Regional Policies and the Implications of Restructuring in the Steel Industry

(1) Research NecessitySince 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.(2) Research ScopeThis study focuses on the steel industry, in which the necessity of restructuring is raised, while recognizing that it is more important than anything else to reduce the negative impacts of stagnation of the main regional manufacturing industry on the local economy and increase the self-sustainability of the region. Therefore, the purpose of this report is to introduce the current status of the steel industry’s base regions in Korea and to devise a long-term plan to overcome the serious side effects of a transforming industrial structure on the local economy. Therefore, this study does not focus on securing the competitiveness of the Korean steel industry itself, but more on what kind of countermeasures should be prepared at the regional level in the long term to minimize the negative impact on the region when the main manufacturing industry is in decline. As a result, it makes it possible to establish and implement appropriate industrial policies in a timely manner.In order to derive implications, we analyzed regional business and industrial policy cases, and examined what roles the central government, local governments, small and medium-sized enterprises and local communities should play, and what preparations are necessary