Geography Reference
In-Depth Information
Shipbuilding and Ocean Industries Association and the Coordinator for the Maritime
Economy in the Federal Ministry of Economics and Technology. Dissolution of the
state-owned enterprise and privatization were the strategies applied by the German
national and regional government. Nowadays the yards are in the hands of mainly
Scandinavian shipbuilding concerns. The modernization of the production capacities
was mainly i nanced by subsidies provided by the German government, the state of
Mecklenburg-Vorpommern and the European Union. Over a period of i ve years, the
German government invested more than DM 6 billion (€3 billion) in the construction of
new docks, which means state support of about DM 1 million (€500,000) per job (Röller
and von Hirschhausen, 1996, p. 17). For each DM of state aid only about 0.09 DM of
private investment was attracted. In order to avoid a strong increase in over-capacity,
the federal government and the European Commission agreed that the shipyards in
Mecklenburg-Vorpommern were not allowed to build more ships than a certain annual
capacity limit until 2005.
Thus, regional industrial policy in Mecklenburg-Vorpommern is very much focused
on preserving the existing shipbuilding complex, rather than focused on developing new
products and industries. That is not only shown by the large amount of subsidies made
available for the shipbuilding industry, it is also shown by the successful lobby of the
consensus group of actors to release the EU capacity limitation and to sue the South
Korean government at the WTO for supposedly illegally supporting Korean yards. It
would be unfair, however, to make the impression that the regional industrial policy is
only active in lobbying activities in order to preserve existing structures. It also does a lot
to support innovative small companies and innovation projects. However, these projects,
such as the Maritime Alliance in the framework of the federal support programme
InnoRegio, also mainly support the innovativeness of the existing cluster. All in all, both
the industrial policy and the regional innovation policy strongly focus on adjustment
rather than renewal. We can therefore clearly observe a 'noisy' restructuring process
because of relatively strong regional lock-in, which can partly be explained by the clear
mono-structure and the lack of alternative industrial activities and by the specii c char-
acteristics of the leading industry (capital-intensive large enterprises, so only a few main
actors in the region). But at the same time also political-institutional factors also play
their role, such as a thick and powerful institutional tissue at the region level in combina-
tion with a federal government determined to support the industry.
The shipbuilding region of Gyeongnam, South Korea
Korea has become a world market leader in shipbuilding within just a time period of
about 30 years (Hassink and Shin, 2005b; Woo, 2003). The industry has been virtually
built up from scratch, as Korea's world market share in the early 1970s was about 2 per
cent, compared to the current 38 per cent. Shipbuilding started in the early 1970s because
of the interventionist developmental state led by Park Chung-hee (Amsden, 1989). The
government's extensive control over the i nancial sector enabled channelling of invest-
ment funds to the industry, which has been heavily concentrated organizationally in a
few extremely large shipyards (the world's three largest shipyards are located in Korea)
and geographically in the province of Gyeongnam (Figure 21.3). Apart from Halla,
which is located in Mokpo (Jeonnam), Korea's seven main shipbuilding companies have
their manufacturing facilities in the region (including Ulsan and Busan), the largest being
