This study provides policy strategies for developing smart-green industrial complexes recently introduced in Korea. Industrial complexes have played an important role in job-creation and economic development in Korea. Facing various challenges, including degraded infrastructure, the ongoing Fourth Industrial Revolution (4IR), and carbon neutrality, 15 industrial complexes have been designated ‘smart-green industrial complexes’ by the Korean government. Smart-green industrial complexes have been developed by the public sector, rather than the private sector, and thus lack a proper theoretical background. This study provides theoretical basis for these complexes and also proposes a set of development strategies that enable enterprises to increase productivity and decrease production costs. In “smart-green industrial complex”, “smart” refers to the digitalization of companies and infrastructure, and “green” refers to increased energy-efficiency and eco-friendliness. Digitalization is the introduction of 4IR technologies that help enterprises maximize profit by increasing efficiency, and contribute to Pareto improvement, enabling enterprises to produce more goods and services at the same cost. Furthermore, based on economies of agglomeration, industrial complexes have some potential to reduce carbon emissions.

The suggestions for policy proposed by this study integrate similar polices promulgated by different branches of government with divergent jurisdictional authority. With some corporate activity bound by spatial constraints, industrial complexes can provide necessary space for industrial production, and thus can serve as a means to land development, continued industrial development, and the mitigation of regional disparities. To this end, the Korean government has introduced several polices promoting industrial complexes, such as the Plan for Improving Industrial Complex Management System (in 2009), the Plan for Increasing Competitiveness of Industrial Complexes (in 2015), the Plan of Great-remodeling for Industrial Complexes and the Smart-green Industrial Complex Policy (in 2020). Regarding policy jurisdiction, smart-green industrial complex policies have been promoted largely by two branches of the government: the Ministry of Trade, Industry and Energy (MOTIE) and the Ministry of Land, Infrastructure and Transport (MOLIT). The salinet difference between MOTIE and MOLIT is that the policies of the former merely designate extant industrial complexes as smart-green industrial complexes, while MOLIT pegs newly created industrial complexes as smart-green ones. That these policies are independently promoted causes certain complexities, and thus it is necessary to integrate them.

Based on an econometric analysis of descriptive statistics, this work studies the effectiveness of smart-green industrial complex policies. The main analysis of the study employs the propensity-score matching difference-in-difference (PSM-DID) model. The results of the analysis show that these smart-green industrial complex policies are modestly effective. To be specific, the analysis finds that smart-green industrial complex policies have positive effects on small- and medium-sized enterprises (SMEs), with an external audit showing increased sales by about 2.5 percentage points(%p) and higher operating margins at the 1% significance-level) two years following official designation. The results suggest that smart-green industrial complexes can serve as a state-of-the-art model for industrial complexes and increase the competitiveness of legacy industrial complexes.

This study surveyed enterprises located within smart-green industrial complexes. An analysis of the survey results produced the following key findings. First, the enterprises located in these smart-green industrial complexes showed a weak level of recognition regarding the smart-green designation of their own complexes. Also, while firms acknowledged the necessity of digitalization and eco-friendliness, very few were actually taking steps to prepare or invest in either. Second, the companies’ responses to the survey indicated that the provision of digitalization infrastructure, support for digitalized manufacturing innovation, and the establishment of a smart energy platform are important in order to develop smart-green industrial complexes. Third, surveyed enterprises said that deregulation, tax exemption, financial support, consulting, and human resources support should be primary policy items on the agenda.
 

Through both quantitative and qualitative analyses, and discussion on the status quo of smart-green industrial complexes, the results of this study carry the following implications for policy. First, this work provides a definition for smart-green industrial complexes and identifies the factors that influence them. It also establishes designation criteria for the management systems of these complexes. Second, the study suggests the shape that the network structures and operating systems of smart-green industrial complexes should take. Once in place, both would facilitate infrastructure discussions and planning that could ultimately increase the competitiveness of enterprises in the complex. Third, this study identified the importance of coordinating existing government projects in order to increase the effectiveness of smart-green industrial complex policy. Fourth, this study proposes a (tentatively named) Plan for Smart-green Industrial Complex Development, based on the Regional-Development Investment Contract. Finally, this study provides a list of government projects and related performance indicators in order to support the transition to smart-green industrial complexes and to ensure policy effectiveness.