A Multi-Industrial Linkages Approach to ClusterBuilding in East Asia

Akifumi Kuchiki • Tetsuo Mizobe • Toshitaka GokanEditors

A Multi-IndustrialLinkages Approachto Cluster Building

in East AsiaTargeting the Agriculture, Food,

and Tourism Industry

EditorsAkifumi KuchikiCollege of Bioresource ScienceNihon UniversityKanagawa, Japan

Tetsuo MizobeCollege of Bioresource SciencesNihon UniversityKanagawa, Japan

Toshitaka GokanIDE-JETROChiba, Japan

ISBN 978-1-137-57127-4 ISBN 978-1-137-57128-1 (eBook)DOI 10.1057/978-1-137-57128-1

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Preface

Kuchiki and Tsuji published a book entitled Industrial Clusters in Asia in2004. This current volume delivers recommendations on policy measuresfor the promotion of regional industrial development in middle-incomeAsian countries through the establishment of multi-industrial linkagesbetween three industries—agriculture, food and tourism (AFTI)—whichis expected to generate innovation, enhance the quality of consumptionand offer an escape from the economic traps now facing these countries.The current volume introduces a model for creating AFTI clusters

based on the concept of “economies of sequence,” which dictates theorder in which the segments of the industry cluster are formed, therebyincreasing efficiency and avoiding failure.Important positive externalities can be generated by establishing back-

ward and forward linkages between industry and other economic sectors,such as agriculture and services, and these processes can be triggered on alocal or a cluster level.The final objective of this book is to propose measures to promote

regional industrial development in Asia from the perspective of threeindustries: agriculture, food and tourism. For regional agriculture todevelop, collaboration with the food industry is essential. Further, bylinking to tourism, economic collaboration between the three industries is

v

strengthened. The process of linking these industries is expected togenerate innovation.We would like to thank all the individuals and organizations who

accepted our visits and shared with us their precious time and informa-tion. We are also indebted to Emi Kawamoto for her tireless secretarialwork. We hope this publication will contribute to academia and toward abetter understanding of AFTI clusters in Asia.

Kanagawa, Japan Akifumi Kuchiki

vi Preface

Contents

Part I Introduction 1

1 Basic Concept and Summary 3Akifumi Kuchiki and Tetsuo Mizobe

Part II Fact Findings: Experiences of the Agriculture, Food,and Tourism Industry Clusters 31

2 Agriculture-Food-Tourism Industry Clusters in China 33Ke Ding

3 The Agriculture-Food-Tourism Industry Cluster in theRepublic of Korea: The Formation and Growth Factorsof Clusters in Regional Agriculture 55Youkyung Lee

vii

4 The Agriculture-Food-Tourism Industry Cluster in Japan:Case Studies of Tourism Industry Clustering in Okinawaand Aichi 73Teppei Yamashita

5 The Agriculture-Food-Tourism Industry Cluster inOkinawa, Japan: The Key Role of an Airport in Clustering 91

Koh Kikuchi

6 Tourism Development in Cambodia: An Analysis of Factorsin the Creation of Local Specialties 117Teppei Yamashita

7 The Collocation of Industries in Agriculture-Food-Tourismin Vietnam 133Toshitaka Gokan

Part III New Approaches for Further Development of ClusterAnalysis 161

8 An Application of the Levels of Organization in Biology toProcess Formation in an Industrial Cluster: The Economiesof Sequence 163Akifumi Kuchiki and Tetsuo Mizobe

9 Railway-Led Formation of the Agriculture-Food-TourismIndustry Cluster: Escaping the Middle-Income Trap 187Akifumi Kuchiki, Toshitaka Gokan, and Toyojiro Maruya

viii Contents

10 Quantitative Analyses of the Economies of Sequence:The Impact of New Airport Construction on TourismIndustry Growth—A Case Study of Hong Kong andSingapore 207Zhixin Chen, Koh Kikuchi, Yuki Yano, Tetsuya Nakamura,and Akifumi Kuchiki

11 An Application of the Flowchart Approach to theAgro-Food-Processing Industry Cluster in East Asia:The Case of the Nacala Corridor Region in Mozambique 225Akifumi Kuchiki and Tetsuo Mizobe

12 A Comparison of the Information Technology IndustryCluster with the Agro-Food Industry Cluster fromthe Perspective of the Economies of Sequence 245Akifumi Kuchiki

13 Appendix: Introduction to an Application of Biology to theFormation of Segments in an Industrial Cluster 269Akifumi Kuchiki

Index 283

Contents ix

Notes on Contributors

Zhixin Chen is a lecturer at Xiamen City University, China. He has a PhD fromNihon University and since 2005 he has been focusing on agricultural economicsand tourism.

Ke Ding is an associate senior research fellow with the East Asian Studies Groupin the Inter-disciplinary Studies Center at the Institute of DevelopingEconomies-Japan External Trade Organization (IDE-JETRO). He has a PhDin economics from the Graduate School of Economics at Nagoya University,Japan. His research interests concern issues in industrial organization, platforms,small and medium enterprises, industrial clusters, specialized markets and inno-vation. His major work, Market Platform, Industrial Clusters and Small BusinessDynamics (2012), is the first book that summarizes the experience of specializedmarkets in China in a systematic manner.

Toshitaka Gokan is a research fellow at the IDE-JETRO. He has a PhD ineconomics from Kyoto University, Japan. For two years, he was a visitingresearcher at the Center for Operations Research and Econometrics, UniversitéCatholique de Louvain, Belgium. His research interests include the spatialdistribution of economic activities, such as new economic geography. He hasmainly written about the location choice of multinational firms in East Asia andSoutheast Asia with a theoretical and/or descriptive approach.

xi

Koh Kikuchi is an associate professor at Nihon University College ofBioresource Sciences, Japan. He has a PhD in agriculture from Niigata Univer-sity, Japan. From 2000 to 2009 he investigated the tropical local agriculture atthe University of the Ryukyus, Japan. In 2009 he moved to Nihon University.He now focuses on issues related to community development and agriculture.

Akifumi Kuchiki is a professor at the College of Bioresource Sciences at NihonUniversity. He has a PhD Kyoto University. He entered the Institute of Devel-oping Economies, Japan, in 1978. He worked at the University of Pennsylvania,USA, as visiting research fellow from 1982 to 1984, at the Oversea EconomicCooperation Fund from 1989 to 1991 and at the World Bank as a senioreconomist from 2000 to 2002. He was Executive Vice President of JETROfrom 2005 to 2008.

Youkyung Lee is an assistant professor at Nihon University College ofBioresource Sciences. She has a PhD from Tokyo University of Agriculture,Japan. She worked at the Policy Research Institute Ministry of AgricultureForestry and Fisheries as a Japan Society for the Promotion of Science (JSPS)research fellow from 2012 to 2013, and for Agricultural Policy Research Com-mittee Inc. as a researcher from 2012 to 2014. The main areas of her research areKorean agriculture and management strategy of agribusiness.

Toyojiro Maruya is a professor at the Research Institute for Regional Econom-ics at Fukui Prefectural University, Japan. He entered the Institute of DevelopingEconomies in 1978. He was a research associate in the Center of Asian Studies atthe University of Hong Kong, Managing Director of JETRO Shanghai and thenExecutive Vice President of JETRO. He is the author of many books and articleson the economy of China and Hong Kong SAR.

Tetsuo Mizobe is an associate professor at Nihon University College ofBioresource Sciences. He has a PhD in agriculture from Nihon University. Heworked for consultancies on development issues between 1980 and 2010, duringwhich time he became an expert in and leader of rural and agricultural develop-ment projects for the Japan International Cooperation Agency (JICA), the AsianDevelopment Bank and the Inter-American Development Bank.

Tetsuya Nakmura is an associate professor in the Department of InternationalManagement at Kyoei University, Japan. He has a PhD in agriculture fromChiba University. Since 2003 he has focused on agricultural economics and he isstudying a local promotion plan.

xii Notes on Contributors

Teppei Yamashita is an assistant professor at the Nihon University College ofBioresource Sciences. He has a PhD from Nihon University. He was a researcherat Japan Bank for International Cooperation and JICA from 2007 to 2008. Hisresearch focuses on issues related to sustainable rural development, quality of lifeand the environment in South East Asia.

Yuki Yano is a lecture in the Department of International Management at KyoeiUniversity. He has a PhD from Pennsylvania State University, USA. From 2009to 2011 he investigated agricultural economics in the Department of Economicsat the Swedish University of Agricultural Sciences. In 2011 he moved to KyoeiUniversity. His research focuses on agricultural economics and rural sociology,and agricultural, environmental and regional economics.

Notes on Contributors xiii

Abbreviations

AFTI Agriculture-food-tourism industryAIC Akaike Information CriterionASEAN Association of Southeast Asian NationsBIC Bayesian information criterionCAE Chinese Academy of EngineeringCAS Chinese Academy of SciencesCentrair Central Japan International AirportCRS Constant returns to scaleDNA Deoxyribonucleic acidFTA Free trade agreementGDP Gross domestic productGE Global extentHKTB Hong Kong Tourism BoardHSP Haidian Science ParkIC Integrated circuitICT Information and communications technologyIDE-JETRO Institute of Developing Economies-Japan External Trade

OrganizationIPM Institute of Policy ManagementIRS Increasing returns to scaleJICA Japan International Cooperation AgencyJSPS Japan Society for the Promotion of Science

xv

LD Local densityNHIZ Nomura Haiphong Industrial ZoneNIES Newly industrialized economiesODA Official development assistancePP Phillips–PerronR&D Research and developmentRNA Ribonucleic acidS&T Science and technologySARS Sever acute respiratory syndromeSNP Single nucleotide polymorphismSTB Singapore Tourism BoardSTPB Singapore Tourism Promotion BoardTHSP Tsinghua Science ParkTLIP Thang Long Industrial ParkTWAS Third World Academy of ScienceVAR Vector autoregressiveVSIC Vietnam Standard Industry ClassificationZSP Zhongguancun Science Park

xvi Abbreviations

List of Figures

Fig. 1.1 Levels of organization hierarchy: the economies of sequence(Source: A. Kuchiki, based on Odum and Barrett [2005]) 8

Fig. 1.2 Segment building: Step I: agglomeration (Source:A. Kuchiki) 11

Fig. 1.3 Segment building: Step II: innovation (Source: A. Kuchiki) 12Fig. 1.4 Flowchart approach to industrial cluster policy (Source:

A. Kuchiki) 13Fig. 1.5 Industrial cluster in Zhongguancun Science Park (Source:

A. Kuchiki) 14Fig. 1.6 The value chain (Source: A. Kuchiki) 16Fig. 1.7 Domestic production of the agricultural and food-related

industries in Japan (2011) (Source: Author) 19Fig. 3.1 Relationship of interorganization learning, trust, and mutual

complementarity in cluster development (Source: Y. Lee. Note:Circles indicate synergistic effects and the arrow indicates thedevelopment of the cluster) 69

Fig. 4.1 A flowchart approach (Source: Created by T. Yamashita basedon Kuchiki (2012)) 74

Fig. 4.2 From industrial accumulation to innovations combiningagriculture, food and tourism (Source: Mizobe (2015)) 75

xvii

Fig. 4.3 The number of tourists to Okinawa (Source: Created byT. Yamashita based on http://www.pref.okinawa.jp/toukeika/) 78

Fig. 4.4 The Ryukyu Dynasty’s tourism cluster (Source: Created byT. Yamashita based on Kuchiki (2012)) 79

Fig. 4.5 The statistical data regarding the users of tourism recreation(Source: Created by T. Yamashita based on “Sightseeingrecreation user statistics in 2010” http://www.pref.aichi.jp/0000085398.html) 88

Fig. 5.1 Potential of AFTI clusters in the Yaeyama region (Source:Developed by K. Kikuchi) 96

Fig. 5.2 The impact of the relocation of the airport to New IshigakiAirport on the Yaeyama region (Source: Developed byK. Kikuchi) 98

Fig. 5.3 Opening-to-application ratio in Okinawa and the Yaeyamaregion (Source: Developed by K. Kikuchi based on theOkinawa labor bureau’s “Monthly report of employmentsecurity operations, Okinawa” and Yaeyama publicemployment security office’s “Monthly report on operations,Sangosho (Coral Reef).”) 99

Fig. 5.4 The job opening-to-application ratio in the Yaeyama regionby month (Source: Developed by K. Kikuchi based on theYaeyama public employment security office’s “Monthly reporton operations, Sangosho (Coral Reef)”) 100

Fig. 5.5 Tree diagram (Source: Developed by K. Kikuchi) 104Fig. 5.6 Spending on souvenirs, monthly income, and disposable

income by group (Source: Developed based on the results ofthe questionnaire survey) 113

Fig. 6.1 Cambodia real GDP (1993–2012) (Source: World Bank,http://data.worldbank.org/country/Cambodia) 119

Fig. 6.2 The breakdown of major industries accounting forCambodia’s GDP as of 2011 (Source: JETRO, http://www.jetro.go.jp/world/asia/kh/stat_01/) 120

Fig. 6.3 The number of visitors to Cambodia (Source: Ministry ofTourism of Cambodia, http://www.tourismcambodia.org/mot/statistic_report) 120

Fig. 6.4 The amount of tourism revenue in Cambodia (Source:Ministry of Tourism of Cambodia, http://www.tourismcambodia.org/mot/statistic_report) 121

xviii List of Figures

Fig. 6.5 Inheritance routes of Cambodia’s food culture (Source:Developed by T. Yamashita based on information at http://www.freemap.jp/item/asia/kouiki.html and http://www.tourismcambodia.org/mot/statistic_report) 123

Fig. 6.6 Production process of rice noodles (Source: Developed byT. Yamashita, from interviews in Cambodia) 124

Fig. 6.7 Social, economic and cultural factors for creating localspecialties (Source: Developed by T. Yamashita) 126

Fig. 6.8 Factors for local specialties in relation to rice noodles (Source:Developed by T. Yamashita) 127

Fig. 6.9 Factors for local specialties in relation to prahoc (Source:Developed by T. Yamashita) 128

Fig. 6.10 Factors for local specialties in relation to pepper (Source:Developed by T. Yamashita) 129

Fig. 7.1 The number of clusters related to AFTI in each region(Source: Developed by T. Gokan) 147

Fig. 7.2 The total number of clusters in the A-industries, F-industriesand T-industries (Source: Developed by T. Gokan) 149

Fig. 7.3 Collocation of industries in the A-industries, F-industries andT-industries in the northwest region and the Red River Delta(Source: Developed by T. Gokan) 150

Fig. 7.4 Collocation of industries in the A-industries, F-industries andT-industries around the Red River Delta and its northeastregion (Source: Developed by T. Gokan) 150

Fig. 7.5 Collocation of industries in the A-industries, F-industries andT-industries around the Red River Delta and its southernregion (Source: Developed by T. Gokan) 151

Fig. 7.6 Collocation of industries in the A-industries, F-industries andT-industries around Da Nang City (Source: Developed byT. Gokan) 152

Fig. 7.7 Collocation of industries in the A-industries, F-industries andT-industries around the Central Highlands and South CentralCoast (Source: Developed by T. Gokan) 152

Fig. 7.8 Collocation of industries in the A-industries, F-industries andT-industries around the Central Highlands and Southeastregion (Source: Developed by T. Gokan) 153

Fig. 7.9 Collocation of industries in the A-industries, F-industries andT-industries in the Southeast region and the Mekong RiverDelta (Source: Developed by T. Gokan) 153

List of Figures xix

Fig. 7.10 The relationship between the numbers of clusters inA-industries and in F-industries (Source: Developed byT. Gokan) 154

Fig. 7.11 The relationship between the numbers of clusters inT-industries and in F-industries (Source: Developed byT. Gokan) 154

Fig. 8.1 Porter’s international competitive advantage (Source: Asimplified version of the figure of M. Porter (1990, p. 78)by A. Kuchiki) 165

Fig. 8.2 The sequence of the diamond approach (Source: A. Kuchiki) 165Fig. 8.3 Levels of organization—hierarchy: The economies of

sequence (Source: A. Kuchiki’s based on Odum and Garrett(2006)) 168

Fig. 8.4 The sequence of the Eastern Seaboard region: The case ofMitsubishi Motors (Source: A. Kuchiki and T. Gokan basedon Shimomura (1996)) 172

Fig. 8.5 The electronics industry cluster in North Vietnam (Source:A. Kuchiki) 174

Fig. 8.6 Flowchart approach to the AFTI cluster (Source: A. Kuchiki) 176Fig. 9.1 Change in the shape of the agricultural hinterland (Source:

Developed by A. Kuchiki) 192Fig. 9.2 Value chain (Source: Developed by A. Kuchiki) 197Fig. 9.3 Value chain management with the industrial linkages of

agriculture, the food industry and restaurants (Source:Developed by A. Kuchiki) 197

Fig. 9.4 Sequence in the formation of the segments of the AFTIcluster (Source: Developed by A. Kuchiki) 198

Fig. 9.5 Hankyu model (Source: Developed by A. Kuchiki basedon Tsuganezawa [1991], Committee on Editing the Historyof Takarazuka City [1977] and Hankyu Railway [2014]) 199

Fig. 9.6 Development of the AFTI cluster by railway express (Source:Developed by A. Kuchiki) 200

Fig. 9.7 Sequence of building the segments of Odakyu Railway(Source: Developed by A. Kuchiki) 201

Fig. 10.1 Trend in tourism revenue of Hong Kong and Singapore,1985–2011 (Source: Created by Z. Chen) 215

Fig. 10.2 Trend in number of tourists to Hong Kong and Singapore,1985–2011 (Source: Created by Z. Chen) 216

xx List of Figures

Fig. 10.3 Trend in GDP of Hong Kong and Singapore, 1985–2011(Source: Created by Z. Chen) 216

Fig. 11.1 Flowchart approach to the automobile industry clusterpolicy (Source: A. Kuchiki) 227

Fig. 11.2 The flowchart approach to agricultural and food clusterpolicy (Source: T. Mizobe) 235

Fig. 12.1 The Flowchart approach to the electronics industrycluster policy (Source: Developed by A. Kuchiki) 246

Fig. 12.2 The industrial cluster in Zhongguancun Science Park(Source: Developed by A. Kuchiki) 249

Fig. 12.3 A hypothesis on the flowchart for innovation (Source:Developed by A. Kuchiki) 250

Fig. 12.4 Partnerships between universities and enterprises in the ZSP(Source: Developed by A. Kuchiki) 265

Fig. 12.5 Management structure of the ZSP. Note: 20 companies:1. Tsinghua Science Park, 2. Zhongguancun EnvironmentalProtection Park, 3. Yongfeng High Technology IndustrialBase, 4. Zhongguancun Life Science Park, 5. Space FlightCity, 6. Zhongguancun Software Park, 7. Peking UniversityBiotechnology City, 8. Zhongguancun InternationalCommerce and Trade City, 9. Shangdi InformationIndustrial Base, 10. Xierqi Intelligence Residential Area,11. Peking University Science Park, 12. ZhongguancunWest Zone, 13. Zhongguancun Science City,14. Shangzhuang Town, 15. Agriculture and ForestryScience Park, 16. Sujiatuo Town, 17. Zhongguancun Cultureand Education Base, 18. Zhongguancun New MedicinePark, 19. Wenquan Town 20. Xibeiwang Town(Source: Developed by A. Kuchiki) 266

Fig. 13.1 A segment building process of an industrial cluster (Source:Author) 279

Photo 5.1 Landscape of Taketomi Island (Source: Taken by K. Kikuchi,September 13, 2012) 95

Photo 6.1 Selecting peppers in Kurata Pepper (Source: Taken byT. Yamashita during interviews in Cambodia, http://www.kuratapepper.com/index.html) 129

List of Figures xxi

List of Tables

Table 1.1 Segment building 5Table 1.2 Input–output table without industrial linkage 15Table 1.3 Input–output table with industrial linkage 16Table 1.4 Free trade agreement progress in East Asia, 2015 20Table 2.1 Major policies on agriculture-food-tourism industry clusters

in China 36Table 2.2 The general situation in China’s agricultural industry 38Table 2.3 The general situation in China’s rural tourism industry 39Table 2.4 Typical cases of agriculture-food-tourism industry clusters

in China 40Table 3.1 Regional agriculture clusters by operating agent 59Table 3.2 Trend in sales by and the number of visitors to green

tea-related businesses 65Table 4.1 The AFTI cluster in Okinawa, Japan 80Table 4.2 Cultural components in various areas of Japan 81Table 5.1 The number of tourists to the Yaeyama region by month 97Table 5.2 The attributes of respondents 102Table 5.3 Indicators for the principal component analysis 103Table 5.4 Principal component loading 103Table 5.5 Frequency of visits to Iriomote Island 106

xxiii

Table 5.6 Assessment of access from New Ishigaki Airport to the citycenter 107

Table 5.7 Convenience of New Ishigaki Airport 108Table 5.8 Accommodation facilities on Iriomote Island 109Table 5.9 Nature of respondents’ trips to Iriomote Island 110Table 5.10 Activities on Iriomote Island 111Table 5.11 Keenness to visit the Yaeyama region again 114Table 6.1 List of factors for tourism resources in Cambodia 131Table 7.1 A comparison between A-industries, F-industries and

T-industries 138Table 7.2 GE and LD in the A-industries 139Table 7.3 GE and LD in the F-industries 141Table 7.4 GE and LD in the T-industries 142Table 7.5 Top 20 locations in terms of the number of AFTI clusters 144Table 8.1 Taxonomy of spatial economics, cluster theory and flowchart

approach 164Table 8.2 The segments of a cluster 166Table 9.1 Sectors in the tertiary industry 195Table 9.2 Breakdown of lifestyle services in Japan 196Table 9.3 Input–output table without industrial linkages 196Table 9.4 Input–output table with industrial linkages 197Table 9.5 History of the development of Japanese railway companies 202Table 10.1 Process of development of Hong Kong International Airport

and Changi Airport 212Table 10.2 Average annual rates of increase in tourism revenue, number

of tourists and GDP of Hong Kong and Singapore (%) 217Table 10.3 Singapore level results of unit root tests 221Table 10.4 Results of Granger causality tests 222Table 11.1 The average values of the effects of a forward linkage in ten

economies 229Table 11.2 The average values of the effects of forward and backward

linkages 231Table 11.3 Number of farm households by land area 238Table 11.4 Farming system and agricultural income of small-scale

farmers 239Table 11.5 Value-added formation according to the crops unit: USD/kg 240Table 11.6 Employment potential of food-processing companies in the

Nacala Corridor Region 241

xxiv List of Tables

Table 11.7 Proposed agro-food-processing cluster model in the NacalaCorridor Region 243

Table 12.1 Data on the seven parks in the ZSP 253Table 12.2 Human resources in the ZSP 254Table 12.3 Development of the ZSP 255Table 12.4 Preferential policies of the ZSP 258Table 12.5 The relationship between research institutes/universities and

enterprises in the ZSP 262Table 13.1 The segments of an industrial cluster and the conditions of

nature and culture 276

List of Tables xxv