Compare to ZGC, where most of the R&D institutes were located in the city center of Beijing, Daedeok Science Town (DTS) in South Korea was initially designed as a pure research area in a very remote city away from Seoul. DST was entirely the creation of the central government in the early 1970s under the consideration of decentralization. On the one hand, the capital city, Seoul, was located very near to the border that was considered too dangerous once the war was started; on the other hand, because too much resources had been concentrated in the capital region, which had created serious regional unbalance and political
18 The rent reached as high as RMB 7 dollars a day per square meter in ZGC. The outskirt areas of Beijing city is about RMB
ramification. Therefore the central government chose Daedeok, which located 170 KM south of Seoul, near Daejon in the middle of the Korean countryside to build a science town for facilitating scientific and technological research. The city was chosen for the DSP because it had ample cheap land and was located away from the border with hostile North Korea.
5.1 Stages of development
At the initial stage, the Ministry of Science and Technology (MOST) was assigned to be responsible for the planning, overseeing the process and the management of DST. In this early stage of developing the DST, the Korean government faced difficulties in recruiting research institutions, most of them located in Seoul, to move to the park, due to the fact that Daejeon was considered to be in the countryside where no decent educational, cultural, or commercial infrastructure were yet available. MOST therefore had to urge some government-funded research institutions to move to the DST, because their budgets were funded mainly by MOST (Shin, 2001). By 1978, the science park mainly was populated with national research institutes, i.e., the Korean Research Institute of Standards and Sciences (KRISS), the Korean Institute of Machinery and Materials (KIMM), and the Korean Electronics and Telecommunications Research Institutes (ETRI). At the same time, a major prestigious university, the Korean Advanced Institute of Science and Technology (KAIST) was established and a local university (Chungnam National University) also completed the relocation of its facilities from the city centre to the DST site by 1980.
From its inception that had only few state-funded institutes to reside, DST has been gradually evolving from a pure science town into a cluster that has involved both research and production functions. The evolution can be roughly divided into 3 stages. The first stage was ranged from 1973 to 1993 when the Korean state started to build DST as a major center for basic and applied research in technology. The second stage ranged from 1993 to 2004, in which the Korean government began to promote the synergy between R&D and industrial productions. The third stage was from 2005 till now when DST was renamed as Daedeok Innopolis (DI) and intended further enhance the synergy effect so as to build DI a world-class innovation cluster.
In the initial stage, MOST not only forced stage-funded research institutes to reside in DST, it also urged
many private firms to establish R&D center in this park. In this authoritarian period, the state’s funding and authority was difficult to reject. Therefore, in the early 1980s, some large research institutes of major private corporations, such as Samsung, LG, and the Hanhwa Group, were also induced to build their R&D facilities in DST. Due to the gradual improvement of living conditions, since the mid-1980s, there has been an increasing number of large corporations attempting to establish their research units within the DST. The total number of the institutions located in the DST increased significantly from 13 in 1985 to 52 in 1995 (Shin, 2001:106).
Because DST was initially designed as a research town, it thus provided no space for industrial production. In fact, the Law of Managing the DST, promulgated in 1993, even prohibited such activities in order to protect the park from becoming an industrial district (Shin, 2001: 107). As a result, DST was described by Castells and Hall (1994:63) as a failed project which had ‘no linkage or feedback developed with manufacturing or applications of any kind.”
The second stage of the development of DST was ranged from 1993 to 2004. In 1993, when most of the planning sites of the research park were completed, the DST Administration Law was passed, giving the cluster unprecedented authority to promote itself as an international research cluster. Nevertheless, this law still prohibited manufacturing activities to occur in DST. The Korean government also realized that without developing R&D and industrial production synergy effects, technology development couldn’t be achieved efficiently. Thus, it on the one hand called for the techno-belt concept that attempted to connect research and industry through which, the Daejeon city government established an industrial park adjacent to the DST in order to connect the fruits of R&D to local production. On the other hand, the Korean government in the 1990s began to promote the emergence of venture firms in order to boost the emergence of small science firms to generate industrial innovation. The 1993 law was changed in 1999 which finally allowed venture business to run in DST.
To take the advantage of the Korea law that promote venture firms, or “Law for Special Measure to Support Venture Business” (1997), and the change of the DST Administrative law in 1999, many ventures firms began to spin-off from major R&D institutes in DST. For example, the most successful research institute, ETRI, had created 100 firms by 1998. KAIST also created many spin-off firms, among them 65 firms organized as an association, called the “Daedeok 21st Century” (Shin, 2001:109). Moreover, many
research institutes began to provide production spaces for venture firms. KAIST, for example, has provided spaces for some 100 companies. Through these efforts, the linkage between R&D institutes and venture firms is expected to establish.
To further the tendency of the linkages between R&D institutes and venture firms, on 28th of September 2000, the former president Dae-Jung Kim has named the area DST, together with adjacent Industrial Complex, Yuseong Tourist Zone, and Dunsan Administrative Town as Daedeok Valley. In order to boost up the R&D capacity, Daejeon City now has been more active in attracting foreign companies and research institutes to reside in DST. Since this stage, progress of synergy at DST has accelerated that set the stage for the next stage’s reformulation into Daedeok Innopolis.
In 2005 the DST was renamed again as Daedeok Innopolis (DI) and was formally established by a special law. This begins the third stage of DST in which the Korean government wants to build this area as a world-class innovation cluster compared to Silicon Valley in the U.S. The main role of DST has now changed from its initial design as a research town to an industrial park that links R & D results with local industries. It can be argued that the core function of DI now has to become an innovative cluster and to become the brain for Korean economy for the new century. Currently, DI has more than 800 high-tech companies, 70 government and private research institutes, and 6 universities to reside. Its innovation capability can also be shown in the following figures. It has over 18,000 researchers and more than 10% of all Korean patents. As Park (2009:7) observes, because DI has integrated R&D institutes, universities, and venture firms, it ‘has completed is habitat from a R&D hub function to a production function. It may be safe to say that a core function as an innovative cluster has been fully completed.’
5.2 performance of DI
Currently, the distribution of venture business in DI is still mainly largely concentrated in ICT category, which has 45% of the firms. This may related to the active role and stronghold of ETRI and KAIST in this area that created many spun-off firms. The second largest category is in environmental science (15.4%), the third category is precision mechanics (10.4%), and the fourth category is biotechnology (9.8%).
The concentration of national research institutes in DST has created an effect that scientists working in
these institutes have published large amount of international scientific papers and filed more patents in the U.S. than in the domestic bureau (Park, 2009). But on the other hand, because of the promotion of technological transfer and creation of venture firms, technological transfer case and transfer fees have increased rapidly in recent years. For example, the number of technology transfer has increased from 577 cases in 2005 to 815 in 2007; the amount of transfer fees also increased from Korean Won $50,715 million to
$77,798 million during the same period (Park, 2009:5).
Among the above cases, the most profound performance of DST was the role of ETRI in collaborating with global telecommunication leader, Quacomm, to develop CDMA technologies and its role in incubating new venture firms. ETRI’s development of CDMA technology has led Korea to become one of the leaders in 3G communication. It is also due to ETRI’s active role that many of its stuff went out to build their own businesses (Shin, 2001; Lee and Kim, 1997). Also, due to the promotion of building up incubation centers in universities and R&D institutes, venture businesses have increase rapidly. The number of venture businesses was merely 65 up to 1998, but it increased rapidly to 898 in 2007.
Table 2: Venture firms in DST
year Up to 1998 2001 2002 2005 2006 2007
Venture business 65 108 149 687 786 898
Source: Park, 2009:9
Although the above figures have shown that DI has increasingly changing from an isolated science town to become an innovative cluster, there are still many institutional weaknesses that may hinter its further development. First of all, the items that national research institutes transfer to venture firms are still mainly products that related to national priorities rather than products that can be easily commercialized. Sawng and Kim (2007) found that the collaboration between Research institutes and venture firms in DST was much less on developing products that can be commercialized. To the latter, the Tehran area in Seoul has outperformed that of DST (also Yusuf et al., 2003: 239; Sohn and Kenney, 2007). In fact, the major functions of many R&D centers of big private firms are to do marginal research, the major R&D function still located in their
headquarters located in Seoul (Park, 2009; Shin, 2001).
Secondly, most of the venture firms are still very small, there is no major large firms in DI to create a localized production network so as to generate local supply chains and cooperation relations (Park, 2009; Shin, 2001). Local customers are necessary condition for innovation (Lundvall, 1990) due to their intensive interaction, but DST obviously lacks that type of networks. However, most of the networks are binary relationship between research institutes and their supported venture firms. A complex production network which generate extensive interaction and knowledge sharing is still lacking in this area.
Finally, due to the shortage of production networks, Daejeon lacks most of all the necessary business services for business to operate. Most of the functions are located in Seoul metropolitan area. These functions include accounting, legal services, financing, etc. (Park, 2009). It is therefore that DI still needs infrastructural software building to become an innovation cluster.