing employment location in Korea in general. Public services such as electricity, industrial water, communication, and many site-specific services have to be provided as part of a service package. Provision of any of these services in isolation tends to lessen the policy of effectiveness especially in the case of planned industrial - 67 - relocation as exemplified by the case of Banweol. Our analysis of the relationship between industrial location and urban services in the Seoul region indicates that large cities and localities close to large cities tend to have better urban services and to attract more manufacturing i ndustri es. Decentralization of employee's residential location does not seem to follow industrial decentralization immediately. Because of poor public services in fringe areas, the time lag between industrial decentralization and residential decentralization is substantial. As distance from major industrial locations to Seoul is relatively short by improved accessibility, many employees working for the relocated or newly established firms tend to choose commuting from Seoul instead of moving with the firms. One of the important reasons appears to be that employees may not. always be able to minimize journey-to-work distance and tend to tolerate inconveniences and costs entailed by commuting from home to workplace for the externalities like better school and other living amenities that Seoul provide. Another reason is that more than 90 percent of the employees relies on public transportation. The fare is generally uniform and distance variation is quite negligible. For movement of workers and their families to take place, the price and availability of housing should not also be ruled out. As Hamilton pointed out, a household may trade off longer distance from a decentralized work-place for lower price of housing in peripheral areas.16/ However, 16/ Bruce W. Hamilton, Wasteful Commuting, The Johns Hopkins University, November 1981, p. 3a pT7 mimelY - 68 - the availability of cheap housing alone seems to make little impact on industrial location in the absense of necessary services at the relocated site. In other words, the low price of housing would not be attractive enough to change the residential locations of employees unless other urban services, especially educational services, are provided. Moreover, housing means more than the provision of shelter; it is the object of real estate speculation in Korea. This means that the expected increase of housing price quite often dictates residential location. This was especially true in the period of rapid inflation. 8. Further Studies It has been attempted to find associations between changes in location characteris-tics and the changing patterns of industrial move- ment in and around a large metropolis of Seoul. These findings should provide some implications for understanding the location behavior of industrial establishments and for what industrial location policies can be expected to accomplish. However, this paper is limited to an acareqate analysis that hardly touches on the complexity of industrial location problems at the micro-level of individual firms. Industrial establishments can be stratified by firm types (newly created firms, firms stayed at the same location, and relocated firms), firm size (large, medium, and small) and industries, in order to identify closely which factors are contributing to locational - 69 changes. Understanding the firms' location behavior at much disaggregated levels should provide better analytical bases for taking policy initiatives. Such analyses, both theoretical and empirical, have been conducted in this research project and presented in other project papers. - 70 - APPENDIX: LOCATION ATTRIBUTES OF SUBAREAS BY 4-DIGIT GEOCODE Social Welfare Facilities Recreation Facilities Drinking Water Supply Industrial Water Supply Per Capita Finance Percent of Capital Investment Sewerage Treatment Garbage Disposal Housing Fire Prevention Services Police Services Universities Junior Colleges Educational Facilities Cultural Facil ities Urban Street Mass Transportation Telecommunication Services Banking Services Market and Commercial Services - 71 - Social Welfare Facilities ! Recreational Facilities Nursery, Employment No. of No. of I Information Game Centers Movie Theatres _ Center 1111 Seoul 119 104 1,784 93 3101 Incheon 9 6 283 14 3111 Suweon 4 5 96 4 3112 Seongnam 6 3 60 5 3113 Euijeongbu 1 I 3 52 3 3114 Anyang 1 i 3 82 2 3115 Bucheon - 1 83 1 2 3131 Yangju 4 1 1 58 3 3132 Namyangju - 1 22 1 3133 Yeoju 3 - 8 I 1 3134 Pyeongtaeg 5 1 - 64 6 3135 Hwaseong 2 - 25 i 1 3136 Siheung - - 1 3137 Paju 13 1 37 3 3138 Goyang 1 - 16 2 3139 Gwangju 7 - 13 1 3140 Yeoncheon 1 - 26 2 3141 Pocheon 4 - 31 2 3142 Gapyeong - 1 14 1 3143 Yangpyeong 1 - 8 1 3144 Icheon - 2 12 2 3145 Yongin - - 25 | 1 3146 Anseong 2 1 25 2 3147 Gimpo 4 - 9 3148 Ganghwa - - 11 1 3149 Ongj in - 5 3150 Banweol - . - - . - --. . . t- . - _________ ___________ - 72 - Drinking Water Supply Industrial Water % of Population Capacity Per Supply Capacity Served Person (liter Per day) (Ton/day) 1111 Seoul 93 366.9 3101 Incheon 91 341.1 3111 Suweon 69 228.5 20,000 3112 Seongnam 85 199.2 3113 Euijeongbu 52 131.3 3114 Anyang 65 493.0 100,000 3115 Bucheon 57 341.1 3131 Yangju 76 89.8 3132 Namyangju - - 3133 *Yeoju 85 99.4 3134 Pyeongtaeg 71 112.4 l 3135 Hwaseong 52 1,516.7 60,000 3136 Siheung - - 3137 Paju 54 94.9 3138 Goyang - - 3139 Gwangju - - 3140 Yeoncheon 56 173.4 3141 Pocheon 34 115.3 3142 Gapyeong 63 156.6 3143 Yangpyeong 49 58.1 3144 Icheon 69 79.2 3145 Yongin - - 3146 Anseong 72 139.9 3147 Gimpo a - 3148 Ganghwa 30 67.5 3149 Ongjin - 3150 Banweol - 73 - Per Capita Finance (Won) % of Capital Investment 1111 Seoul 53,730 21.5 3101 Inche6n 32,751 44.3 3111 Suweon 30,718 44.6 3112 Seongnam 29,863 39.5 3113 Euijeongbu I 27,607 20.2 3114 Anyang 31,609 29.9 3115 Bucheon 32,346 25.4 3131 Yangju 43,345 24.9 3132 Namyangju 31,614 29.0 3133 Yeoju 51j386 21.7 3134 Pyeongtaeg 22,135 15.4 3135 Hwaseong 48,362 28.9 3136 Siheung 29,432 32.6 3137 Paju 41,987 29.8 3138 Goyang 32,330 21.8 3139 Gwangju 41,328 25.3 3140 Yeoncheon 55,185 30.4 3141 Pocheon 40,135 20.8 3142 Gapyeong 60,664 32.7 3143 Yangpyeong 47,733 30.3 3144 Icheon 51,543 27.7 3145 Yongin 51,547 33.1 3146 Anseong 42,954 33,8 3147 Gimpo 48,115 44.5 3148 Ganghwa 94,779 26.8 3149 Ongjin 25.0 3150 Banweol 9,480 11.9 74 - Sewerage Treatment I Garbage Disposal g Housing % of Area Served % of Garbage % of Housing Shortage ____ ___ ___ ___ ____ ___ ___ ___ ___Collected 1111 Seoul 64.8 100.0 45.9 3101 Inche6n 56.0 100.0 42.6 3111 Suweon 65.0 68.0 43.6 3112 Seongnam 72.4 70.0 52.5 3113 Euijeongbu 74.8 100.0 50.2 3114 Anyang j 64.6 72.0 46.2 3115 Bucheon 32.1 96.0 I 47.8 3131 Yangju 21.8 98.6 2 7. 8 3132 Namyangju 21.7 100.0 1 42.6 3133 Yeoju 42.3 92.0 12.6 3134 Pyeongtaeg 28.6 100.0 26.8 3135 Hwaseong 35.4 98..0 17.1 3136 Siheung 33.6 100.0 45.4 3137 Paju 33.1 80.0 22.1 3138 Goyang 23.3 80.0 37.1 3139 Gwangju 10.7 71.0 29.1 3140 Yeoncheon 20.0 100.0 18.3 3141 Pocheon 14.0 80.0 14.8 3142 Gapyeong 47,8 100.0 17.6 3143 Yangpyeong 17.0O 100.0 12.1 3144 Icheon 16.7 100.0 16,1 3145 Yongin 59.7 100.0 27.8 3146 Anseong 63.1 100.0 10.3 3147 Gimpo 45.5 100.0 13.5 3148 Ganghwa 50.0 96.6 6.9 3149 Ongjin - - 0,1 3150 Banweol - 100.0 7.0 - 75 - Fire Prevention Services Police Services No. of Noo Fire Stations Fire- No. of Police Stations Police- Total Main Branch No. of man Total Head- police Branch man sta- Sta- Fire per qua- Sta- Sta- per tion tion Care 1000 ters tions tion 1000 per- per- sons sons 1111 Seoul 68 8 52 140 0.29 23 546 1.62 3101 Incheon 11 2 9 33 0.23 59 2 10 47 0.82 3111 Suweon 4 1 3 15 0.27 18 1 - 17 0.95 3112 Seongnam 4 1 3 11 0.25 22 1 - 21 0,78 3113 Euiijeongbut 3 1 2 9 0.54 21 1 12 8 2.10 3114 Anyang 3 1 2 10 0.37 25 1 13 11 1.37 3115 Bucheon 3 1 .2 8 0.37 30 1 - 29 1.78 3131 Yangju 1 - - 5 0.07 - - - - - 3132 Nx¢amyangju 3 - - 4 0.02 12 1 9 2 1.17 3133 Yeoju 1 - - 3 0.04 10 1 8 1 1.14 3134 Pyeongtaeg 3 - - 11 0.05 15 1. 11 3 0.94 "3135 Hwaseong 1 - - 12 0.04 19 1 16 2 1.02 3136 Siheung 4 - - 1 0.03 - - - - - 3137 Paju 3 - - 4 0.04 17 1 15 1 1.12 3138 Goyang 7 - - 4 0.03 9 1 11 1 0.88 3139 Gwangju 4 1 - 4 0.04 11 1 9 1 1. 08; 3140 Yeoncheon 1 - - 2 0.03 10 1 8 1 1.61 3141 Pocheon 1 - - 4 0.03 15 1 13 1 1.31 3142 Gapyeong 1 - - 3 0.03 7 1 5 2 1,61 3143 Yangpyeong 1 - - 3 0.02 13 1 11' 1 1.29 - 3144 Icheon 2 - - 5 0.02 14 1 11 2 1.21 3145 7Yongin 2 - - 7 0.02 11 1 10 1 1.36 3146 Anseong 1 - - 5 0.05 15 1 12 2 0.90 3147 Gimpo 1 - - 8 0.07 10 1 8 1 1.25 3148 Ganghwa 1 - - 5 0.05 14 1 12 1 1.91 3149 Ougj in - - - - - - - - - - 3150 Banweol 2 - - 2 0.06 1 - 1 - 0.23 - 76 - Uaiversities Junior Colleges Number No. of No, of Number No. of No. of Departments Students Departments Students 1111 Seoul 37 1,047 172,155 20 149 20,733 3101 Incheon i 2 100 119887 6 50 11,610 3111 Suweon 3 37 8,099 3 3 1,773 3112 Seongnam - - D 3 30 7,378 3113 Euijceongbu - 1 8 1,399 3114 Anyang - - 2 10 4,540 3115 Bucheon 2 20 2,617 3 17 3,701 3131 Y.4ngju - - - - 3132 Namyangju - - - - 3133 Yeoju - - ,, - 3134 Pyeongtaeg - - - 3135 Hwaseong - - 3 20 3,785 3136 Siheung - - 3137 Paju - - 3138 Goyang 1 5 . 1182 1 1 195 3139 Gwangj -- - - - 3140 Yeoncheon - - - 3141 Pohbeon - - - - 3142 Gapyeong - - - 3143 Yangpyeong - , - - - 3144 Icheon - - - 3145 Yongin. 4 26 4,536 - 3146 Anseong 1 .10 2,400 1 8 614 3147 Gimpo - - - - 3148 Ganghwa - J 3149 Ongj in - - - 3150 Banweol 1 13 4,1, - | - 77 - Educational Facilities Cultural Facilities Middle School High School No. of Nfo. of No, of No. of Citizen's s M41useum Stadium Schools Classes Schools C Classes Center 1111 Seoul 200 6,977 164 6,212 1 12 2 3101 Incheon 33 884 31 822 1 1 5 3111 Suweon 10 277 11 307 1 - - 3112 Seongnam 10 282 12 162 i - 3113 Euijeongbu 5 123 11 146 - I - 3114 Anyang 9 201 7 187 - | - 3115 Bucheon 6 115 5 140 1 - 313J1 Yangju - - - I 3132 NIamyangju 10 135 7 102 - - - 3133 Yeoju 12 52 9 90 . . 3134 F-'angtaeg 17 ! 266 13 314 I - 313.5 I -:L. eong 15 224 11 172 - - - 3136 Siheung - - 3137 Paju 14 168 9 143 1 - 3138 Goyang 6 106 4 67 - - - 3139 Gwangju 6 79 5 54 1 1 1 3140 Yeoncheon 6 77 3 44 - - 3141 Pocheon 11 127 5 3142 Gapyeong 5 75 4 46 - - - 3143 Yangpyeong }11 123 80 79 -, 3144 Icheon 11 125 8 75 - 3145 Yongin 11 128 5 60 - - 3146 Anseong 10 145 6 98 - - 3147 Gimpo 10 97 5 72 j - - 3148 Ganghwa j j 3149 Ongjin 9 56 1 6 23 - - - 3150 Banweol 78 - Urban Stree.t j 1ass Transportation (Bus) % of % of Intra-urban Interregional Street to Paved Total area Street No. of No. of No. of No. of Cars Routes Cars Routes 1111 Seoul 15.49 67.3 3101 Incheon 11.84 48.6 | 509 31 353 18 3111 Suweon 9.71 51.2 1 145 62 218 56 3112 Seongnam 12.93 48.3 52 10 - - 3113 Euijeongbu 8.17 74.4 36 8 358 104 3114 Anyang 18.49 30.0 115 17 50 11 3115 Bucheon 7.97 77.6 54 10 3131 Yangju 4.97 74.1 - - 3132 Namyangju 73.3 - - - 3133 Yeojut 3.99 35.0 - - 3134 Fyeongtaeg 4.62 56.0 45 24 67 20 3135 Hwaseong 4.07 63.3 - - 63 35 3136 Siheung 5.58 56.1 - - .20 4 3137 Paju 2.70 83.3 - - 141 32 3138 Goyang 4.78 70.8 - - j 53 19 3139 Gwangju 6.45 47.6 - - 146 49 3140 Yeoncheon 2.33 17.8 - - - 3141 Pocheon -4.92 58.5 - - 78 16 3142 Gapyeong 6.78 40.9 - - 105 39 3143 Yangpyeorng 6.09 57.0 - - 57 35 3144 Iche.on 5.19 54.5 - - I 148 68 3145 Yongin 6.64 75.0 25 16 99 47 3146 Anseong 5.01 50.0 5 9 111 31 3147 Gimpo 5.25 50.0 - 105 22 3148 '.' nghwa 4.79 81.1 - - 54 25 3149 .2gj in - - - - 3150 Barweol 8.30 - - .. ~~~~- ...-. - 79 - Tele-Communication Services Post Offices Telephone & Telegram Telephone Total Gener- Spe- Branch Total Tel. & Tel. & No. of Auto- Manual al cial Teleg. Teleg. Tel. matic Branch peri1O per- sons 1111 Seoul 129 129 - - 32 32 - 11.83 100.0 3101 Incheon 20 14 - 6 5 3 2 7.20 100, 0 3111 Suweon 6 2 - 4 2 1 1 8.86 3112 Seongnam 6 4 2 - 5.02 94.1 5.9 3113 Eui:jeongbu 1 1 - - 5.93 100.0 3114 Anyang 2 2 - 7.00 100.0 3115 Bucheon 3 1 2 - 5.82 100.0 3131 Yangju 13 4 6 3 5.47 100.0 3132 Namyangju 8 3 4 1 2.93 89.0 21.0 3133 Yeoju 11 6 3 2 4.13 100.0 3134 Pyeongtaeg 13 5 6 2 r.52 100.0 3135 Hwaseong 17 6 11 - .391 100.0 3136 Siheung 1 9 6 2 1 2.01 24.0 176. 0 3137 Paju 13 6 h 1 4. 69 100.0 3138 Goyang 7 5 1 1 1.98 85.0. 15.0 3139 Gwangju I 11 3 6 2 4.96 100.0 3140 Yeoncheon i 7 4 3 - 3.52 100.0 3141 Pocheon 13 6 6 1 3.32 100.0 3142 Ga,pyeong j 6 5 1 - 4.21 100.0 3143 Yangpyeong| 14 6 7 1 3.33 100.0 3144 Icheon 12 4 7 1 4.29 79.0 22.0 3145 Yongin 12 6 1 1 1 4.28 3146 Anseong 13 6 7 - 3.86 100.0 3147 Gimpo 10 4 4 2 5.39 100.0 3148 Ganghwa 14 3 10 1 7.52 100.0 3149 Ongjin 10 4 5 1 5.28 3150 Banweol 1 - - 1 | J - 100.0 - 80 - Banking Service Market and Commercial Services Bank Bank Spe- Commet- Depart- ] Super- Total of Of cial I cial Total. Markets ment i markets Koreal Indu-' Bank ! Banlk Stores stry - 8 1111 Seoul 597 1 1 271 315 860 369 8 483 3101 Incheon 62 1 1 27 33 90 34 4 52 3111 Suweon 2) 1 - 9 10 181 6 4 8 3112 Seongnam 110 - - 7 3 31 9 1 2 20 3113 Euijeongbu| 7 - 5 2 15 4 - 11 3114 Anyang 12 - - 6 6 49 9 - 40 3115 Bucheon 7 - - 4 3 16 4 2 10 3131 Yangju 6 - - 5 1 12 2 - 10 3132 NamyangJu 1 1 - 9 - - 9 3133 Yeoju 1 - - - 4 3 - 1 3134 Pyeongtaeg 10 - 6 4 82 3 3 76 3135 Hwaseong 4 3 1 6 3 3 3136 Siheung 3 - - 2 1 8 3 - 5 3137 Paju 4 1 - 4 - 14 8 1 15 3138 Goyang j 3 - - 3 - 1 1 - 3139 Gwangju j 2 -: . 2 8 3 - 5 3140 Yeoncheon i - 1 1 - 3141 Pocheon J 2 - I- 2 - 1 1 - 3142 Gapyeong 1. - 1 - 3 2 - | 1 3143 Yirngpyeong 1 3 i 1 2 1 - 3144 Iche.on ' 2 - 1 2 - 3 3 | 3145 Yongin : 2 - 2 j 3 1 - 2 3146 Anseong 3 2 - 1 6 1 - 5 3147 Gimpo 1 1 - 2 1 - 1 31/48 Ganghwa 21 - 1 1 - - - - 3150 Banweol 1 4 3 - 1 -.. ... ~ ____________________________ 81 - REFERENCES Bade, Frang-Josef, "Locational Behaviour and the Mobility of Firms in West Germany," Urban Studies, Vol. 20, pp. 279-297, 1983. 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