High Technology Development in Regional Economic Growth

Korea has had considerable success in developing its high-technology industries and these have become significant employers in this region. By analyzing the situation in Korea, this text explores the effects of dynamic externalities on the growth of regional employment in the high-technology industries. It puts forward simultaneous equation models to test three sets of hypotheses related to so-called "Jacobs", and "MAR" effects, differentiated by firm size, organizational type and product. Evidence is found for endogenous technological progress marked by positive feedback, especially for small firms in diversified high-technology enclaves. There are technological externalities associated with knowledge spillovers, and local employment has indirect effects on employment growth via dynamic externalities. The implications for local economic development policy are outlined in a concluding section.