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Regional Policies and the Implications of Restructuring in the Steel Industry

Author Choe Hyunkyung(최현경) Date 2020.12.31 Series
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Since first industrializing, Korea has maintained a growth strategy centered on export-oriented major industries, selecting and supporting manufacturing industries suited to each region and creating a basis for growth. Therefore, the structure of the main manufacturing industry in any given region has a great influence on the overall economy of that region. Past industrial policies emphasized decentralization and balanced national development to increase the self-sustainability of provincial economies through the regional distribution of industrial facilities, which led to a set of core industries and companies coming to dominate regional economies.
As a result, the stagnation of major manufacturing industries has led to the formation of a structure that is directly connected to social issues that go beyond employment and welfare in certain regions or mere bankruptcy or management difficulties at specific companies.
This can be seen in the example of the regional economic downturn that followed the closure of the General Motors plant in Gunsan in 2019.
Therefore industrial policies to help regions overcome slumps in main industries based cannot be implemented in neither a timely nor rational manner due to fears of negative impacts in the region. Eventually a long-term change is made necessary to help regions reshape regional economic structures overly reliant on a single industry. In terms of industrial policy, regional SMEs should not only rely on large corporations, but seek a change in the direction of developing independent viability in the region.