kim, jeongho , president of rig

2009. 11 2009. 11

Spatial Planning and Economic DevelopmentSpatial Planning and Economic Developmentin Border Region: in Border Region: The Experiences of GangwonThe Experiences of GangwonProvince in Korea.Province in Korea.

Spatial Planning and Economic DevelopmentSpatial Planning and Economic Developmentin Border Region: in Border Region: The Experiences of GangwonThe Experiences of GangwonProvince in Korea.Province in Korea.

I. Gangwon Province: Geographical & Demographic Features

■ Geographical location ■ change in populationII. Rationale behind the Slow Regional Economic Growth ■ Change in industrial Structure ■ Other Factors

III. Efforts for Sustained Regional Growth? ■ Promoted Strategic Industries ■ Inducement of Firms from Outsides ■ Improving Competitive Edges of the Farming and Tourism Sectors

IV. Further Efforts Required to Make Regional Industries Competitive

■ Increase Value-added of the Prevailing Leading Industries ■ Utilize ‘Naturally Endowed Green Resources’

V. Any Conceivable Green Growth Strategies? ■ Locally and Regionally Initiated Renewable Energy Production ■ Further Development Potential for Renewable Energy ■ Promote Tourism Industry ■ Conceivable Projects Integrated with National Green Growth

Strategy

VI.Conclusions

Table of ContentsTable of ContentsTable of ContentsTable of Contents

11

■ ■ Geographical Location Geographical Location

22

I. Geographical & Demographic FeaturesI. Geographical & Demographic Features I. Geographical & Demographic FeaturesI. Geographical & Demographic Features

■ ■ Demographic FeaturesDemographic Features

<Change in Population><Change in Population>

1970 1980 1985 1990 1995 2000 2006

186.7 179.1 172.5 158.0 153.0 155.9 151.6

(6.0) (4.8) (4.3) (3.6) (3.3) (3.2) (3.1)

Source: Gangwon Census of Population and Households, Gangwon Provincial GovernmentSource: Gangwon Census of Population and Households, Gangwon Provincial Government

33

I. Geographical & Demographic FeaturesI. Geographical & Demographic Features I. Geographical & Demographic FeaturesI. Geographical & Demographic Features

II. Rationale behind the Slow Regional II. Rationale behind the Slow Regional Growth Growth II. Rationale behind the Slow Regional II. Rationale behind the Slow Regional Growth Growth

Nation as a whole

/ Components

■ ■ Change in Industrial StructureChange in Industrial Structure

44

- The Province’s GRDP as of 2007 amounted to 20.6trillion won (12billion Euro) or 2.5% of the GDP and it grew at an annual rate of 2.3%

between 1996 and 2006;

- As shown in Table 1, the industrial structure is skewed toward such sectors as farming, construction, tourism, and service (public service included), which comprise about 65% of the GRDP, and the share of manufacturing sector is only 11.5% in 2007, about 1/3 of its national share, which is more likely to create a large number of jobs relative to other sectors (larger employment multiplier.)

- One of critical industrial characteristics is low value-added and inter- and intra-industry value chain is weak or rarely exists in many cases.

- Intra-regional production inducement rate is estimated at 56%, implying that almost half of the production takes place outside the province.

II. Rationale behind the Slow Regional Economic GrowthII. Rationale behind the Slow Regional Economic GrowthII. Rationale behind the Slow Regional Economic GrowthII. Rationale behind the Slow Regional Economic Growth

55

■ Other Factors

1) The poor quality of physical infrastructure

2) Insufficiency in capital investment funds

3) A series of regulations and controls

4) Conservation and preservation

5) Poor access to markets and professional labor force

66

II. Rationale behind the Slow Regional Economic GrowthII. Rationale behind the Slow Regional Economic GrowthII. Rationale behind the Slow Regional Economic GrowthII. Rationale behind the Slow Regional Economic Growth

III. III. Efforts for Sustained Regional Efforts for Sustained Regional Growth?Growth?III. III. Efforts for Sustained Regional Efforts for Sustained Regional Growth?Growth?

■ ■ Promoted Strategic Industries; more on knowledge-based Promoted Strategic Industries; more on knowledge-based R/D and green ocean industries, less on cash cow onesR/D and green ocean industries, less on cash cow ones

■ ■ Promoted Strategic Industries; more on knowledge-based Promoted Strategic Industries; more on knowledge-based R/D and green ocean industries, less on cash cow onesR/D and green ocean industries, less on cash cow ones

<R/D Expenditures by industrial type><R/D Expenditures by industrial type><R/D Expenditures by industrial type><R/D Expenditures by industrial type>

<R/D Expenditures by Types><R/D Expenditures by Types>

77

<contribution of strategic industries<contribution of strategic industries to value added and jobs created as of 2008 to value added and jobs created as of 2008 >> <contribution of strategic industries<contribution of strategic industries to value added and jobs created as of 2008 to value added and jobs created as of 2008 >>

#ofCompanies

#of Employees

Sales(in million won)

Exports(10 millions)

Patentsissued

Patentsregistered

Patentsin use

Bio techMedical

equipment

CeramicsDisaster

Prevention *Plasma

IT

Total


* Disaster prevention industry refers to those firms which manufacture fire extinction equipments and chemical substances for fire works, mostly located in Samchuk city.

88

<< patents issued and formally registered as of patents issued and formally registered as of 2005>2005>

<< patents issued and formally registered as of patents issued and formally registered as of 2005>2005>


99

- Economic impacts: total sales, 927b. won (537m Euro); total value added, 700b won (405m Euro) or about 3% of the province’s GRDP; total number of jobs created, 6,305; and 292b (169m Euro). worth of goods exported;

- Intends to raise GRDP percentage ratio up to 15% by successfully implementing the Second Stage Plan; Gangwon will generate 45trillion worth of GRDP and witness per capita GRDP of $30G by 2015; the plan reveals that when fully implemented it’ll help create 800 firms and export 1.6 trillion won worth of high value added products.

- But this rosy picture could be realized only if the R/D efforts continue and in particular, sufficiently large amount of venture capital be mobilized to help transform newly developed technologies into marketable, high value added products.

III. III. Efforts for Sustained Regional Growth?Efforts for Sustained Regional Growth?III. III. Efforts for Sustained Regional Growth?Efforts for Sustained Regional Growth?

1010

■ ■ Inducement of Firms from OutsideInducement of Firms from Outside

- Actively induced firms from the Seoul Metropolitan Area(SMA)

- A total of 314 firms moved between 2000-2005, but a majority of them were unstable and marginal ones with low level of job creation; only a few made a significant contribution to local employment market! * 140 firms employed less than 10 persons; 250 firms, less than 30 persons

■ ■ Improving Competitive Edge for Farming and Tourism Improving Competitive Edge for Farming and Tourism SectorsSectors

- Highland vegetable farming, introduction of new wellbeing products, and localized high quality meat branding efforts have been partially successful; entrepreneur farming made selected few rich, but had only limited effect on income distribution!

- Increasing number of tourists notwithstanding, tourism-generated incomes were not substantial, partially due to short supply of good or high quality products (or tourism sale packages.)


1111

IV. Efforts Required to Make Regional Industries IV. Efforts Required to Make Regional Industries CompetitiveCompetitiveIV. Efforts Required to Make Regional Industries IV. Efforts Required to Make Regional Industries CompetitiveCompetitive

■■ Increase value added of the prevailing, leading Increase value added of the prevailing, leading industriesindustries

1) tourism industry - expand scale and maximize value chain with such industries as MICE, cultural/food/entertainment, and event

2) agriculture & fishery industry - search for new niche markets (e.g. for high income wellness-conscious class), - develop high value- added products to make the most of the special tastes of new urban high income BOBOs

3) service industry - diversify service industry and put more focus on business support services rather than personal services; e.g. business call service (call center), legend- teller, accounting and consulting for green business, etc.

4) medical equipment industry - promote R/D efforts to develop high value added medical equipment products - integrate its activities with other medical industrial activities in nearby regions; e.g., pharmacuetical, medical/health care, and medical tourism etc.

1212

■■ Utilize ‘Naturally Endowed, Green & Indigenous Utilize ‘Naturally Endowed, Green & Indigenous Resources’Resources’

1) water : Develop water industry and secure ‘water rights’

- water, perceived as economic good, no longer free good! - Gangwon province produces 43b tons of water, but consumes only 1.6b tons; the rest being supplied very cheaply for SMA-residents, -factories and -businesses. - conceivable to enter the bottled pure water global market if water taste be made globally appealing to compete with Perrier, Pure Life, Evian & Sweppe?

<Water Usage by <Water Usage by Types>`Types>`

<Water Usage by <Water Usage by Types>`Types>`

Total

1,610.8

100%

Quantity

% ratio

Household use(Piped water)

328.0

20%

Industrial use

58.0

4%

Agriculture use

1,224.8

76%

(Unit: million ton)

1313


2) Forest: Reassess the value of forest in the greening era2) Forest: Reassess the value of forest in the greening era

- % share of forest area : 32%; cumulative density of tree: 1.5times the national average; may serve as major carbon absorption agent - big asset when carbon emission market opens (estimated to be worth 80b won (46m

Euro))

<Forest Area Size and Tree Stock Density><Forest Area Size and Tree Stock Density> <Forest Area Size and Tree Stock Density><Forest Area Size and Tree Stock Density>

Total areas in 1000 ㎢ (a)

Forestry covered area In 1000 ㎢ (b)

% ratio (b/a%)

Tree cumulativeIn hectare

Total tree stock density in 1000 ㎡

Country asA whole(A)

Gangwon Province(B) B/A, %

1414


- Other uses: e.g., air cleaning, water reserve, therapeutic uses, etc.

<Estimated Monetary Value of Public Functions of Forest (as of

2000)>

3) Mining Resources: coal, dolomite, silicon, etc. -coal: low carbon extraction and use technology under study -dolomite: raw material for Mg; its demand rapidly increases! -silicon: ingredient for solar cell to generate solar power

Total value

Cleaning the airWater reserve

and supplyPrevention of

soil lossRecreation/therapy

Purification of forestPrevention of mud sliding

Wild life protection

Country as a whole (A)Gangwon Province (B) B/A, %

(Unit: 100million won)

1515


■ ■ Locally or Regionally Initiated Renewable Energy ProductionLocally or Regionally Initiated Renewable Energy Production■ ■ Locally or Regionally Initiated Renewable Energy ProductionLocally or Regionally Initiated Renewable Energy Production

<Electricity Produced by Renewable Energy Sources <Electricity Produced by Renewable Energy Sources as of 2007> as of 2007>

<Electricity Produced by Renewable Energy Sources <Electricity Produced by Renewable Energy Sources as of 2007> as of 2007>

V. Any Conceivable Green Growth V. Any Conceivable Green Growth Strategies ?Strategies ?V. Any Conceivable Green Growth V. Any Conceivable Green Growth Strategies ?Strategies ?

1616

h

■■ Further Development Potential for Renewable Further Development Potential for Renewable

EnergyEnergy

1) Wind Power

- potentially up to 29, 200MW/h of additional power can be generated. <Technical Potential of Gangwon <Technical Potential of Gangwon Wind Power>Wind Power> <Technical Potential of Gangwon <Technical Potential of Gangwon Wind Power>Wind Power>

(Unit: 1000toe)

Chunch

eon

Won

juGan

gneu

ng

Don

ghae

Taeb

aek

Sok

cho

Sam

cheo

kH

ongch

eon

Hoe

ngse

ong

Yeo

ngw

ol

Pye

ongch

ang

Jeon

gse

onCheo

rwon

Haw

cheo

nYan

ggu

Inje

Gos

eong

Yan

gya

ng


1717

2) Solar Energy - estimated to grow further by at least 908MW/h - thermal power plant seems to be too costly to be built!

3) Biomass - very difficult to estimate, but;

- potentially very optimistic because the province generates large amount of animal and other wastes, including wood product wastes and wood pellet, methane gas, fishery and agricultural wastes, etc.

4) Develop and Execute 5-Year Renewable Energy Development Plan as suggested by Korea Energy Economy Institute (KEI); - requires a total of1.2trillion won (694million Euro) of new investment into

renewable energy (w. 260b of government share) - effects: reduces 1.3m tons of CO2, thousands of green job creation, regional

investment multipliers of 2.5 to 2.8, with big intra-regional linkage and trickle down effects expected.


1818

■ ■ Promote Tourism IndustryPromote Tourism Industry

<Tourism Resources as of 2006><Tourism Resources as of 2006>

NationalParks

Waterfalls

Valleys

LakesRiversCaves

Forestarea

Other Total

Gangwon(A)

99 107 31 19 113 369

Nation asA whole(B)

442 308 109 155 679 1,693

A/B(%) 22.4 34.7 28.4 12.3 29.5 21.8

Source: Korea Tourism Business Corporation

Source: Korea Tourism Business Corporation

1919


■ ■ Conceivable Projects Integrated with Conceivable Projects Integrated with National Green Growth National Green Growth StrategiesStrategies

1) National: 4 Major River Revival Projects (Han, Nakdong, Kum & Sumjin),

involving cleaning river basin, improving water quality, expansion of water

holding capacity, building dikes for flood control, development of recreation

& park facilities, etc.

Gangwon: cleaning & streamlining upstream of Han rivers to improve water quality and building water parks and water-born park & recreation areas

2) National: Green Transportation, involving modal shift to rail transportation,

expansion of carbon free public transit system (e.g., CNG buses, battery

operated cars, development of hydrogen fueled cars, etc.)

Gangwon: construction of E/W high speed railroad, speedy completion of Wonju-Gangreung Rail Transit System, modernization of Central Railroad

Line, construction of bike roads, and other related improvements


2020

3) National: Construction of small- and medium-sized dams for water storage and power generation

Gangwon: push for small & medium sized dam construction along S & N Han River upper basin areas and further improvements of the dam sites for leisure facilities and tourist attraction

4) National: Produce renewable energy as much as possible to reduce CO2

Gangwon: produces 67b. won worthy of renewable energy, including hydro electric power, solar heat/generator, methane gas, wind power etc. can double its output if incentives are given to the producers, including such ones as purchase of such energy at cost-plus basis. Efforts be made to cut the costs down!

5) National: Green home, green office and green school, including 2M units of green home project

Gangwon: will develop 4 basic passive house modules; hill house, ocean/sea cliff house, lake house and regular house reflecting Gangwon’s natural setting; all geared to fuel efficiency, resource reduction/reuse/recycling and heavy dependence on renewable energy; similar efforts will be made for greening offices, factories and schools if incentives are announced to promote green buildings; all of them ’ll help stimulate construction business; design, material supply, construction and maintenance.


2121

6) National: Promotion of ‘Green Business’,including carbon free automobile, LED and its related products, smart GRID and other environmentally sustainable goods and services Gangwon: when the government’s promotional incentive system materializes, Gangwon will facilitate such green businesses as follows;

- Renewable energy production business, - Fuel efficiency technology development business (hardware and software such as Smart Grid). - Environmentally motivated business, including resource reuse, reduction and recycling business, and - Medical (care service) tourism and medical equipment and tool production related business. - Green tourism and leisure business


2222

In order to revitalize Gangwon’s economy, a major shift in regional development strategies is required as follows:

1. Streamline the strategic Industries in such a way that they could ‘commercialize’ new technologies and knowledge accumulated from R/D activities; 2. Reinforce conventional industries, farming and tourism in particular, so that they can take advantage of scale economies and focus on ‘new green markets’; 3. Be selective when inducing firms from outside; preferably the ones producing high value added parts and components, and with ‘green and clean image’; 4. Make the most of ‘Naturally Endowed Resources’; water, forestry, wind, and the nature itself as tourist attraction; and especially, 5. Ride on green wave to take advantage of government incentives and develop projects integrated with National Green Growth Strategies

VI.VI. ConclusionsConclusionsVI.VI. ConclusionsConclusions

2323

Thank You!Thank You!

kim, jeongho , president of rig

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