• Journal of the Economic Geographical Society of Korea
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• v.6 no.1
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• pp.45-60
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• 2003

As the process of economic globalization deepens market uncertainty and severe competition, modern companies are tend to rely on non-market, socio-economic mechanisms such as trust, collaboration, and interdependence, They are being more influenced by cultural economic mechanisms like networks, embeddedness, and placeness rather than explicit cost-reductions. This paper analyzes the characteristics of industrial clusters, the formation of social capital, and the process of institutionalization by comparing two distinctive types of clusters, say Teheran and East-Gate Valleys in Seoul, Korea. The one is mainly consisted of IT industries with increasing vertical integration supported by venture capitals and favorable business infrastructures. The other cluster has long been a traditional CBD frame of Seoul and has transformed to the most dynamic and productive area, characterized by one-stop 'R&D-production-distribution-consumption-after sales services'. The study of the developmental trajectory and key characteristics for these kinds of clusters can give us insight for the cluster theory. This paper firstly reviews the similarities and differences between the social capital in general and that of industrial clusters. It then profiles the growth of the two clusters over the past decade, and compares the current spatial and business structure of the two clusters, focusing on transactions costs, the creation and flow of information, and the local institutions. The paper concludes with some comments about the prospects and perils of the two types industrial clusters of Seoul.