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Changes in Industrial Clusters in Seoul during COVID-19 Pandemic and Future Strategies

Author: 
Mook Han KimㆍCho Dal HoㆍInHye Yu

Unlike the previous economic shocks, the economic crisis caused by COVID-19 simultaneously globally as a result of the simultaneous contraction of supply and demand, because of the spread of the global pandemic and quarantine measures. Recently, the concept of a new type of ‘K-shaped recession’ or ‘K-shaped recovery’ has emerged as a scenario to explain the COVID-19 crisis.

A K-shaped recovery refers to a situation in which the economy rebounds unevenly, causing some parts of the economy to recover rapidly while other parts continue to suffer. Policy-wise, the K-shaped recovery suggests that special policies are needed to strengthen structural support for sectors/sectors that have already entered recovery, and to focus on sectors/sectors that need support because of slow recovery.

Korea is being evaluated as having succeeded in reducing the impact of economic downturn, while continuing to maintain its mitigation policy. ‘Social distancing’ is Korea’s representative health policy during the COVID-19 era, which elicited an economic response.

Internationally, the prolonged COVID-19 outbreak aroused a consensus for reconstruction rather than recovery, and prepared the transition from initial liquidity support to structural support. From the beginning of the COVID-19 pandemic, the central government provided liquidity support and structural support as an economic measure, and Seoul led in filling the blind spots of the central government.

The spatial distribution change of risk/opportunity industries in Seoul was analyzed, according to the path through which the impact of COVID-19 spreads from industry to space. The impact of COVID-19 was spreading with a time lag along the propagation path of location - population - sales - vacancy - opening and closing businesses. Opportunity industries/regions in Seoul during the COVID-19 pandemic did not undergo major changes in terms of location or opening/closing businesses, and maintained the existing pattern. Risky business types showed a more dispersed pattern than opportunity industries/regions, and areas with weak commercial, business, and residential-related backgrounds emerged as risk regions.

Seoul's future industrial economy strategy requires a shift from liquidity support to structural support, from the perspective of preparing for the long-term COVID-19 era. At the same time, differentiated support by industry/region should be provided in parallel.

For a soft landing after the COVID-19 pandemic, Seoul's existing liquidity support will be flexibly operated. Strengthening the use of opportunity industries/regions in the transition to structural support to prepare for digital transformation in the future is needed. Finally, a customized plan for the relief of a small number of commercial areas that has emerged as a crisis area during the COVID-19 pandemic will be prepared and implemented.