Busan, Ulsan and South Gyeongsang Province (Gyeongnam) are moving faster to build a mega-region economy that ties together industries, companies, talent and jobs across administrative borders. The plan is to link Busan's ports, logistics and digital capabilities, Ulsan's manufacturing base in autos, shipbuilding and petrochemicals, and Gyeongnam's aerospace, defense, nuclear power and machinery industries into a single industrial ecosystem rather than three competing city and provincial economies. The goal is to develop four growth engines — advanced shipbuilding and shipping, next-generation mobility manufacturing, aerospace and defense, and next-generation nuclear power and energy — while jointly connecting advanced technologies such as artificial intelligence and quantum technology with talent, jobs and transport networks to create a southern growth axis that can counter the capital region.
The renewed push for mega-region cooperation stems from structural limits the three local economies share. All three are core production bases for South Korea's mainstay manufacturing industries, including shipbuilding, autos, machinery, nuclear power and aerospace, yet all are losing population, seeing young people leave and struggling with shortages of industrial workers. Officials judged that individual local governments courting companies and talent and bidding for state projects on their own cannot reverse the flow of capital and people into the capital region. The idea is to step away from competition among regions and combine the industrial bases and infrastructure of the three governments to build scale and competitiveness across the whole area.
The three already have the scale and industrial base to grow into a single economic bloc. They are home to 7.54 million people and produce a combined gross regional domestic product of 366 trillion won, accounting for about 20% of the country's manufacturing output. About 80% of South Korea's shipbuilding output comes from the area, which also has high industrial concentration in autos, aerospace, defense and energy. Global conglomerates, mid-sized and small suppliers, universities and research institutes are densely clustered there.
The strengths of the three differ but interlock. Busan has logistics infrastructure centered on the country's largest port, along with information and communications technology and digital capabilities and a base of universities and research institutes. Ulsan concentrates large-scale production facilities and global anchor companies in autos, shipbuilding and petrochemicals, making it well suited to applying and testing new technologies on actual factory floors. Gyeongnam has an industrial ecosystem that supplies core parts and equipment, built on precision manufacturing in aerospace, defense, nuclear power, machinery and metals. Linking those assets, officials calculate, would allow a value chain running from research and development through demonstration, production, logistics and exports to be built within the region.
The four growth engines are being pursued on the basis of that division of roles. In advanced shipbuilding and shipping, Busan's port and shipping operations will be linked with the shipbuilding industries of Ulsan and Gyeongnam. In future mobility, Ulsan's finished-vehicle production base will be combined with parts and materials companies and research capabilities in Busan and Gyeongnam. Aerospace and defense will center on Gyeongnam's industrial cluster, tied to materials, parts and research capabilities in Busan and Ulsan. Next-generation nuclear power and energy will connect Gyeongnam's nuclear industry, Ulsan's energy and manufacturing base and Busan's research and service functions.
Once that structure takes hold, the space for industrial policy also extends beyond city and provincial boundaries. Where support has gone separately to companies in Busan, Ulsan and Gyeongnam, policy can now be designed by treating the three as a single industrial cluster and linking supply chains, research and development, production and logistics. Companies would be able to use universities, research institutes, production facilities, ports and airports anywhere in the region regardless of where they are based.
Advanced technologies such as AI and quantum technology sit at the center of the industrial transition. The three plan to raise productivity and shift to higher value-added industries by applying AI to existing manufacturing in shipbuilding and shipping, future mobility, aerospace and defense, and nuclear power and energy. Ulsan's large manufacturing sites will serve as testing grounds for manufacturing AI and physical AI, while Busan's digital and research capabilities and Gyeongnam's advanced manufacturing base support technology development and commercialization.
Winning the Southeast Region quantum sensing cluster jointly in the national quantum cluster competition follows the same logic. Technologies from universities and research institutes including Pusan National University and the Ulsan National Institute of Science and Technology will be applied to shipbuilding and marine industries, ports and logistics, aerospace and defense, and mobility and energy. The core aim is to build a structure in which technologies developed in laboratories are tested at manufacturing sites and carried through to commercialization.
People, not only industries, are being treated as a single region. Through cooperation among local governments, universities and companies, the three are jointly training workers that industry needs and building a system that links education and research to joint research and development, technology commercialization, employment and settlement. The intent is to move away from each university training talent on its own and instead align education and research functions with industrial demand across the entire region.
A regional jobs program that recently got under way extends the strategy into the labor market itself. Through the "Regional Connection Project," the three governments support young people from outside the area in finding jobs at local companies and settling in, and provide transport subsidies to workers who commute across city and provincial lines. The aim is to make cross-boundary commuting and hiring routine — a company based in Busan with a worker living in Gyeongnam, or a young employee at an Ulsan manufacturer who lives in Busan. Giving young people a wider choice of jobs and companies a wider talent pool is intended to address labor shortages and the outflow of young people at the same time.
Transport networks are the foundation for turning industrial and talent links into an actual shared living area. The goal is to bind Busan, Ulsan and Gyeongnam into a one-hour commuting zone by expanding the Busan-Yangsan-Ulsan metropolitan railway, a Southeast Region circular metropolitan railway, wide-area roads and bus rapid transit systems. Rather than simply cutting travel times, the networks are meant to function as economic infrastructure that encourages movement of workers between companies, joint research, logistics among suppliers and exchanges between universities and businesses.
The gateways to global markets will also be used jointly. Connecting the manufacturing industries of Ulsan and Gyeongnam to the global logistics network centered on Busan Port and Gadeokdo New Airport could expand the area into an industrial bloc combining production, logistics and exports. Busan's competitiveness in ports and shipping will be combined with the manufacturing base of Ulsan and Gyeongnam, and the three will respond jointly to new global logistics patterns such as Arctic shipping routes. The structure is designed to move high value-added products made in the region to world markets through its ports and airport.
The government's "five poles, three special zones" balanced growth strategy is also giving the mega-region effort new momentum. The three plan to draw up a joint mega-region development strategy and to respond together to mega special zones, national projects and a second round of relocating public institutions. The strategy is to shift bids for state projects and central government funding, once pursued competitively by each government, to the regional level in order to attract large national projects that individual cities and provinces would struggle to pursue alone.
Ultimately, the mega-region economy the three envision goes beyond jointly pursuing a handful of projects. The core is to bind Busan's logistics and digital sectors, Ulsan's manufacturing and anchor companies, and Gyeongnam's aerospace, defense, nuclear power and precision manufacturing into a single value chain, and to connect advanced technology, talent, jobs and transport to it. Each area would keep its own strengths while making up for what it lacks, so that the three move as one industrial and living zone.
The success of the effort will ultimately depend on execution. Joint industrial and technology projects must translate into corporate investment and jobs, and regional transport and employment policies must change where residents actually live and work, for the area to function as one economic bloc. The experiment — turning a region of 7.54 million people into another growth axis for South Korea in response to the dominance of the capital region — is moving into full implementation.
