Economic interdependence and challenges to the nation-state: the emergence of natural economic territories in the Asia-Pacific.

Economic interdependence and challenges to the nation-state: the emergence of natural economic territories in the Asia-Pacific. The political economy of the Asia-Pacific region is undergoingmomentous changes, including the advent of natural economic territories(NETS) that are springing to life throughout the region. Variouslycalled "growth circles," "growth triangles" or"sub-regional economic zones," the phenomenon is marked byintensified trade, investment and technology flows among contiguouslocalities or territories of three or more countries. While trade amongneighbors is certainly not new, the emerging breadth and depth of theeconomic interaction among these various sub-regions has led some toargue that trade boundaries are superseding political boundaries.Indeed, in some cases, sub-regions of nation-states are developingeconomic links with neighbors that may be more vital than links with thepolitical centers of power that govern them. This has raised thequestion of whether there is an emerging disjuncture dis��junc��ture?n.Disjunction; disunion; separation.Noun 1. disjuncture - state of being disconnecteddisconnectedness, disconnection, disjunctionseparation - the state of lacking unity between economicrelations generated "from below" and political authorityadministered "from above."It is important to pause here to define "natural" sincethis terminology has caused debate and some confusion among scholars.The term NETs, as coined by Robert A. Scalapino, applies to naturaleconomic complementarities that cross political boundaries;"natural" does not imply lack of government involvement butcan include government action that removes barriers to realizepre-existing complementarities.(2) In each case, however, the privatesector plays the major role. The corollary of this thesis is thatgovernment action or political will alone cannot create or haltborder-area interactions; it can only enhance market conditions that arerooted in natural complementarities.(3)A recent confluence of domestic, regional and international factorshave made NETS a viable mechanism for economic growth and integration.The economic maturation of a number of Asia-Pacific economies in the1980s meant, for the first time, that there were increasedcomplementarities among them to exploit.' The failure of commandeconomies, worldwide and regionally, led to market liberalization lib��er��al��ize?v. lib��er��al��ized, lib��er��al��iz��ing, lib��er��al��iz��esv.tr.To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . policies that created more opportunities at the local level, in contrastto policies that were previously highly regulatory and state-centric.The reduction in political tensions in the post-Cold War era has alsoaltered the foreign policy calculus in the region, resolving borderconflicts and easing apprehension from cross-border trade andinvestment. Domestic trends toward democratization de��moc��ra��tize?tr.v. de��moc��ra��tized, de��moc��ra��tiz��ing, de��moc��ra��tiz��esTo make democratic.de��moc and/or politicaldecentralization de��cen��tral��ize?v. de��cen��tral��ized, de��cen��tral��iz��ing, de��cen��tral��iz��esv.tr.1. To distribute the administrative functions or powers of (a central authority) among several local authorities. have also helped to create a favorable tradeenvironment.These factors, combined, have led to the development of some nine defacto [Latin, In fact.] In fact, in deed, actually.This phrase is used to characterize an officer, a government, a past action, or a state of affairs that must be accepted for all practical purposes, but is illegal or illegitimate. or nascent NETS in the region, at various stages of developmentand with differing degrees of public- and private-sector involvement;yet all are generating innovative means of economic interaction thathave limited consonance con��so��nance?n.1. Agreement; harmony; accord.2. a. Close correspondence of sounds.b. The repetition of consonants or of a consonant pattern, especially at the ends of words, as in blank with traditional economic controls and politicalarrangements. It is a phenomenon particularly suited to the Asiancontext, where there is a strong predilection for informal agreementsrather than legalistic le��gal��ism?n.1. Strict, literal adherence to the law or to a particular code, as of religion or morality.2. A legal word, expression, or rule. and binding treaties, and for incremental ratherthan bold systemic change. NETS are emerging in Asia because they allowstates to experiment with economic reform policies and to graduallyexpand them if successful. NETS also allow states to experiment withcooperating with each other, which they approach cautiously given theregion's varying levels of economic development, its differentsocio-political systems and its complex security and politicalrelationships. As a result, Asian states may find NET cooperationparticularly attractive at a time when official mechanisms for economiccooperation - such as the Asia-Pacific Economic Cooperation (APEC), theEast Asia Economic Caucus The East Asia Economic Caucus is a regional free trade zone (FTA) proposed in 1990 by former Malaysian Prime Minister Dr. Mahathir bin Mohamad and encompasses the Association of Southeast Asian Nations (ASEAN) member states, China, South Korea and Japan. (EAEC EAECenteroadherent Escherichia coli.EAECEnteroadherent Escherichia coli, see there ) and the World Trade Organization (WTO See World Trade Organization. )- are proving slow to achieve consensus on a regional (or global)economic framework for trade and investment.(5) Thus, the use of NETsallows states to proceed along their own paths of economic growth anddevelopment without the need to agree on overarching regional goals.It is important to emphasize, however, that NETs are only one factoramong many which are affecting the evolution of economic development andthe nation-state. The globalization globalizationProcess by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation of national economies, the declineof ideology and traditional value systems to provide social cohesion andan increase in ethnic conflict are occurring in areas totally unaffectedby NETs. The emergence of NETs should be viewed as one mechanism throughwhich these dynamics may be occurring, but often not the principalone.(6)While current research on NETS has contributed to an understanding ofthe motivations and patterns of trade and investment flows that createNETs, research has only tangentially tan��gen��tial? also tan��gen��taladj.1. Of, relating to, or moving along or in the direction of a tangent.2. Merely touching or slightly connected.3. addressed the political andsecurity questions that arise from these economic relations. Are theresignificant internal tensions, such as strains between a NET provinceand the "center" or among provinces, particularly as a"netting" province increases its economic ties with anexternal actor? What leverage do governments have to address thesestrains, as well as social problems such as unequal distribution ofgains, new labor mobility Labor mobility or worker mobility is the socioeconomic ease with which an individual or groups of individuals who are currently receiving remuneration in the form of wages can take advantage of various economic opportunities. and imported versus traditional values Traditional values refer to those beliefs, moral codes, and mores that are passed down from generation to generation within a culture, subculture or community. Since the late 1970s in the U.S. ? Dogovernments possess adequate tools to channel, speed or slow the pace ofsub-regional economic interaction if they so choose? Of equal or greaterimportance, how do NETs affect relations among NET states? Doesintensified economic interdependence Economic interdependence is a consequence of specialization, or the division of labor, and is almost universal. It was described at least by 1828, when A. A. Cournot wrote, "but in reality the economic system is a whole of which the parts are connected and react on each other. reduce political conflict or createnew sources of conflict?In the sections that follow, a number of these questions will beaddressed in a regional framework: first, by examining the SouthernChina NET (the most mature and distinct of the NET cases); second, byanalyzing NETS in Northeast Asia; and third, by evaluating NETS inSoutheast Asia. Given the relatively abundant literature on the economicaspects of these NETs, the focus here will be on their political andsecurity implications, incorporating economic analysis whereappropriate. Finally, we will posit some conclusions about the impact ofNETs on the viability of the nation-state and on the economic, politicaland security life of the region.SOUTHERN CHINA NETThe impressive economic growth along China's southeastern coasthas received widespread attention since Special Economic Zones (SEZs)first started to fuel growth in this area in the early 1980s. As thedecade ended, capital and other inputs from Taiwan and Hong Kong Hong Kong(hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. (aswell as from other overseas Chinese A list of famous people with Chinese ancestry living outside of the Republic of China and the People's Republic of China. Leaders and politiciansAsiaSteve Chia, politician, Singapore 谢镜? communities) had created an economicboom that thoroughly swept across political borders. As one observer hasnoted, it is striking that a market of such huge proportions hasdeveloped without a single meeting, discussion or negotiation about itsgrowth among officials of these areas.(7)Yet the absence of a coordinated policy framework among thegovernments of this NET reflects the underlying political and securityagendas of each entity in pursuing the NET: for China, reunification re��u��ni��fy?tr.v. re��u��ni��fied, re��u��ni��fy��ing, re��u��ni��fiesTo cause (a group, party, state, or sect) to become unified again after being divided. with Taiwan and the assertion of its interests in Hong Kong leading upto 1997; for Taiwan, de facto independence from China and a legitimateand autonomous international role; and for Hong Kong, maximization ofits importance to the Chinese economy in order to deter political oreconomic retrenchment re��trench��mentn.The cutting away of superfluous tissue. by Beijing, post-1997. This NET has thusprogressed through a series of unilateral economic policies that seek toadvance and protect the individual political and security agendas ofeach of the three entities.Clearly, increased economic interdependence has helped to modernizeeach of these economies, thereby enhancing state power. Yet ultimatelythis interdependence may have exacerbated rather than lessened securityconcerns: the governments of the People's Republic of China (PRC)and Taiwan are each particularly wary of its economy becoming"hostage" to the other's political goals. In part, thiswariness is because economic ties have resulted in an unanticipatedcompromise of central policy control over increasing segments of theirrespective economies. This trend is less of a concern in Hong Kong thanin China and Taiwan.Internal tensions on the Mainland over the development of the GreaterChina NET are illustrated by the ongoing struggle between Beijing andGuangdong Province Noun 1. Guangdong province - a province in southern ChinaGuangdong, Kwangtung over autonomy and control issues, by provincialdemands for favorable economic privileges and benefits and byBeijing's concern over growing linkages between Guangdong and HongKong, and Fujian and Taiwan. This interplay of center-province,intra-province and provincial relations with external actors has becomeincreasingly complex in the evolution of the PRC's 15-yearexperiment with economic reform.The 1979 devolution of many economic powers from the PRC centralgovernment to Guangdong Province saw a renewal of Guangdong'shistorical role as a gateway to the south, which had long inspired alocal spirit and identity that Beijing had sought to subjugate sub��ju��gate?tr.v. sub��ju��gat��ed, sub��ju��gat��ing, sub��ju��gates1. To bring under control; conquer. See Synonyms at defeat.2. To make subservient; enslave. . Thisreform marked a departure from decades of tight political control,invested in trusted officials appointed from the center. It alsorepresented a central government policy of allocating little investmentto the province as a result of its security-driven shift of industrialproduction from the coastal areas to the interior following the KoreanWar Korean War,conflict between Communist and non-Communist forces in Korea from June 25, 1950, to July 27, 1953. At the end of World War II, Korea was divided at the 38th parallel into Soviet (North Korean) and U.S. (South Korean) zones of occupation. . Thus it was Guangdong's minor importance to the nationaleconomy, as well as its historical gateway role, that made it anattractive arena in which to experiment with risky economic reforms,where damage could be limited if reform failed.(8)Thus, Deng Xiao-ping chose Guangdong as the initial focus of his 1979economic reforms and his plans to develop economic ties with Hong Kongand Taiwan - with the tacit goal of preparing them for reunification.Guangdong's three-decade subjugation SubjugationCushan-rishathaim Aramking to whom God sold Israelites. [O.T.: Judges 3:8]Gibeonitesconsigned to servitude in retribution for trickery. [O.T.: Joshua 9:22–27]Ham Noahcurses him and progeny to servitude. [O. to national priorities hadgenerated a pent-up demand for economic betterment, reflected in thestatement of one provincial party secretary that Guangdong would developmuch faster if it were an independent nation.(9) Yet the province'squest for Verb 1. quest for - go in search of or hunt for; "pursue a hobby"quest after, go after, pursuelook for, search, seek - try to locate or discover, or try to establish the existence of; "The police are searching for clues"; "They are searching for the greater autonomy was only possible when its goals convergedwith those of the central government leadership, which itself wasdivided between proreformers and conservatives who "tried in turnto protect and oppose Guangdong's reforms."(10)While provincial officials molded their strategies according to according toprep.1. As stated or indicated by; on the authority of: according to historians.2. In keeping with: according to instructions.3. political currents in the central government, Beijing authoritiesbroadened economic reforms - to hasten and disseminate economic growth,to offset the growing dominance of the southern Chinese economy (withits concomitant push toward political autonomy) and to appease demandsfrom other areas (such as Shanghai) that contended for preferentialtreatment as early as 1980. As one scholar observed:The central government would have growing difficulties indecentralizing more power to Guangdong over time because one provinceafter another has been demanding similar treatment. Not only did thiscompetition for more power cut into the central government's ownposition but it also allowed many other areas to share Guangdong'sonce monopolized privileges by the early 1990s and become its keencompetitors.(11)Over time, then, Beijing's economic reform policies resulted ina widespread decentralization of decision making, which was intended notonly to spur economic development but also to disperse decision-makingpowers to a variety of regional authorities so as to preclude one regionor province from growing too strong in relation to others. By devolvingpower not just to provincial authorities but to a diversity of actors -including village and township enterprises - Beijing generated economicand political competition at the regional level, avoiding any"simple struggle for control between center and province."(12)This regional competition serves Beijing's interests of broadeningthe stake in economic reforms' success to more actors, in order tominimize its own political risk in case of failure.Yet as Beijing loosened economic controls, its ability to enforceeconomic policies when it needed to do so steadily eroded. There are fewinstitutional mechanisms in Beijing's nascent economicinfrastructure available to manage such a devolution of power. Inaddition to lacking adequate monetary, fiscal and administrative leversto implement its overall policy decrees, Beijing is proving weak inmediating inter-provincial conflicts, which have dramatically increased,particularly between the richer coastal provinces and the hinterland.Furthermore, the center's ability to rein in to check the speed of, or cause to stop, by drawing the reins.to cause (a person) to slow down or cease some activity; - to rein in is used commonly of superiors in a chain of command, ordering a subordinate to moderate or cease some activity deemed excessive.See also: Rein Rein provincial autonomyhas also weakened; Guangdong has demonstrated in recent years, forexample, that it is able to resist Beijing's efforts to appoint itslocal officials and has also been successful in negotiating reducedpayments to the center's coffers, both matters of historicalcontention between the provinces and the central government." Thefact that Beijing-directed economic reforms have historically coincidedwith succession struggles in the central government has meant that thereis a reluctance among provincial officials to concede powers to, or makesacrifices for, a central government that may not last very long.(14)How the central government leadership succession is resolved willaffect the future of this NET. But, given the existing and growingdegree of economic integration, the political costs of halting or evenslowing trade, investment and labor flows within this NET will likely betoo high for any Beijing leadership to bear. Rather, the development ofthis NET will almost surely proceed with continual jostling between theprovinces and the center, with continued economic and political strainsamong the provinces and with further economic integration of Guangdongand Fujian within the NET as well as with regional and internationalmarkets. The Southern China NET still plays an important role forBeijing, both as a model of economic reform to replicate elsewhere andas a continued testing ground Noun 1. testing ground - a region resembling a laboratory inasmuch as it offers opportunities for observation and practice and experimentation; "the new nation is a testing ground for socioeconomic theories"; "Pakistan is a laboratory for studying the use of American for new reforms; as one Chinese scholar Chinese Scholar is a free online project created to help English-speakers learn Mandarin Chinese. It contains interactive games, videos, and Flash animations in the Chinese language. English translations are included. LinkWork in progress 10/01/07 Chinese Scholar has observed, "The south China NET symbolizes a window for otherparts of China to see the outside world and explore ways to convergewith the world market and the global economy."(15)Internal divisions in Taiwan over the pace and scope of economicopening to the Mainland have developed with increasing intensity sincethe PRC unilaterally ended its ban on Taiwanese investment and trade in1979. It took Taipei six years to lift its own ban on trade andinvestment with the Mainland, and it did so only with strict regulationsthat have been very gradually relaxed in the years since. Divisionsexist both within government and business and between the two. The mostdivisive issues concern the establishment of direct transportation linkswith the Mainland and further liberalization of trade, investment andpopulation flows, including an investment agreement that would providelegal protection to Taiwanese investors. While the Taiwanese governmentis anxious not to allow the development of economic dependencies uponthe Mainland that would compromise its pursuit of a legitimate andautonomous international role, Taiwanese enterprises are eager toovercome the increased costs and inconvenience of operating its Mainlandtrade and investment through third parties, notably Hong Kong. This isparticularly true for Taiwan's financial and transportationconglomerates, whose investments are large and long-term in nature, thusrequiring greater legal protection and transparency embodied ininter-governmental agreements with the Mainland.Yet small- and medium-sized businesses - which presently provide thebulk of Taiwan's trade and investment in the Mainland - seekshort-term profits offered by the Mainland's low production costsand large market, and appear to trade and invest almost regardless oftheir own government's policies.(16) In part, this mobility ofpeople, capital, and goods despite government restrictions capitalizeson Taiwan's historical, cultural and linguistic linkages withFujian Province on the Mainland. Government restrictions have also beendesigned in part to prevent a "hollowing out" of Taiwan'sindustrial structure, motivated by a fear that the Mainland authoritiesmight at some point squeeze Taiwanese businesses heavily invested inMainland China in order to extract political benefits.Taiwan's growing economic wealth and a demographic shift towardTaiwanese-born citizens have created a large middle class that favorsincreased independence from the Mainland. While the majority ofTaiwanese favor de facto rather than formal independence, the risingDemocratic People's Party The Democratic People's Party is a name used by various political parties including Antigua and Barbuda - Democratic People's Party Germany - Democratic People's Party Ghana - Democratic People's Party Hungary - Democratic People's Party (DPP DPP - Dining Philosophers Problem ), with its platform of formalindependence, effectively competes with the ruling Kuomintang (KMT KMT Kuomintang (Taiwan's Political Party)KMT KemetKMT Kinetic Molecular TheoryKMT Kiss My TeethKMT Key Management and Distribution Toolkit ) onthis issue. Partly as a result, the Taiwanese government has sought ahigher international profile to satisfy proponents of de factoindependence and to weaken the appeal of elements seeking formalindependence. To further enhance its profile and to develop analternative to increasing interdependence with the Mainland, in early1994 Taipei launched a "southern strategy" to developpolitical and economic relations with Southeast Asia.(17)Contrary to observations that the southern strategy is an attempt tooffset growing dependence on the Mainland, Taipei officials maintainthat it is part of a long-term goal of developing Taiwan as a regionaltransport and service center, which in its most ambitious form envisionsTaiwan as a hub linking Singapore and Shanghai, and one that wouldattract multinational headquarters to locate in Taiwan. Taipei viewsthis plan as an effort to internationalize in��ter��na��tion��al��ize?tr.v. in��ter��na��tion��al��ized, in��ter��na��tion��al��iz��ing, in��ter��na��tion��al��iz��es1. To make international.2. To put under international control. its economic relationswithout detracting from the advantages that accrue from its proximity tothe Mainland. The Taiwanese government also recognizes the need tostrengthen its financial and service sectors, particularlytelecommunications, finance and transportation. Its service sector musttake center stage in further modernizing the Taiwanese economy, which isnecessary, in turn, for maintaining the global competitiveness of itsmanufacturing industries manufacturing industriesnpl → industrias fpl manufacturerasmanufacturing industriesnpl → industries fpl de transformation .Yet, given the conflicting views toward closer ties with theMainland- within business, government and the DPP - the"Singapore-Taipei-Shanghai hub" plan remains an extremelycontroversial one.(18) Presently, the government is studying a varietyof proposals that would accommodate political and security needs whilealso promoting economic development. It is considering adopting astatute allowing the use of Hong Kong as an intermediary port after1997, although this would require the consent of the Beijing government.Taiwan is also studying the feasibility of alternative transit ports,and of establishing free-trade zones in western Taiwan that would beallowed to have direct transportation links with the Mainland.(19) TheTaipei government is thus trying to channel this NET in ways that areconsonant with its security interests and as a means of responding todomestic political and economic pressure.Hong Kong's involvement in the NET has not created the kind ofinternal divisions evident in Taiwan and Mainland China. There is littledisagreement among government and business sectors that economicexpansion into Guangdong Province has benefitted the economy and willcontinue to do so in the post-1997 period. As one Hong Kong officialobserved, "Trade is like water; when barriers are lifted it findsits own natural course."(20) Rather, the internal divisions in HongKong are over the pace and scope of democratization - which is notdriven by the NET, but by Governor Christopher Patten's hastenedattempt to broaden political representation before 1 July 1997, whenHong Kong comes once again under Chinese rule.Yet PRC-Hong Kong interactions over democratization in Hong Kong areultimately conditioned by economic interdependence in the NET. Despiteits threats, Beijing has been unable to halt the democratization processin Hong Kong. Hong Kong's power derives from its central role inthe growth of southern China, whose development, in turn, is key to theentire Chinese economy. By promoting its entrepot ENTREPOT. A warehouse; a magazine where goods are deposited, and which are again to be removed. role and restructuringitself as a service hub for southern China, Hong Kong hopes that - incombination with its partners in Guangdong - it will be able to resistBeijing's political pressures. Beijing, in turn, is constrainedfrom acting too vigorously by its need to demonstrate that it can manage"diversity" after 1997. Should the PRC react too harshlyagainst a Hong Kong trying to preserve its democratic reforms, it wouldrisk disturbing the political stability and economic dynamism that arekey to Hong Kong's prosperity. If Mainland China fails this test,Taiwan's return could be jeopardized as well. Again, the outcome ofBeijing's leadership succession struggle will influence how thesematters are ultimately resolved.NET Effects on Relations among National ActorsThis Southern China NET is a clear example of economic relationsgenerated "from below" creating a momentum independent ofpolitical authority from central governments. Taiwan and the PRC are inthe position of reacting to domestic pressures to further liberalize lib��er��al��ize?v. lib��er��al��ized, lib��er��al��iz��ing, lib��er��al��iz��esv.tr.To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . trade and investment, while being constrained from doing so by theirsecurity concerns. This is particularly true for Taiwan, whose smallereconomy is more susceptible to being dominated by the booming PRCeconomy. These governments' only option is to try to manage andchannel growing interdependence to their own possible politicaladvantage, because the economic and political costs of halting economicflows are too high. Thus, involvement in this NET provides each of thegoveniments with leverage, but also adds constraints, in a dynamicprocess that no one of them fully controls.It is difficult to know what the state of PRC-Taiwan and PRC-HongKong affairs would be today without this NET, and whether the danger ofconflict has been increased or reduced by virtue of growing economicinterdependence. The PRC has not renounced its "right offorce" should Taiwan claim independence, yet the NET probably didlead to the first direct interactions between the two governments afterfour decades of hostilities.(21) However, economic inter-action may bepostponing conflict over the most divisive issue of sovereignty ratherthan helping to solve it. Indeed, conflict on sovereignty-related issuesseems to have increased recently - as seen in the PRC'S virulentopposition to Taiwan's efforts to seek an independent seat in theUnited Nations and to join the General Agreement on Tariffs and Trade General Agreement on Tariffs and Trade(GATT), former specialized agency of the United Nations. It was established in 1948 as an interim measure pending the creation of the International Trade Organization. (GATT See General Agreement on Tariffs and Trade. GATTSee General Agreement on Tariffs and Trade (GATT). ), now the World Trade Organization (WTO).Still, economic integration through this NET has undoubtedly had theeffect of containing some political differences between the threeparties, especially in view of the economic costs that protractedconflict would entail, which has, in turn, motivated a search fornegotiated solutions.(22) Although in some circumstances, eachgovernment may want to limit or slow the NET growth, current policy inall three governments is to expand and strengthen, not dismantle, theNET, demonstrating its overall utility to them.NORTHEAST Asia netsWhile the developing NETS in Northeast Asia are a direct result ofthe thaw in post-cold War regional relations (particularly between Chinaand Russia), their progress is also hindered by unresolved political andsecurity issues.(23) On the positive side, the relaxation of politicaltensions has motivated many countries to open up their "shadowbelts," sub-regions that are distant from the national trade andcommercial centers developed during the Cold War, sub-regions that cannow be more naturally linked with world markets and emerging regionalones. This is the case with Northeast China, the west coast of Japan,the west coast of Korea, the Russian far East and Mongolia.(24)Despite the desire of provincial and central governments to exploresub-regional economic linkages, intergovernmental cooperation is stillat a nascent stage in these areas, and new entrepreneurial exchanges,while beginning to be impressive, are primarily limited to bilateralinteraction. This is due in part to the far greater sense of politicaland economic competition, rather than cooperation, among Northeast Asiangovernments. Yet, since the lack of governmental cooperation has nothindered the Southern China NET, one must conclude that the naturaleconomic complementarities here are relatively fewer than in southernChina or, for that matter, than in Southeast Asia. There are also largebodies of water separating the majority of Northeast Asian countries, sothat cross-border historical and cultural ties do not exist to helpfacilitate economic flows.Contrasting the Yellow Sea Rim NET with the efforts to develop theTumen River Tumen RiverRiver, eastern Asia. It forms the northeastern frontier of North Korea with China and Russia. It originates on Mount Paektu, North Korea's highest mountain, and flows generally north and northeast before turning southeast to enter the Sea of Japan (East Sea). Project highlights both the potential for, and limitationsof, sub-regional economic cooperation in Northeast Asia. The Yellow SeaNET links Kyushu in Japan, Korea's west coast centered onChungchong and Cholla chollaAny cactus of the genus Opuntia, native to North and South America, having needlelike spines partly enclosed in a papery sheath. Chollas vary greatly in size and have small flowers, sometimes chartreuse and inconspicuous, but usually of more striking colors. O. Provinces and China!s northem coastal region fromLiaoning (which the Chinese call the Bohai Sea Bohai Sea (Chinese: ; Pinyin: B�� Hăi), also known as Bohai Bay or Bohai Gulf, is the innermost gulf of the Yellow Sea on the coast of northeastern China. ) down to Shanghai [seemaps pp.437 and 445]. This NET enjoys support from Korean and PRCcentral governments - and a seemingly agnostic stance from Tokyo - aswell as economic complementarities and thriving business interactions,particularly for the PRC-South Korea leg. The economic complementaritytaps Japanese and South Korean capital and technology, PRC labor and therelatively well-developed industrial infrastructure on MainlandChina's northern coast, which is dominated by state enterprises.The numerous small- and medium-sized businesses that populate thedirect-ferry transport route between Inchon in South Korea across theYellow Sea to Tsingtao and Weihai on the Shangdong Peninsula dominatedthe $213 million of Korean investment in the area in 1992; in the caseof Taiwan's large firms, however, the Korean chaebols remainskeptical of Mainiand China's limited liberalization policies.(25)Already, some 28 percent of Mainland China's provincial exportsto Japan are from Liaoning, which received half of its total foreigninvestment in 1992 from Japan. Japan's relations with theShanghai/Jiangsu region of Mainland China are also strong. The primarylocus of the NET in Japan is the southern island of Kyushu, which in thelast decade has become a "silicon island," with scores ofJapanese and foreign corporations setting up factories to tap the cheapland, well-educated workforce and Kyushu's proximity to the PRC andKorean economies - exemplified by the fact that Kyushu's capital,Fukuoka, is closer to Pusan, Seoul and Shanghai than it is to Tokyo.Kyushu also prides itself on its frontier spirit; it contested thecentralization of power in Tokyo by a bloody rebellion as late as1877.(26) The island thus has a predilection to be self-reliant, or atleast not reliant on the central government for its economic well-being.Support from the Korean and PRC central governments is strong becauseeconomic development in these sub-regions is a priority in theirrespective national development plans. Korea, for example, has adopted a"west coast development" strategy that will develop ports,roads and industrial parks to link it with both internal and foreignmarkets.(27) Mainland China believes the area it calls the Bohai Sea hasthe potential to rival the economic importance of the booming southernChina region. Furthermore, since Korea and Mainland China normalizeddiplomatic relations in 1992, they have both sought greaterintergovernmental cooperation. This is particularly a priority forKorea, given the PRC'S important relationship with North Korea.Official support from Tokyo, however, is lagging behind otherregional government initiatives. Fukuoka, the capital of Kyushu, hascreated a think tank with state and provincial officials, businessmenand scholars to develop cooperative schemes with Korea and China. Thenumber of Japanese prefectures and cities, particularly along the westcoast, seeking to expand trade with foreign partners led former PrimeMinister Morihito Hosokawa to proclaim a "revolt of theregions."(28) These regional government initiatives do not,however, appear to conflict with Tokyo's economic or politicalpriorities; in fact, the trend toward economic initiatives generated atthe local level may, in part, reflect dissatisfaction with the center,which has, in turn, also shaken the political foundations of the LiberalDemocratic Party during the past several years.Thus, the Yellow Sea Rim NET is expanding most rapidly in thosesub-regions where there are both economic complementarities and centralgovernment commitment - which demonstrates that governments are capableof accelerating or channeling NET development when local economic andpolitical conditions permit them to do so. The Tumen River project [seemap p.445], in contrast, demonstrates that central governments can holdback on NET development when it runs counter to their security interestsand entails too much economic risk. In its most ambitious form, theTumen River project was a $30 billion, 20-year project to build 11specialized harbors as well as an extensive road and rail system tounlock resource-rich areas that have been cut off from potentialmarkets. As the sponsor of several international conferences on theTumen River project, the United Nations Development Programme (UNDP UNDP United Nations Development ProgrammeUNDP Uni��n Nacional para la Democracia y el Progreso (National Union for Democracy and Progress))proposed joint administration of an economic zone by the three countriesinvolved (Russia, North Korea and the PRC) as well as by South Korea andMongolia. This proposed NET would build on the production of materialsand resources from this zone as well as from the northeast region of thePRC, the Primorsky area in Russia and Mongolia for export via the TumenRiver directly, rather than through the Chinese port at Dalian; it wouldalso rely on capital and technology from Japan and South Korea.Proponents of the Tumen River project also hoped that economic growthwould help develop political cooperation among states with longhistories of hostility. Yet, after three years of sponsoring meetingsamong the five prospective members, the UNDP office on Tumen has alreadyspent its $3.5 million budget, closed its New York New York, state, United StatesNew York,Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of office (in October1994), and admitted that the project is dead for now. The project. wasrife with difficulties; foremost among them was the grandness of thescheme, which required massive capital inputs, and the lack of agreementamong the governments on the mutual benefits to be achieved. In short,the political and economic risks far outweighed the prospective economicgains, which were to be long-term and thus uncertain. The political riftbetween Japan - who was expected to be the primary source of capital -and Russia over the disputed Northern Islands was one security issuethat economics could not overcome. A second was North Korea'scautious approach to opening its economy to foreign investment andtrade; it wanted to use the project to attract capital inputs to itsforeign trade zone at Rajin-Songbong, but did not want to link this zonewith the other planned Tumen projects. In addition, Russia has beenpreoccupied with internal economic turmoil and has no resources tocontribute to its far east, and many Russian economists argued thatChina would benefit more anyway. South Korea, which once hoped the planwould nudge North Korea out of isolation, has said that bilateral tradeamong the two now takes priority over multilateral schemes.(29) A moremodest project now focuses on removing cross-border impediments betweenthe booming economy of Hunchun on the Mainland's northeasternborder, with border areas of Russia and North Korea; rail links arealready in the works.The ill-fated Tumen River project further underscores the lesson thatsuccessful NETS occur when central governments can untap or build onlocally driven linkages. This lesson again raises the use of the term"natural" economic territories; the economic potential ofdisparate undeveloped areas is not a sufficient condition to attractprivate- or public-sector support.This lesson also applies to a potential NET along the Japan Sea rim(or West Sea to Korea), which envisions linking the west coast of Japanwith the northeast area of Mainland China, the Russian Far East, SouthKorea and potentially North Korea. The motivation for this NET isparticularly strong at the sub-regional level in Japan. The city andprefecture of Niigata have created the "Economic Research Institutefor Northeast Asia" and have held annual meetings on economiccooperation since 1990 on such issues as the role of local government inpromoting grassroots exchange. A number of other west coast Japaneseport cities are also trying to expand trade, sometimes in directcompetition with each other. Yet these prefectures lack sufficientinfrastructure to link them with the interior and therefore have much toimport and little to export compared to the thriving east coast portsthat import raw materials and export manufactured products.(30) It willbe interesting to observe how these sub-regional efforts to create theirown linkages with foreign markets will progress when central governmentinvolvement is absent or weak.One cannot conclude that efforts at economic cooperation in NortheastAsia are doomed - more likely they will proceed slowly, probablyfitfully fit��ful?adj.Occurring in or characterized by intermittent bursts, as of activity; irregular. See Synonyms at periodic.fit , as specific linkages become feasible both politically andeconomically. One of the more interesting examples of the potentialpolitical, and even security, impact of Northeast Asian NETS is the caseof Mainland China, for it is involved, currently or prospectively, in anumber of NETS on its borders: the so-called Greater China in thesoutheast, the Golden Quadrangle quadrangleRectangular open space completely or partially enclosed by buildings of an academic or civic character. The grounds of a quadrangle are often grassy or landscaped. in the south (analyzed below) andHunchun and the Yellow Sea or Bohai area, both in the northeast. Giventhe variety of regions and nations thus "netted" with the PRCand the widely varying nature and intensity of the interdependenciesinvolved, the PRC'S neighbors will be called upon increasingly todeal with the PRC'S localities rather than the center in economicrelations. This will require a more differentiated understanding ofMainland China and thus provides an area for further research.(31)Southeast Asia netsSub-regional economic cooperation in Southeast Asia has beenoccurring with far more official government stimulus than in the case ofthe Greater China NET or in Northeast Asia. At the ASEAN ASEAN:see Association of Southeast Asian Nations. ASEANin full Association of Southeast Asian NationsInternational organization established by the governments of Indonesia, Malaysia, the Philippines, Singapore, and Thailand in Fourth Summitin Singapore in January 1992 - when parties agreed to form an ASEAN FreeTrade Area ASEAN Free Trade Area (AFTA) is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries.The AFTA agreement was signed on 28 January 1992 in Singapore. (AFTA) in 15 years'time - the "growthtriangle" approach was endorsed as a parallel and supportivemechanism for regional economic cooperation.The NETS analyzed below are:(32)(1) The Indonesia-Malaysia-Singapore Growth Triangle (IMS-GT) -linking Singapore, Malaysia's Johor Province and Indonesia'sRiau Islands Riau Islands (Indonesian: Kepulauan Riau (Kepri or Riau Kepulauan) is a province of Indonesia, consisting of Riau Archipelago, Natuna Islands, Anambas, and Lingga Islands. .(2) The Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), whichencompasses North Sumatra North Sumatra (Indonesian: Sumatera Utara) is a province of Indonesia. Its capital is Medan. Geography and populationThe province of North Sumatra stretches across the island of Sumatra between the Indian Ocean and the Strait Malacca. and Aceh in Indonesia; Malaysia'snorthern states of Kedah, Perak, Penang and Perlis; and Thailand'ssouthern provinces of Satun, Songkhla, Yala, Narathiwat and Pattani.(3) The Golden Quadrangle, which encompasses parts of northernThailand Northern Thailand, one of the 5 regional groups of Thailand, usually describes the area covered by 17 provinces. Chiang Mai Chiang Rai Kamphaeng Phet Lampang Lamphun Mae Hong Son Nakhon Sawan Nan Phayao Phetchabun , Yunnan province Noun 1. Yunnan province - a province of southern ChinaYunnanCathay, China, Communist China, mainland China, People's Republic of China, PRC, Red China - a communist nation that covers a vast territory in eastern Asia; the most populous country in the world in Mainland China, northern Myanmar and Laos.INDONESIA-MALAYSIA-SINGAPORE GROWTH TRIANGLE (IMS-GT)Known since its inception in 1989 as SIJORI (for Singapore, Johor andRiau), this NET is the oldest and most developed NET in Southeast Asia.Its new name was created at a December 1994 meeting, when officials fromthe three countries signed a Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. (MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. ) thatpromises the first official government endorsement of this NET.(33)The IMS-GT marries Singapore's capital and infrastructure withland and semi-skilled labor in Johor and land plus low-skilled labor inthe five main Riau Islands, of which Batam and Bintan are currently themost developed. The IMS-GT has been most successful in attractinginvestment to the Riau Islands, where market forces were weak prior to1989. Singapore and Indonesia have signed two agreements, the first inAugust 1990 to jointly develop Batam and Bintan and the second in June1991 to sell water rights to Singapore from Bintan Island for 50 years.Resort development, industrial estates with favorable investment lawsand agro-industries have all been prospering. The IMS-GT has alsoenhanced the Johor-Singapore link, which began to strengthen in theearly 1980s as wages and land costs rose in Singapore and companiesbegan moving labor-intensive industries to Johor Province. Nevertheless,the NET has not improved the Riau-Johor link, which remains virtuallynonexistent non��ex��is��tence?n.1. The condition of not existing.2. Something that does not exist.non since the two hinterlands are similarly endowed.In the first several years of this NET'S development concernswere expressed that while Singapore took the lead and reaped the mostgains, Indonesia and Malaysia not only gained less, but also encounterednew problems to resolve as a result.(34) Given that the strongest linksin this NET are between Singapore-Johor and Singapore-Riau, some arguethat it is not a triangle but a corridor managed by Singapore, and thatSingapore's interest in promoting the NET concept conceals anunderlying security motivation to create a buffer zone buffer zonen.A neutral area between hostile or belligerent forces that serves to prevent conflict.Noun 1. buffer zone with Johor to thenorth and the Riaus to the south, thereby reducing potential threatsfrom her neighbors.(35)Indonesia has felt less dubious than Malaysia about the linkage toSingapore, for a variety of reasons. First, development of the RiauIslands was as much, if not more, of a priority for Jakarta as it wasfor Singapore, since the Riaus became a showcase for Jakarta'sefforts to increase non-oil exports in the wake of the plunge in oilprices in 1986.(36) Johor, however, had already embarked on an ambitiousdevelopment path prior to the establishment of the IMS-GT, seeking tobecome Malaysia's most industrialized state within the decade bymoving out of semi-skilled industries into high-technology ones.Singaporean companies locating in Johor, however, have generally tendedto be sunset, low-technology and polluting industries, with the resultthat the IMS-GT has been seen by authorities in both Kuala Lumpur Kuala Lumpur(kwä`lə lm`pr), city (1990 est. pop. andJohor to have kept Johor in Singapore's shadow.Second, while both Malaysia and Indonesia have experienced socialproblems arising from the NET - in terms of labor mobility, unequaldistribution of benefits and potential ethnic rivalries - these seem tobe more manageable in the remote and small island region of the Riausthan in Johor, which forms a significant physical and economic part ofMalaysia. Problems common in Malaysia and Indonesia include theperception that government and private-sector investments in Johor andRiau are being diverted from more needy areas in other provinces, andthat policies within the NET areas favor outside investors over thelocal populace. In Johor, there is concern that ethnic Chinese arebenefitting at the expense of the native bumiputra This article describes Bumiputra in terms of Malaysia. For the legal definition of Bumiputera as defined in Brunei, please see BumiputeraBumiputra or Bumiputera (Malay, from Sanskrit Bhumiputra and, in the Riaus,investments are seen as dominated by political elites and largeconglomerates.(37) Housing shortages and the rise in land prices andcost of living are also occurring in both Batam and Johor. Latentresentments of a "meddling" Singapore, managing the economiesof Johor and Riau, are rising - particularly in Malaysia.A third reason why Malaysia has been less enthusiastic than Indonesiaabout the IMS-GT is that officials in Kuala Lumpur initially felt leftout of its development. It was the state, not the federal, governmentthat was approached during the founding of SIJORI, and the Malaysiancentral government was not asked to be represented in two promotionalforeign tours undertaken by Indonesian and Singaporean officials. Thisdemonstrates a problem when a provincial government pursues a NETwithout central government concurrence CONCURRENCE, French law. The equality of rights, or privilege which several persons-have over the same thing; as, for example, the right which two judgment creditors, Whose judgments were rendered at the same time, have to be paid out of the proceeds of real estate bound by them. Dict. de Jur. h.t. ; central government jealousiesand concerns were probably aroused more than would have been the casehad the center been afforded a leading, or at least equal, role in theearly development of the IMS-GT. In addition to central governmentsensitivities to Johor-Singapore direct talks, there was no centralgovernmental infrastructure in Kuala Lumpur to deal with or manage theNET, so that Singapore's proposals may have caught Kuala Lumpurofficials off-guard. There are now Malaysian cabinet ministers assignedto deal with the lMS-GT as well as the IMT-GT, and correspondingbusiness councils have been created.(38) But this raises an interestingissue relevant to other NETS, for there appears to be a learning curvefor government bureaucracies to develop an administrative infrastructureto deal with sub-regional economic cooperation. This learning curve isalso applicable to authorities in Jakarta who, unlike those in KualaLumpur, have managed the NET entirely from the center.(39) Jakarta hasnow begun to take provincial needs into account, although it seemsreluctant to allow increased regional autonomy in decision making.One measure of the success of the IMS-GT is that economic growth hasexpanded from Johor to Malaysia's northern provinces of Malacca andPahang, as well as from Batam - the initial focus of Singapore-Indonesiacooperation - to the other Riau Islands. The long-run potential of theRiau chain of islands could be significant, with shipping facilities,industrial parks, natural resources development and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.Please [ improve this article] or discuss the issue on the talk page. creating what some have termed a "second Singapore."(40)Broadening the economic benefits into other regions of Indonesia andMalaysia is crucial to building support for central governments that donot want to be perceived as favoring one province's welfare at theexpense of others. This is, again, more important to Malaysia than toIndonesia, given Johor's size and weight to Malaysian economicstrategy. Although the free flow of people and goods among the threeareas will likely be unfeasible (given Johor's long internalborder, the free-trade area would have to include the whole ofMalaysia), Kuala Lumpur is considering establishing a free-trade port inJohor to create additional economic opportunities.The IMS-GT has been widely lauded as a successful model combiningpolitical will and private-sector initiative, both of which have beenstrengthened since it was launched. It also demonstrates that NETS arenot a static phenomenon but evolve according to changing economic andpolitical conditions, as well as what has been called here thegovernment learning curve, the ability to adapt its bureaucracy to newmodes of subregional economic cooperation. Observers have consistentlynoted that one challenge for the central governments of the IMS-GT isfor each to refine its internal policy coordination toward the NET inorder to maximize its economic benefits and address respective socialproblems; as previously mentioned, Indonesia and Malaysia have beenlearning to do this, and as they embark on developing other NETS, thepolicy management of the IMS-GT will improve as well. A second challengeobservers have pointed to is the need to develop trilateral cooperationand a more unified policy framework toward the NET. To this end, therecently-signed MOU will help to strengthen intergovernmentalcooperation on all three sides of the triangle. These governments alsoappear tolerant of the fact that the distribution of benefits will notbe entirely equal as long as overall gains exceed the costs; asarticulated by one Malaysian scholar, "We must summon the maturityto say, what does it matter if you gain by ten, I gain by five, and ifby not doing anything, we don't gain at all?"(41)Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT)The IMT-GT is an example of a NET that builds on some existingcross-border trade and investment that the central governments are eagerto broaden and strengthen. Development of these sub-regions is apriority for all three governments, and would tap surplus labor andagriculture-based economies in Sumatra, Indonesia and southern Thailandwith the more industrialized area surrounding Penang in northernMalaysia.The three governments requested the Asian Development Bank Asian Development BankA financial_institution established in 1966 to reduce poverty in the Asia-Pacific region. The bank is headquartered in Manila, Philippines and consists of 61 member countries. (ADB (Apple Desktop Bus) A low-speed serial bus for connecting keyboards, mice and other input devices on Apple IIgs and Macintosh computers. Starting with the iMac in 1998, the ADB was superseded by USB. ) toconduct a feasibility study "A Feasibility Study" is an episode of the original The Outer Limits television show. It first aired on 13 April, 1964, during the first season. It was remade in 1997 as part of the revived The Outer Limits series with a minor title change. of economic prospects in the area, which wascompleted in July 1994.(42) The report concluded that there is greatpotential for cross-border economic complementarities, and that thestrong historical links of economic interaction and cultural and ethnicaffinities are already creating some cross-border economic flows,including smuggling and illegal trade as well as undesirable labor flowsinto Malaysia. The complementarities are also promising for developingagribusiness and agro-processing industries, utilizing marine andforestry reserves, and thus "bringing the triangle areas into themainstream of the region's economic and socialdevelopments."(43) This NET is therefore an example wheregovernments are seeking to balance uneven economic growth in theirrespective hinterlands and to create new nodes of economic developmentto complement their overburdened urban centers.(44)At a ministerial meeting held in Penang, Malaysia in December 1994,it was noted that some 20 MOUs have been signed among private sectorparties and another 20 MOUs were signed at the meeting among governmentofficials. Principal among these agreements was one to implement an"open border" plan among the three countries that facilitatesthe movement of people along cross-border communities. A tripartitebusiness council met for the third time, also in Penang in December1994, and is successfully promoting private-public-sector cooperation onjoint projects.(45)The challenge, in addition to attracting capital and services, is toharmonize government policies and regulations and to allow greatersub-regional autonomy that will, in turn, allow self-reinforcing linksto be established among the sub-regions. Each central government will nodoubt permit sub-regional autonomy with great caution;federal-provincial relations are made especially complex in thisprojected NET by the inclusion in this triangle of some 20 provincialand state governments among the three countries. Another reason forgovernments to manage autonomy cautiously is that separatist movementshave been active in this border region in the past; southern Thailandexperienced a terrorist bombing as recently as late 1993.(46)The ADB report argues that, although policies should be adopted toinduce the private sector to play the major role, each government willhave to play the catalyst to realize its goals. The report urges that anadministrative structure be established that integrates central andregional officials as well as private-sector interests to facilitateplanning. To date, there is an abundance of political will from thethree governments that is only gradually transforming local economies.The IMT-GT is expected to develop as manageable projects can be agreedupon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations"stipulatorynoncontroversial, uncontroversial - not likely to arouse controversy by the three governments, although this may be hindered bydifferent priorities among them on what should be tackled first.THE GOLDEN QUADRANGLE NETThe Golden Quadrangle NET is the border region connecting Myamnar,Thailand, Laos and western China, and is a region that has served as a"battlefield as well as marketplace" from its earlyhistory.(47) There is now a renewed flourishing of trade among localentrepreneurs along the border areas that share common histories as wellas ethnic and cultural ties.(48) Ancient routes are being revitalized,such as the old Silk and Burma Roads, as well as the Ambassadors'Road that connects Myanmar with Kunming in Mainland China. The routesconnecting Laos and Yunnan are also usable, though quite ancient.While private entrepreneurs have already created a thriving bordertrade, the respective central governments view these developmentspositively and are seeking to formalize and build on what is nowoccurring, though without official sponsorship. The potential forsuccess is good due to the relatively strong, multiple cross-border,natural economic complementarities. Yunnan needs new markets in Myanmarand Laos for its cheap consumer products and minerals, and thislandlocked province can access the sea through Myanmar. Thai businessmenare eager to expand tourism and trade, particularly to Yunnan province,and Yunnan is, in turn, attracted by Thailand's relatively moresophisticated consumer goods consumer goodsAny tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and . Myanmar and Laos produce timber,agricultural produce and hydropower hy��dro��pow��er?n.Hydroelectric power. resources that both Tbailand and thePRC need, and the former two countries are in need of the cheapmanufactured goods manufactured goodsnpl → manufacturas fpl; bienes mpl manufacturadosmanufactured goodsnpl → produits manufactur��sthat Mainland China can provide. Myanmar is alsodeveloping a significant tourist industry.As in the IMT-GT, the first step towards furthering the GoldenQuadrangle is to develop the border areas' weak infrastructure.Representatives from each of the central governments agreed at aSeptember 1993 ADB meeting to undertake a feasibility study on buildinga circular road linking some ten towns and cities along the four countryborders. Parts of this road already exist but are in poor condition - asone local adage says, crossing these roads depends on "good naturalas well as political weather." Just now, the political weatherappears strikingly good: Intergovernmental cooperation as reflected inthe ADB agreement has been percolating for some time. The end of theCold War, which constrained the flow of people and goods, as well as thedecline of ideology and internal commitments to market reforms, are allcritical factors in creating the political will for intergovernmentalcooperation.(49) For example, following Myamnar's adoption ofinitial economic reforms in 1987, it signed a border trade agreementwith Yunnan in 1988 that helped to foster border trade coordinationcommittees comprised of Ministry of Trade officials and localbusinessmen.(50) Yunnan also benefitted from central government reforms,as Beijing opened up three border cities and counties in the province in1992. Laos adopted an economic reform program in 1988, which includesformalization for��mal��ize?tr.v. for��mal��ized, for��mal��iz��ing, for��mal��iz��es1. To give a definite form or shape to.2. a. To make formal.b. of border trade as part of a larger trade reform, and itbegan to open its borders for trade with Mainland China and Thailand inlate 1988. Yet, while these initiatives represent an importantbeginning, there are considerable hurdles that need to be crossed inliberalizing import and export controls (particularly for Myanmar),liberalizing tariff and visa restrictions and normalizing exchange ratesand currency valuations.Thus, as in the IMS-GT and IMT-GT cases, the favorable externalpolitical environment coupled with central government adoption of marketreform policies are significant causal factors in building the GoldenQuadrangle NET. An additional motivating factor in this NET is that,rather than government policies helping to create economic linkages, theIMT IMT,n.pr See inspiratory muscle training. central governments are seeking to assert a central government rolein the border region to formalize both legal and illegal trade, tobroaden the border linkages into their respective interiors and, moreimportantly, to arrest mounting social problems spilling across theborders.(51) It is estimated, for instance, that there are more than50,000 illegal laborers from Mainland China and Myanmar in Thailand.Cross-border prostitutes have also become a problem that includes thespread of AIDS along the border areas of Thailand, Mainland China andMyanmar. Trafficking in drugs, arms and ammunition also continues. Thecities connected with border trade are booming and land prices areskyrocketing; in Myanmar, there is a feeling that Chinese from theborder areas are buying up land in the prime areas of Myanmar,generating concerns about rising social and racial tensions.Environmental concerns are mounting too, as forests are felled and thePRC plans a $30 million project to dam the Mekong River Mekong RiverChinese Lancang Jiang or Lan-Ts'ang ChiangLongest river of Southeast Asia. Rising in southern Qinghai province, China, it flows south through eastern Tibet and across the highlands of Yunnan province. near theYunnan-Laos-Myanmar border.What leverage do governments have to solve these problems? To somedegree, social and political tensions will occur with economicdevelopment regardless of NET activity. Yet NETS may accentuate problemsassociated with growing pains grow��ing painspl.n.Pains in the limbs and joints of children or adolescents, frequently occurring at night and often attributed to rapid growth but arising from various unrelated causes. because they provide concentrated sitesfor economic growth. Utilizing ADB expertise in economic developmentplanning is a sound strategy for central governments in creating anenabling environment for private-sector activity, which should focus onstrengthening the border areas' infrastructure - roads, ports andair links - and creating an efficient border management system. As inthe IMS-GT and IMT-GT cases, these four governments are learning how todevelop the proper administrative infrastructure to address regionalproblems.The positive factors of the Golden Quadrangle are the vitality of theprivate sector and the political will of the central governments tocooperate for mutual benefit; the dangers are that in trying to regulateentrepreneurial activity - both to increase economic benefits and solvesocial problems that unbridled economic growth can create - the centristtendencies that they are trying to shed with economic reforms willresume. In fact, the Southeast Asian NETS demonstrate that providing acoherent policy framework for the development of NETS, let aloneconsistency among governments, has proven difficult for any onegovernment to achieve. The temptation for central governments tomicro-manage a NET, thereby reintroducing state centrism cen��trism?n.The political philosophy of avoiding the extremes of right and left by taking a moderate position.centrismadherence to a middle-of-the-road position, neither left nor right, as in politics. , is a commonproblem for governments whose bureaucratic and political infrastructuresare not geared to respond to, or even adequately contemplate, provincialneeds in their center-driven decision making. But the incentive forcentral governments to learn is great in that their political legitimacyincreasingly derives from successful economic management - includingmanagement of interdependency.Another question is how central governments can adapt their extensiveeconomic policies that are geared toward national systems - includingexport promotion, investment rules and labor force movements - tosub-regional economic cooperation and growth. As stated earlier, onemotivation for NETS in general is that they allow governments toexperiment with reforms in a limited fashion, tailor-made to aparticular sub-region. But as governments undertake more NETS alongtheir frontiers, they will face increasing pressure to rationalizeeconomic policy among sub-regions, especially within the sub-regionitself Inability to do so could constrain further sub-regionalcooperation if disputes over harmonization har��mo��nize?v. har��mo��nized, har��mo��niz��ing, har��mo��niz��esv.tr.1. To bring or come into agreement or harmony. See Synonyms at agree.2. Music To provide harmony for (a melody). of policies are perceived tobe the cause of unequal gains.CONCLUSIONSNETS are an important new phenomenon with potentially significant,but not yet clearly discernable, implications for interstate andintrastate relations. With varying degrees of enthusiasm, Asian stateshave embraced the NET concept, as evidenced by the 1992 ASEANendorsement and by the governmental initiatives and support described inthe foregoing sections. Cross-border economic flows are a naturaladaptation by Asia-Pacific nation-states to fully capitalize on Cap´i`tal`ize on`v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize onan opponent's mistakes s>. theirregion's economic dynamism in a global competitive environment. Sofar, most of the region's states are encouraging or accommodatingsub-regional linkages - sometimes too reluctantly or too boldly in theeyes of other states, and occasionally at cross-purposes with eachother. But as a given NET progresses, governments have shown that theyare capable of learning to adjust their policies and improvecooperation; in Southeast Asia, in particular, the balance of gain andcompromise has, overall, been a positive experience.The impact of NETS on interstate relations will be long-term and isstill evolving. NETS often reflect a flourishing of historical tiesamong sub-regions, reinstating a pre-colonial, pre-cold War order toregional economic dynamics. As an Asian business journal expressedregarding the transfer of Macao to China in 1999, at the start of thenext century, "the sun will rise on a region finally administeredby its own people . . . [who] have different attitudes towardsterritorial borders . . . drawn often to suit non-asian political andmercantilist needs or ambitions."(52) Thus, historical and ethnicties are converging in ways that will likely surprise us all, includingcentral government authorities. Yet it would be difficult to locate anyAsian statesman who would now tolerate a wholesale, or even partial,redrawing of the Asian political map - apart, perhaps, from the case ofthe disputed South China Sea.Another potential effect of NETS that bears watching is theenhancement of the bargaining power of provinces vis-a-vis their centralgovernments, for, as the provinces stimulate needed foreign investmentand otherwise become increasingly valuable assets, their capacity forautonomy grows. Over time, NETS may become a catalyst for greaterdemocratization, or at least pluralism, in national policy making.Central governments have generally devolved economic decision-makingpowers only reluctantly and gradually, and it has been in theprovinces' interests to balance their demands for autonomy withcooperation to deter backsliding by the center. Thus, there arecross-cutting forces that constrain provinces from going their own wayand central governments from ignoring provincial interests.What then is the ultimate meaning of NETS for the region'spolitics and security? Internally, the political significance of NETS isnot that they threaten the integrity of the nation-state, at least notin the foreseeable future. Rather they stimulate and facilitate a newintrastate balance of forces and relationships and, in successfulinstances, help governments cope with the new challenges of governing inthe post-cold War era. Moreover, while greater democracy in nationaleconomic decision making is desirable, states will continue to rely onrespective central governments to negotiate and implement internationalagreements, such as the GATT. There is thus a common interest amongstates not to encourage undue diffusion of central government controlthrough the courting of provincial interests.For interstate relations, the significance of NETS does not lie inthe prospect that they may resolve the region's most entrenchedsecurity conflicts, even though they may provide limited ways forgovernments to cooperate at the margins of these conflicts and thusserve as confidence-building measures Confidence-building measures (CBMs) are certain techniques which are designed to lower tensions and make it less likely that a conflict would break out through a misunderstanding, mistake, or misreading of the actions of a potential adversary. . NETS are unlikely to resolveage-old animosities among states; in fact, they might even revive them.Still, to the degree that NETS offer economic incentives fornation-states to abandon old psychological patterns of distrust for newpatterns of cooperation, they should be constructive rather thandivisive. Although the intimacy of NETS could create new forms ofconflict, the very existence of NET interdependencies increases the costof political conflict and creates greater stakes in politicalcooperation than in competition.Given the general enthusiasm with which Asia-pacific governments haveembraced the NETS concept, we can expect NETS to continue to exertinfluence on the region's economic life and political relations, aswell as on its security agendas and conflicts. In short, the evolutionof NETS will be a dynamic factor in the region for years to come. (1)This article draws on a comparative policy study of natural economicterritories that the Pacific Forum Center for Strategic andInternational Studies The Center for Strategic and International Studies (CSIS) is a Washington, D.C.-based foreign policy think tank. The center was founded in 1964 by Admiral Arleigh Burke and historian David Manker Abshire, originally as part of Georgetown University. (CSIS Noun 1. CSIS - Canada's main foreign intelligence agency that gathers and analyzes information to provide security intelligence for the Canadian governmentCanadian Security Intelligence Service ) is undertaking with funding from The PewCharitable Trusts Pew Charitable Trusts,philanthropic foundation established (1948) by the children of Sun Oil Company founder Joseph N. Pew (1886–1963) of Philadelphia to provide funds for "general religious, charitable, scientific, literary, and educational purposes. and the Institute for International Relations international relations,study of the relations among states and other political and economic units in the international system. Particular areas of study within the field of international relations include diplomacy and diplomatic history, international law, (Taipei).(2) Robert A. Scalapino, "The United States United States,officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Asia: FutureProspects," Foreign Affairs foreign affairspl.n.Affairs concerning international relations and national interests in foreign countries. , 70, no. 5 (Winter 1991-92) pp. 19-40.(3) For further definitions and analyses of NETS, see Chia Siou Yueand Lee Tsao Yuan, "Subregional Economic Zones: A New Motive Forcein Asia-Pacific Development," in Pacific Dynamism and theInternational Economic System, ed. C. Fred Bergsten and Marcus Noland(Washington, DC: Institute for International Economics, 1993); Myo Thantand Ming Tang, "Growth Triangles: Fad or Fact?," monographprepared for the Pacific Forum CSIS conference on natural economicterritories (Hawaii, 30 November-1 December 1993); Chia Siow Yue,"Motivating Forces in Subregional Economic Zones" (Honolulu,HI: Pacific Forum CSIS Occasional Paper, December 1993).(4) One factor that fostered economic maturation among Asia-Pacificeconomies was the surge in yen investment to the region following the1986 Plaza Accord Plaza AccordAgreement among country representatives in 1985 to implement a coordinated program to weaken the dollar. , which created capital surpluses that needed to berecycled and helped to promote the adoption of export promotionstrategies.(5) Sec Robert A. Scalapino, Trends (Singapore: Institute ofSoutheast Asian Studies Asian studies is a field in cultural studies that is concerned with the Asian peoples, their cultures and languages. Within the Asian sphere, Asian studies combines aspects of sociology, and cultural anthropology to study cultural phenomena in Asian traditional and industrial , forthcoming). Reflecting this lack of consensuswas the divisive debate prior to the APEC Bogor Summit on 11-12 November1994 over the adoption of a distant timetable to liberalize regionaltrade and investment. See John McBeth, "Down to Business," FarEastern Economic Review, 157, no. 45 (10 November 1994) pp. 29-32.(6) Robert A. Scalapino argues that due to these and other factorsthe nation-state is "being assaulted from below and above,"and that NETs will have more impact on creating internal politicaldivisions than on causing external conflicts (Speech by Robert A.Scalapino, conference on "Southeast Asian Growth Triangles,"CSIS and Institute for Southeast Asian Studies [Singapore: October1994]). See also Scalapino, Trends (forthcoming, 1995).(7) Sally Stewart Sally Stewart was a British actress. FilmographyDon't Be a Dummy (1932) - Florrie Falling in Love / Trouble Ahead (1935) - Gertie Holiday's End (1937) - Betty Sulgrave The Lady Vanishes (1938) - Julie His Lordship Regrets (1938) - Sally , "The Return of the Prodigals: OverseasChinese in Greater China," in The Political Economy of NaturalEconomic Territories in the Asia-Pacific, ed. Jane Khanna (Washington,DC: CSIS Significant Issues Volume, forthcoming).(8) Peter Tsan-yin Cheung, "The Case of Guangdong inCentral-Provincial Relations," in Changing Central-Local Relationsin China: Reform and State Capacity, ed. Jia Hao hao?n. pl. haoSee Table at currency.[Vietnamese h��o.]Noun 1. and Lin Zhimin(Boulder, CO: Westview Press, 1994) pp. 207-237; and Peter T.Y. Cheung,"Relations between the Central Government and Guangdong," inGuangdong: Survey of a Province Undergoing Rapid Change, ed. Y.M. Yeungand David K.Y. Chu (Hong Kong: The Chinese University Press, 1994) pp.20-51.(9) Peter Tsan-yin Cheung, "Relations between the CentralGovernment and Guangdong," p. 8.(10) ibid, p. 30.(11) ibid, p. 25. This policy of further opening was most recentlyexpanded in Deng Xiao-ping's famous "southern tour" inthe spring of 1992 that resulted in a total of 14 "open"(liberalized trade) zones along the coastal belt and extended economicreform privileges to more than 330 localities in neatly every comer ofthe country.(12) Gerald Segal, China Changes Shape: Regionalism re��gion��al��ism?n.1. a. Political division of an area into partially autonomous regions.b. Advocacy of such a political system.2. Loyalty to the interests of a particular region.3. and ForeignPolicy, Adelphi Paper 287 (London: International Institute for StrategicStudies The International Institute for Strategic Studies (IISS) is a British research institute (or think tank) in the area of international affairs. It describes itself as "the world’s leading authority on political-military conflict". , March 1994) p. 55.(13) Cheung, "Relations between the Central Government andGuangdong," p. 41.(14) George Segal, China Changes Shape, p. 55.(15) Chen Dezhao, "Impact of the NET on Beijing's Economicand Political Strategies," in The Political Economy of NaturalEconomic Territories, ed. Jane Khanna.(16) Osman Tseng, "Risky Business," Free China Review, 44,no. 1 (January 1994) pp. 34-5.(17) Pursuing this strategy was the primary purpose for PresidentLee's highly publicized Southeast Asia "vacation tour" inearly 1994.(18) The intragovernmental controversies, for example, are oftenbetween the Ministry of Economic Affairs The following nations have a Ministry of Economic Affairs: The Netherlands The Republic of China , which takes a more liberalview towards increased linkages with the Mainland, and the Ministry ofForeign Affairs and the Mainland Affairs Council The Mainland Affairs Council (MAC) (Chinese: 大陸委員會; Pinyin: D��l�� Wěiyu��nhu��) is a cabinet-level administrative agency under the Executive Yuan of the Republic of China (Taiwan). , which are moreconservative. See Eugenia Yun, "The Billion NT DollarQuestion," Free China Review, 44, no. 1 (January 1994) pp. 16-23,especially p. 23.(19) Philip Liu, "Direct Questions on Indirect Policies,"Free China Review, 44, no. 1 (January 1994) pp. 30-33. (20) J.A. Miller,"Princes and Merchant Adventurers Merchant Adventurers,name given originally to all merchants in England who engaged in export trade, but later applied to loosely organized groups of merchants in the major ports concerned with exporting cloth to the Netherlands. : Keeping Bureaucrats out ofBusiness," in The Political Economy of Natural EconomicTerritories, ed. Jane Khanna. (21) These were the Koo-wang talks, firstheld in April 1993 and subsequently in November 1993 and March 1994. Thetwo sides could not even agree, however, on the limited agenda items ofrepatriation RepatriationThe process of converting a foreign currency into the currency of one's own country.Notes:If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of illegal immigrants and hijackers or cross-strait fishingdisputes. (22) Robert S. Ross Robert S. Ross is a professor of political science at Boston College, associate of the John King Fairbank Center for East Asian Research at Harvard University, senior advisor of the security studies program at the Massachusetts Institute of Technology, and a member of the Council , "Political Dimensions of EconomicInterdependence in the Southern China NET," in The PoliticalEconomy of the Southern China NET, ed. Jane Khanna (Washington, DC: CSISSignificant Issues Volume, forthcoming). (23) The NETS in Northeast Asiainclude the Yellow Sea Rim, the Japan Sea Rim and the contiguous borderareas of North Korea, Russia and China. Some analysts include innerMongolia Inner MongoliaChinese Nei Mongol or Nei-meng-kuAutonomous region (pop., 2002 est.: 23,790,000), China. Stretching some 1,800 mi (2,900 km) across north-northeastern China, it has an area of 454,600 sq mi (1,177,500 sq km); its capital is Hohhot. in the latter area. See Ts. Batbayar, "Regional EconomicCooperation in Northeast Asia," Mongolian Journal of InternationalAffairs The Journal of International Affairs is a leading foreign affairs periodical published twice yearly by the students at the School of International and Public Affairs at Columbia University in New York. , 1, no. 1 (1994) pp. 4-14. (24) Lu Zhongwei, Northeast AsianEconomic Cooperation in the Post-Cold War Era(La Jolla La Jolla(lə hoi`yə), on the Pacific Ocean, S Calif., an uninc. district within the confines of San Diego; founded 1869. The beautiful ocean beaches, in particular La Jolla shores and Black's Beach, and sea-washed caves attract visitors and , CA: institute onGlobal Conflict and Cooperation, 1993) p. 11. (25) "Korea'sSmall Businessmen Cross Yellow Sea," Asian Wall Street JournalWeekly, 13 December 1993, p. 17. (26) "Kyushu, Japan'sSouthern Gateway," National Geographic (January 1994) pp. 88-117.(27) Won Bae Kim, "The Future of Coastal Development in the YellowSea Rimlands," Journal of Northeast Asian Studies, 9, no. 4 (Winter1990) pp. 53-70. (28) "Revolt of Regions," Korean Newsreview,24, no. 39 (24 September 1994) p. 7. (29) Jeffrey Lilley, "TumenTeeters," Far Eastern Economic Review, 157, no. 45 (10 November1994) pp. 46-49. (30) Masanori Yamakuchi, "Ports drowning in tideof inactivity," The Nikkei Weekly, 24 October 1994, p. 20. (31)Gerald Segal, China Changes Shape. (32) An additional Southeast AsianNET that is in a nascent stage is the East Asian Growth Area (EAGA EAGA East ASEAN Growth AreaEAGA Eastern Amputee Golf AssociationEAGA Expert Advisory Group on AIDS (UK)) thatlinks Brunei with the eastern sub-regions of Indonesia (East and WestKalimantan West Kalimantan (Indonesian: Kalimantan Barat often abbreviated to Kalbar) is a province of Indonesia. It is one of four Indonesian provinces in Kalimantan, the Indonesian part of the island of Borneo. Its capital city Pontianak is located right on the Equator line. and North Sulawesi North Sulawesi (Indonesian: Sulawesi Utara) is a province of Indonesia. It is on the island of Sulawesi, and borders the province of Gorontalo to the west (originally a part of North Sulawesi until 2001 when it became its own province). ), Malaysia (Sabah, Sarawak and Labuan) andthe Philippines (Mindanao Island). See Philippine Business, 1, no. 3(3rd Quarter, 1994) pp. 20-25. (33) The significance of the MOU is thatit seals the governments'political commitment to the NET'ssuccess and sets up a "consultative mechanism" for moreregular meetings between government officials to monitor projects in thetriangle. See "Growth Triangle MOU will be signed tomorrow,"Singapore Straits Times, 18 December 1994, p. 1; "Growth Triangle:Start of a promising future," The Straits Times, 17 December 1994;and "BG Lee: Growth Triangles will benefit ASEAN region," TheSunday Times, 18 December 1994, p. 1. (34) For an overview of differingperspectives on the IMS-GT, see Lee Tsao Yuan, ed., Growth Triangle: TheJohor-Singapore-Riau Experience (Singapore: Institute of Southeast AsianStudies and Institute of Policy Studies, 1991). (35) MichaelVatilciotis, "Search for a hinterland: Singapore appeals toneighbor's enlightened self-interest Enlightened self-interest is a philosophy in ethics which states that persons who act to further the interests of others (or the interests of the group or groups to which they belong), ultimately serve their own self-interest. ," Far Eastern EconomicReview, 151 (3 January 1991) pp. 34-36. (36) For further analysis of howRiau fit into a national policy shift, see Mubariq Ahmad, "EconomicCooperation in the Southern Growth Triangle: An IndonesianPerspective," paper presented at the International Symposium onRegional Cooperation and Growth Triangles in ASEAN (National Universityof (37) Bumiputra are the indigenous Malay people. (38) For example,Malayasia's International Trade and Industry Minister Datuk SeriRafidah Aziz This is a Malay name; the name "Aziz" is a patronymic, not a family name, and the person should be addressed by his or her given name, "Rafidah". The Malay words bin (b.) and binte (bte.) respectively mean "son of" and "daughter of". was the signatory to the IMS-GT MOU, and Finance MinisterTun TUN, measure. A vessel of wine or oil, containing four hogsheads. Daim Zainuddin is the coordination minister for the IMT-GT. (39) Theassignment of senior cabinet official Dr. B. J. Habibie to head theBatam Industrial Development Authority (BIDA) - which is the soledecision-making body for investment in the Riaus - is indicative of howthe Indonesian government centrally manages the IMS-GT. (40) Lee TsaoYuan, "Growth Triangles in ASEAN: Lessons for SubregionalCooperation," in Asia's Borderless Economy: Ihe Emergence ofSubregional Zones, ed. Edward Chen and C.H. Kwan (Sydney, Australia:Allen and Unwin, forthcoming). (41) The Straits Times, 17 December 1994.(42) Asian Development Bank, Executive Summary of Preparatory Work forthe Indonesia-Malaysia-Thailand Growth Triangle Development Project(Manila: July 1994). (43) Asian Development Bank, Executive Summary, p.4. (44) The port at Penang, for example, could be upgraded to exportagribusiness goods from the region and, according to the ADB, could cometo rival that of Singapore in the south. The region has the potential tobecome the world's largest rubber and palm-oil agro-industrialcomplex as well as a major livestock and fishery producer. See AsianDevelopment Bank, Executive Summary, p. 6. (45) Northern Growth Trianglealready showing success," New Strait Times, 15 December 1994, p. 4.(46) Chia Siow Yue and Lee Tsao Yuan, "Subregional EconomicZones," p.231. (47) This section on the Golden Quadrangle draws onanalysis in Myanan, The Growth Quadrangle of Mainland SoutheastAsia," draft manuscript (Singapore: Institute for Southeast AsianStudies, forthcoming). (48) There are about ten cross-national borderethnicities" who speak either Dai or Chinese and share commoncustoms. See G. Wijeyewardene, ed., Ethnic Groups across NationalBoundaries in Mainland Southeast Asia (Singapore: Institute forSoutheast Asian Studies, 1990) and Mya Than, "Striking it Rich inthe Golden Quadrangle," Business Times, Weekend Edition, no. 39,27-28 November 1993, p. 1. (49) As Than articulates, "During theCold War period, Thailand belonged to the Western bloc, China and Laosleaned to the Eastern Bloc and Burma remained neutral. China supportedthe Burmese Communist Party and some minority armed dissident groupswhile Thailand protected the Karen ethnic armed dissident group and someother minority anti-government groups in Burma, as well as armedinsurgents in Laos." The current thaw in relations is reflected byThailand's constructive engagement" policy toward Myanmar;ASEAN is actively encouraging Myanmar and Laos to be part of theSoutheast Asian mainstream, and China is one of the few governments thatactively supports Myanmar, in part, because both are the target of humanrights advocates in the West. See Mya Than, "Striking itrich." (50) ibid., p. 20. (51) Illegal trade in this sub-regionstems from its history of knowing no permanent border demarcationbetween the countries. Even when colonial governments began to set upcustoms posts at border cities along caravan routes, traders oftendeveloped routes to avoid them or bribed local officials, a practicestill in use and considered "informal" trade, which issubstantial. See Than, "Striking it rich." (52) Asia Inc., 2,no. 11 (November 1993) p. 37.