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The Determinants of Locational Changes of IT Service Firms in the Seoul Metropolitan Area

Abstract

Recently, the relocation of firms in the IT service sector—especially in game industry— in Seoul, South Korea to the metropolitan areas outside of Seoul has become a clear trend. For example, 7 out of 10 top firms in the game industry have moved to the Pangyo Techno Valley, Seongnam City, Gyeonggi Province, by 2014. The alarming outflow of IT service firms from Seoul needs countermeasures, and the aim of this study is to suggest some, based on a proper analyses.

 

The IT service firms in the Seoul Metropolitan Area tend to be located in a few IT clusters, including the Gangnam-gu, Seocho-gu, Guro-gu, and Geumcheon-gu districts in Seoul and the Bundang-gu district in Seongnam City. The Bundang-gu district is where the Pangyo Techno Valley, of which is located the second largest IT cluster in the Seoul Metropolitan Area. The growth rates of the Bundang-gu district in IT service establishments and employment are the highest among those of the major IT clusters in the Seoul Metropolitan Area.

 

Three major IT clusters in the Seoul Metropolitan Area—G-Valley, Teheran Valley, and Pangyo Techno Valley‑have their own particular characteristics. G-Valley is the biggest and the most mature cluster in the IT service and game industries in Seoul. Teheran Valley had managed to build a booming start-up ecosystem. Pangyo Techno Valley became an emerging IT cluster that is revolves around key anchor firms in the game industry.

 

A survey of firms in Pangyo Techno Valley was conducted, and revealed that 53.9% of the surveyed firms of Pangyo Techno Valley relocated from outside that area, and almost half of those firms were from the Gangnam-gu and Seocho-gu districts in Seoul. Although most of the firms in the Pangyo Techno Valley were satisfied with their current location, they also showed strong preferences for the IT clusters in Seoul.

 

In short, Teheran Valley is in the middle of building a strong start-up ecosystem, whereas G-Valley still has the merit of a mature cluster of both the IT and manufacturing industries in Seoul. Since it is an ineffective and expensive option for Seoul to reverse the relocation trend, we suggest that the Seoul Metropolitan Government should give credits for Pangyo Techno Valley as an emerging IT and game cluster; and rather, endeavour to find ways to collaborate with the Pangyo Techno Valley and other IT clusters in the Seoul Metropolitan Area.

 

Contents

01 Introduction

1_Background and Purpose

2_Contents and Research Methods

 

02 Analysis of the Characteristics of the IT Service and Game Industries

1_Overview of an Analysis of the Characteristics of the IT Service and Game Industries in the Seoul Metropolitan Area

2_Industrial Characteristics of the IT Service and Game Industries in the Seoul Metropolitan Area

3_Regional Characteristics of the IT Service and Game Industries in the Seoul Metropolitan Area

4_Agglomerations of the IT Service and Game Industries in the Seoul Metropolitan Area

 

03 Current States and Phase Changes of IT Clusters in the Seoul Metropolitan Area

1_G-Valley: The Biggest Agglomeration of Small- and Medium-Sized Venture Firms in South Korea

2_Teheran Valley: A Spontaneously Generated Agglomeration of the IT Service and Game Industries

3_Pangyo Techno Valley: An Emerging IT Service and Game Industrial Cluster


04 Current States and Work Environments of Firms in the Pangyo Techno Valley

1_Overview

2_A Survey of Firms in the Pangyo Techno Valley

3_Survey of the Work Environments of Firms in the Pangyo Techno Valley

 

05 Policy DIrections

 

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