Microregionalism and World Order

Microregionalism and World Order Edited by Shaun Breslin and Glenn D. Hook

Microregionalism and World Order

Also by Shaun Breslin CHINA IN THE 1980s: Centre–Province Relations in a Reforming Socialist State COMPARATIVE GOVERNMENT AND POLITICS: An Introduction (4th edition, with Rod Hague and Martin Harrop) MAO NEW REGIONALISMS IN THE GLOBAL POLITICAL ECONOMY: Theories and Cases (co-editor with Christopher Hughes, Nicola Phillips and Ben Rosamond)

Also by Glenn D. Hook THE INTERNATIONALISATION OF JAPAN (co-editor with M.A.Weiner) MILITARIZATION AND DEMILITARIZATION IN CONTEMPORARY JAPAN JAPANESE BUSINESS MANAGEMENT, RESTRUCTURING FOR LOW GROWTH AND GLOBALIZATION (co-editor with H. Hasegawa) SUB-REGIONALISM AND WORLD ORDER (co-editor with I. Kearns) JAPAN’S CONTESTED CONSTITUTION: Documents and Analysis (with Gavan McCormack) JAPAN’S INTERNATIONAL RELATIONS: Politics, Economics and Security (with Julie Gilson, Christopher W. Hughes and Hugo Dobson) POLITICAL ECONOMY OF JAPANESE GLOBALIZATION (with H. Hasegawa) FROM MILITARIZATION TO DEMILITARIZATION REGIONAL ORDER AND SECURITY IN ASIA PACIFIC (co-editor with H. Kan and S.Weston)

Microregionalism and World Order Edited by

Shaun Breslin Principal Research Fellow Centre for the Study of Globalisation and Regionalisation University of Warwick

and

Glenn D. Hook Professor of Japanese Studies School of East Asian Studies University of Sheffield

Editorial matter, selection and Chapters 1 and 10 © Shaun Breslin and Glenn D. Hook 2002 Chapter 5 © Glenn D. Hook 2002 Remaining chapters © Palgrave Macmillan Ltd 2002 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2002 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 0–333–96291–5 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Microregionalism and world order/edited by Shaun Breslin and Glenn D. Hook. p. cm. Includes bibliographical references and index. ISBN 0-333-96291-5 1. Regional economics. 2. Regionalism. 3. International economic integration. 4. Globalization. I. Breslin, Shaun. II. Hook, Glenn D. HT388.M53 2002 330.9–dc21 2002075806 10 9 8 7 6 5 4 3 2 1 11 10 09 08 07 06 05 04 03 02 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne

Contents List of Maps

vii

List of Tables

viii

Acknowledgements

ix

Notes on the Contributors 1

2

x

Microregionalism and World Order: Concepts, Approaches and Implications Shaun Breslin and Glenn D. Hook San Diego–Tijuana: Microregionalism and Metropolitan Spillover Scott Grimes

3

Microregionalization across ‘Caribbean America’ Tony Heron and Tony Payne

4

Microregionalization across Southern China, Hong Kong and Taiwan Katsuhiro Sasuga

5

The Japanese Role in Emerging Microregionalism: The Pan-Yellow Sea Economic Zone Glenn D. Hook

6

Tumen River Area Development Programme (TRADP): Frustrated Microregionalism as a Microcosm of Political Rivalries Christopher W. Hughes

7

The Maputo Development Corridor: Whose Corridor? Whose Development? Ian Taylor

1

23 42

66 95

115

144

8

Microregionalism in the Zambesi Basin Patrik Stålgren and Fredrik Söderbaum

166

9

Microregionalism around the Black Sea Panagiota Manoli

193

v

vi Contents

10

Researching Microregional Integration: Towards New Frameworks of Analyses Shaun Breslin and Glenn D. Hook

Index

215 237

List of Maps 1

The Caribbean

2

Southern China, Hong Kong and Taiwan

3

The Pan-Yellow Sea Zone

4

The Zambesi Basin

vii

List of Tables 4.1 Geographical distribution of FDI in China in national total (actual use) (percentages) 4.2 China’s processing trade by country and region, 1999 (US$100 million) 4.3 Guangdong’s trade relations by country and region (value, US$100 million, and percentages) 4.4 The processing trade’s share in Hong Kong’s trade with the mainland (percentages) 4.5 Inter-provincial and foreign trade ratios (1980–1992) (percentages) 4.6 Railway transport of freight between provinces, 1998 (volume of cargo, percentages) 6.1 Leading indicators of Northeast Asia’s geography and economy in 1994 6.2 TRADP subregional and microregional trade matrix, 1996 (US$ million) 6.3 Northeast Asia subregional FDI matrix, 1997 (US$ million) 6.4 Potential comparative and complementary factor endowments in Northeast Asia microregion 6.5 Chronology of TRADP and national FEZ (Free Economic Zone) 8.1 National area and population distribution in the Zambezi River Basin 8.2 Agricultural developement and distribution in the Zambezi Basin (1995) 9.1 Microregional schemes in the framework of the BSFC area

viii

71 73 74 76 84 85 123 126 129 131 133 169 177 202

Acknowledgements Research in the Centre for the Study of Globalisation and Regionalisation at the University of Warwick is funded by the UK Economic and Social Research Council, and Shaun Breslin gratefully acknowledges their support. Glenn Hook gratefully acknowledges the award of a Leverhulme Research Fellowship and the support of the Asian Studies Frontier Research Project, Rikkyo University, and Chubu Electric Power Company.

ix

Notes on the Contributors Shaun Breslin is Reader in Politics and Principal Research Fellow in the Centre for the Study of Globalisation and Regionalisation at the University of Warwick. He is author of Mao, China in the 1980s: Centre–Province Relations in a Reforming Socialist State and, with Rod Hague and Martin Harrop, Comparative Government and Politics: an Introduction. Scott Grimes is Director of Research and Program Development at San Diego Dialogue, a regional public policy center at the University of California, San Diego. Mr Grimes is the author of three books, including Doing Business in Mexico (1999). He has also written several reports and policy papers on the San Diego–Tijuana cross-border region, including ‘The Global Engagement of San Diego/Baja California’ (2000) and ‘Towards Smart Growth Strategy for San Diego County’ (1999). His published work has focused on such issues as welfare reform, regional economic development, globalization, and urban growth management. Mr Grimes holds a Bachelor of Arts from the University of California, Los Angeles and Masters in International Public Policy from UC San Diego. Tony Heron is currently completing his PhD: ‘Export Processing Zones and the Regionalisation of the North American Textile and Apparel Production Chain: A Case Study in the New Political Economy of United States–Caribbean Relations’ at the University of Sheffield. Glenn D. Hook is Professor of Japanese Studies and Director of the Graduate School of East Asian Studies, the University of Sheffield. Recent books include Militarization and Demilitarization in Contemporary Japan (1996), Japan’s Contested Constitution: Documents and Analysis (coauthor, 2001), Japan’s International Relations: Politics, Economics and Security (co-author, 2001) and The Political Economy of Japanese Globalization (co-editor, 2001). Christopher W. Hughes is Senior Research Fellow, Centre for the Study of Globalisation and Regionalisation, University of Warwick. His major publications include Japan’s Economic Power and Security: Japan x

Notes on the Contributors

xi

and North Korea (1999), Japan’s International Relations: Politics, Economics and Security (co-author, 2001), and Japan’s Post Cold War Security Agenda: the Search for Regional Stability (forthcoming). He has been a research associate at Hiroshima University, and visiting associate professor at Tokyo University. He is also associate editor of The Pacific Review. Panagiota Manoli is a PhD candidate in the Department of Politics and International Studies at the University of Warwick. She is a Research Associate of the Hellenic Foundation for European and Foreign Policy and currently works as the Secretary of the Economic, Commercial, Technological and Environmental Affairs Committee of the Parliamentary Assembly of the Black Sea Economic Cooperation. Her research interests focus on European regionalism and the Black Sea area. Tony Payne is Professor of Politics at the University of Sheffield. He has written and edited a number of books on politics, development and regionalism, frequently with specific reference to the Caribbean. He edited, with Andrew Gamble, Regionalism and World Order (1996) and, most recently, co-authored, with Paul Sutton, Charting Caribbean Development (2001). Katsuhiro Sasuga holds a PhD from the Department of Politics and International Studies, University of Warwick. He studied economics at Waseda University (Japan) and holds a MA in International Relations and International Political Economy from the University of Kent at Canterbury (UK). He is currently conducting research on trends in microregionalization in East Asia. Fredrik Söderbaum is a PhD candidate in the Department of Peace and Development Research, Göteborg University (Padrigu). Most of his publications deal with ‘the new regionalism’ – theoretically, comparatively or specifically in Africa. Söderbaum contributed to the UNU/WIDER research project, The New Regionalism, and he has published in New Political Economy and the Journal of Modern African Studies. He is co-editor (with Michael Schulz and Joakim Öjendal) of Regionalization in a Globalizing World: A Comparative Perspective on Forms, Actors and Processes (2001). Patrik Stålgren is a PhD Candidate at the Department of Political Science, Göteborg University, Sweden. He is also Research Associate at

xii Notes on the Contributors

Centre for Applied Social Sciences, University of Harare. During 2000 he was a Fulbright Scholar at Stanford University. Among his recent publications are (with Ashok Swain) ‘Managing the Zambezi: The Need to Build Water Institution’ in D. Tevera and S. Moyo (eds), Environmental Security in Southern Africa (2000), and ‘Regional Public Goods and the Future of International Development Co-operation’ (EGDI Working Paper 2000: 2. Ministry of Foreign Affairs, Sweden). Ian Taylor is a lecturer in the Department of Political and Administrative Studies, University of Botswana and a Visiting Research Fellow at the Department of Political Science, University of Stellenbosch, South Africa. He holds an MPhil from the University of Hong Kong and a DPhil from the University of Stellenbosch (March 2000). His recent publications include Stuck in Middle GEAR: South Africa’s Post-Apartheid Foreign Relations (2001) and as an editor with Philip Nel and Janis van der Westhuizen South Africa’s Multilateral Diplomacy and Global Change: the Limits of Reform (2001). He has also published more than twenty academic articles.

1 Microregionalism and World Order: Concepts, Approaches and Implications Shaun Breslin and Glenn D. Hook 1

Microregionalism is not new. A case can be made, for example, for understanding the late-nineteenth-century creation of the modern German state as the political spillover from multiple and interconnected processes of economic regionalization amongst the hanza (Rorig 1967). Similarly, in her contribution to this volume, Manoli shows how many of the contemporary features of Black Sea microregionalization repeat similar processes from a pre-state era. More recently, the formal creation of subnational and cross-national growth triangles within the Association of Southeast Asian Nations (ASEAN) has given a renewed impetus to the study of microregionalism (Thambipillai 1998). Informal subnational economic processes of interconnectedness across national borders in Europe (Morata 1997), across the US–Mexican border (Lowenthal and Burgess 1993), and in the ‘region states’ of East Asia (Hiroshi Kakazu, Min Tang and Myo Thant 1998) have added to the impetus to carry out sustained research on microregions. Yet, despite the growing number of formal microregionalist projects, and informal microregionalization processes, microregionalism remains understudied. Perhaps more correctly, while political and economic geographers and urban planners have long recognized the importance of microregionalism, it has yet to receive significant attention in the politics and international relations disciplines. True, a number of good works do assess the causes and significance of individual microregional projects. And some scholars have taken a first step in considering their significance and implications, typically in the relationship between microregions and wider macroregional and/or global processes.2 Nevertheless, nothing exists which attempts to draw 1

2 Microregionalism and World Order

together a number of disparate cases in a theoretically informed way. This volume, then, aims to fill this lacunae in the literature by providing a wide-ranging assessment of a number of different case studies – wide-ranging in terms of both geographic coverage, and in terms of the types of microregionalism assessed. This book is the third volume in a series that started with Gamble and Payne’s Regionalism and World Order (1995), followed by Hook and Kearns’ Subregionalism and World Order (1999). In combination, these contributions evaluate three different levels of regional interaction in the modern world: metaphorically, the books have moved from ‘higher’ to ‘lower’ levels of regionalism. That is, the first book dealt with regionalist projects promoted by the big powers, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), and the Asia Pacific Economic Cooperation (APEC). It thus took up projects with preferential trading arrangements (the EU) as well as those promoting non-discriminatory practices (APEC). The second book on subregionalism moved down a level to examine those projects promoted by the weaker, non-core states of the global political economy, as illustrated by the Central European Free Trade Association (CEFTA), the Association of Caribbean States (ACS), and the East Asian Economic Caucus (EAEC). The term ‘sub’ was used here in a sociospatial, rather than simply a spatial, manner. Subregionalism here referred to the fact that these states were seeking to strengthen cooperation and inscribe identities in a more circumscribed space than the ‘higher levels’ of regionalism discussed in Gamble and Payne. In essence, these subregionalist projects take on their significance within the context of the more embracing regionalist projects and identities promoted by the powerful states. The present volume focuses on the ‘lowest level’ of microregionalism, or what Hook and Kearns (1999) also termed ‘sub-subregionalism’. The objective here is to place the study of microregionalism in the context of the analyses proffered in the first two volumes. The underlying assumption is that microregionalism and other forms of regionalism should not be viewed as contending forces. Debates indicate that different regional processes are not contradictory. On the contrary, they are complementary and parallel to each other. Both processes are inter-linked and therefore microregions may contribute to the emergence of a sub-region and viceversa (Rosenau 1995: 26). As Hettne argues, regionalization serves to strengthen microregions, ‘as the geopolitical environment becomes transformed and creates new possible alignments and a direct approach to the world economy for the subnational regions’ (Hettne 1999: 15).

Shaun Breslin and Glenn D. Hook 3

It should be clear from the above that we share with Bowles (1997) the view that one of the defining characteristics of the ‘new regionalism’ is coexisting, multiple forms of regionalism. Or as Hurrell (1995: 38) similarly argues: ‘There are no “natural” regions, and definitions of “region” and indicators of “regionness” vary according to the particular problem or question under investigation.’ Microregionalism, then, not only coexists with other forms of regionalism; it is inextricably linked to them. In the case of microregionalism within the EU, for example, partners of more-or-less equal standing and power have joined together. In many respects, however, the European case is illuminating as much for its atypical qualities as for what it says about microregional processes elsewhere. In our case studies, microregional processes include either South–South cooperation, or what Grugel and Hout (1999) and Bowles (1997) would term North-South regionalism – processes that cut across a North–South divide.3 Our key concern in this introduction is to place the context of our study of microregionalism within the wider study of regionalization and regionalism and globalism and globalization. That being said, the actual debate on the meaning of the key term in this debate, globalization, has served as much to obfuscate as to elucidate the essential features of this dynamic process. Similarly, the terminology of regionalism is contested and is frequently confusing. For example, much of the literature on subnational and cross-national regional integration uses the terminology of ‘subregionalism’, with ‘sub’ referring to the idea that these processes occur below the ‘normal’ or usual framework for examining regionalization processes. Thus, if the ‘region’ is the EU, then processes that occur below this level are ‘sub-regional’.

The new political economy of regionalism Despite a terminology which, at its simplest level, treats the concept of the region as ‘separate’, it is the interrelationship between and amongst them that needs to be kept in mind. In other words, a number of seemingly separate yet intricately linked regionalist projects and regionalization processes tie microregionalism and microregionalization to the wider debate on globalism and globalization, regionalism and regionalization, and subregionalism and subregionalization. This might not be a neat and simple concept that lends itself to short and pithy headlines, but, as Hettne and Söderbaum (2000) argue, the world is complex, and acknowledging this fact is much better than truncating reality to the fit Procrustean bed of methodological or ideological predilection.

4 Microregionalism and World Order

The distinction between regionalism and regionalization made by Gamble and Payne (1996: 250) in the first volume in this series remains a good starting point for any analysis of regionalism. Regionalism refers to the conscious, deliberate and purposive attempts made by national states to create formal mechanisms for dealing with common transnational issues. Such regionalism may well be a response to economic factors and may even have been promoted by non-state actors, but the regional project is defined as one which is promoted by governments and proceeds through intergovernmental interaction. In this sense, it is ‘top-down’ in terms of governments implementing policies which impact on the economy and society. Regionalization refers to processes which, rather than resulting from predetermined plans of national or subnational governments, primarily emerge from the actions of non-state actors.4 These cross-national processes can be initiated by nongovernmental organizations (NGO) and other actors. Transnational cooperation by NGOs to deal with shared transnational environmental issues is illustrative of such a cross-national process. However, regionalization is more often assessed as having a primarily economic basis. ‘Spontaneous’ microregionalism, as the exemplary cases of the zone of the Sea of Japan and the ‘triangles of growth’ indicate, may develop without or beyond the formal will of institutionalized governmental arrangements (Smouts 1998: 35). This particular form of regionalism is driven by economic forces, production and finance, that do not acknowledge formal borders. Under this understanding, microregionalization places an emphasis on the creation of transnational economic spaces which result from the deliberate or indeliberate action of other actors which ‘at least initially may foster a relocation of authority from the political to the economic realm’ (Rosenau 1995: 25–6). In the extreme ‘hyper-globalization’ thesis of Kenichi Ohmae (1995: 6), the role and significance of state actors in the creation of what he terms ‘region states’ is essentially ignored. The significance of state borders is also, at the very least, downgraded: ‘What defines [region states] is not the location of their political borders but the fact that they are the right size and scale to be the true, natural business units in today’s global economy.’ But the role of non-state economic actors is patently important. Indeed, as we will argue later, the structure of the global economy and the predominance of neoliberal economic paradigms provides the context for this study. However, we should avoid teleological explanations and take care not to depoliticize the debate. As an illustration, on a general level, neoliberalism – as

Shaun Breslin and Glenn D. Hook 5

promoted by purposive state actors and international organizations – does not just exist in a political void. It is predicated on political and ideological preferences and, if not promoted, is certainly facilitated by the decisions of governments and international financial institutions (which are themselves clearly not apolitical). Or, indeed, in the case of outward investment in East Asia, the negotiated deal by the US and Japanese authorities to realign currency exchange rates cannot be ignored. As seen in the case of the currency realignment following the 1985 Plaza Accord, for example, decisions at the global level are crucial to understanding the way opportunities for different levels of regionalization to proceed are interrelated. Furthermore, a key finding of this study is that national and local governments across the world have implemented numerous policy initiatives to facilitate increased transnational economic relationships – to open their national economic space to a wider transnational economic space and often to locate the national economic space within a global capitalist division of labour and production. So rejecting the overly apolitical approach of Kenichi Ohmae, we propose an analysis that emphasizes the importance of the state (at both national and local levels) as a facilitator of economic integration, and the relationship between state and economic non-state actors (between agency and structure). Returning to Gamble and Payne (1996: 334), regionalization can be summarized as being a process which: ‘Although seldom unaffected by state policies, the most important driving forces for economic regionalization come from markets, from private trade and investment flows, and from the policies and decisions of companies’ (emphasis added). Thus, as far as the different levels of ‘isms’ are concerned, from globalism down to microregionalism, all should be understood as political projects promoted by the interaction between a variety of actors. Indeed, for Shaw (2000), moving away from the old statist approach to regionalism is a characteristic of analyses of new regionalisms. While the old regionalism simply focused on state actors, the new regionalism should add inter-state global and regional institutions, non-state actors such as multinational corporations, and also (though perhaps to date with less impact) emerging civil societies and national and international nongovernmental organizations. The balance in importance of these actors varies on a case-by-case basis. This is important to note, and it is one of the main intentions of this volume to contribute to the emerging literature on comparative regionalism. In his essay on the new political economy of area studies, Payne (1998: 255) notes that the literature on hegemony was developed

6 Microregionalism and World Order

primarily as a result of ‘a selective reading of the US post-war experience minimally qualified by reference to nineteenth century Britain’. In some respects, it is a shortcoming that the comparative regionalism literature is in danger of repeating. In the US-based literature in particular, NAFTA might be compared to the EU, and often to APEC. So while this volume does contain two chapters considering microregionalism in the Americas, we have taken care to include examples from often neglected areas of the world – particularly Africa – in order to provide a more comprehensive set of cases for considering regional processes through a comparative approach.

From the global to the micro To recap, then, a key aim in this volume is to consider a complex matrix of relationships, and to trace how these relationships are manifest at the local level. For obvious reasons, the case studies in this volume concentrate on the specifics of the individual microregional projects, but all are predicated on Smart’s (2000: 74) understanding that: ‘capitalist practices are embedded in local structures, and that certain contexts can generate new and vibrant variations upon the theme of capitalism. If nothing else, globalization produces a considerably diverse set of local outcomes’. This understanding, then, does not posit the local against the regional or the regional against the global as loci of analysis. Rather, it suggests that assessing the relationship between and amongst the local the regional (and multiple forms of region) and the global remains a fruitful avenue for research. The global As far as globalism is concerned, we argue that the globalist project is a statist project which has been pursued with vigor by successive US administrations, supported by the neoliberal agendas of other governments in the advanced capitalist world. It seeks to spread specific political, economic, security and social forms of interaction and understanding on a global spatial scale. It is symbolized in particular by Reaganite–Thatcherite efforts to spread the market economy. Globalization, in contrast, is a process of growing interconnectedness in these different dimensions. Whereas the US as a state actor has thus been purposive in seeking to realize national interests through the pursuit of the globalist project, globalization processes are driven forward by actors which need not be motivated in these terms. This is the case, for example, with US business enterprises which develop a

Shaun Breslin and Glenn D. Hook 7

global strategy in order to maintain international competitiveness and ensure continued profitability. The regional Similarly, many regionalist projects are promoted by the stronger states in the international system, as with the EU, NAFTA and APEC. In terms of scope, the regionalist project seeks to pursue interests and create a shared identity within a circumscribed regional space. In the case of the EU, for example, the ending of the Cold War has allowed a redefinition of the European identity (or identities) to include parts of Scandinavia and former East European states. In the case of NAFTA, geographical contiguity has served to help demarcate the region. In APEC, however, trade, investment and other forms of market exchange linking economies as diverse as Chile and Taiwan have been used to impute a concept of ‘Asia Pacific’ with meaning as a way to tie together insiders in a shared identity. At the same time, it excludes outsiders from the tantalizing bounty of the East – at least that was a common perception before the 1997 Asian financial crisis. Regionalization processes, as with globalization, are promoted by business enterprises and other non-state actors pursuing interests on a regional spatial scale. In this sense, regionalization as a process is linked intricately with globalization as a process, as the former is part of the more encompassing processes occurring at the global level. As in the case of business enterprises pursuing a strategy focussing on a specific region, as illustrated by British enterprises exclusively focussing on business in the EU, US companies in NAFTA, or Japanese companies in APEC, regionalization processes are simultaneously separate from, as well as symbiotically a part of, globalization. What counts is the level at which the analyst seeks to apprehend these different projects and processes. Likewise, subregionalist projects are pursued by states, but these are the weaker states in the global political economy. As in the cases of CEFTA, ACS and EAEC, these projects have emerged in the context of, and often in reaction to, the larger regionalist projects pursued by the stronger states. Similarly, as with regionalization, business enterprises pursuing interests in a subregion are simultaneously separate from, as well as a part of, globalization processes. At the same time, subregionalization is intertwined with regionalization. The microregion It is the contribution of this volume to bring the study of these phenomena down to the little-studied level of microregionalism

8 Microregionalism and World Order

Microregionalism refers to those processes of growing regional interconnectedness that occur below the national level, and which cut across national borders. In many cases, the microregionalist project is promoted by non-state actors, such as subnational political authorities. Nevertheless, it shares with the regionalist and subregionalist projects promoted by states the motivation of seeking to reinscribe spatial relations in order to promote political, economic, security, cultural and other interests. Unlike the higher-level cases, then, subnational actors often play the pivotal role in promoting microregionalism. Indeed, one of the key findings from the case studies in this volume is that the conflicting goals and aspirations of local and national governments frequently act as a brake against microregional integration. As with regionalization and subregionalization, however, business enterprises seeking to realize interests on a microregion level are simultaneously separate from, as well as a part of, globalization processes. It would defeat the purpose of this volume, however, if readers were to regard microregionalism as a secondary or in some way inferior form of regionalism. It is not. To be sure, microregionalism may well be seen as a secondary form of regionalism in some cases. Morata’s analysis of the North-West Mediterranean Euroregion provides a good example here (1997: 292–3). Morata argues that microregionalism was driven by the development of wider European integration. In essence, the authority and efficacy of national governments in dealing with transboundary issues has been undermined both by the transfer of some fields of national sovereignty upwards to the EU and by the concomitant dismantling of national borders as barriers to inter-EU trade. Institutional changes at the EU level, as well as new communications technologies and the development of transportation, have encouraged the formation of regional networks based on common interests in terms of economic development. The same is true, to greater or lesser extents, in many of the cases studied in this volume – Black Sea microregionalism in the context of both EU regionalism and subregional ‘Euroregions’; the Zambesi Basin in the context of SADC (and EU–SADC relations); the San Diego–Tijuana microregion in the context of NAFTA; and Caribbean America in the context of both NAFTA and the plans for a Free Trade Area of the Americas. In other cases, however, the higher-level region is more difficult to identify and define. In East Asia, for example, while APEC does exist as a higher-level region, its relevance for objectively identifiable indices of regionalization is, to say the least, contested. If we perceive economic regionalization in East Asia as owing more to

Shaun Breslin and Glenn D. Hook 9

informal economic interaction than to intergovernmental collaboration, then microregionalism is neither secondary nor inferior. Indeed, we might argue that, in certain practical terms, the higher levels of subregionalization in East Asia and regionalization in Asia Pacific are occurring through overlapping and interlinked microregionalist and microregionalization processes. In this sense, microregionalism should not always be conceived as a response to globalization and higher-level regionalism; rather, in some cases, it can be conceived as a promoter of higher-level regionalization and, indeed, globalization. Building on Gamble and Payne’s distinction between regionalism and regionalization – and at the risk of oversimplification – we can identify three main reasons for the actions taken to establish microregions. In terms of microregionalism, the first is the desire to exploit economic complementarity. An example here would be the development of the Tumen River Delta project. National and local state leaders5 are attempting to build a region that can exploit the capital and technology of Japan and South Korea; the natural resources of the Russian Far East (and potentially North Korea); and the abundant (and cheap) labour, land and primary resources in north-eastern China. The second is where subregional growth areas are proposed and created to facilitate the joint development of natural resources, infrastructure, and industries in cases where the resources are located on or around the international border. A case in point is the Malaysia–Thailand Joint Development Area to explore and transport offshore natural gas to Songkhla in southern Thailand for onward redistribution to each country’s market. In such cases, the initiatives stem from sharing capital investment, and potentially also from resolving territorial disputes (particularly in the case of offshore resources). The third is where neighbouring subnational political authorities deem that local collective action is the most efficient mechanism for dealing with local transboundary issues. In the case study of the Zambesi Basin in this volume, we see an echo of the debates put forward by Mitrany on the Tennessee Valley Authority which did so much to generate functionalist understandings of regionalism6 –whether regional forms should be based on functionally discrete areas, or whether holistic bodies need to be created to oversee the interactions and spillovers between and from individual functional issues. In analyses of microregionalization, the emphasis switches from the creation of formal sociospatial structures, identities and the actions of state actors, to informal or ‘soft’ regional linkages and the actions and decisions of non-state actors. In all this, though, the main impulse for

10 Microregionalism and World Order

microregionalization is divergent levels of development between and amongst subnational areas of different national economies. Drawing largely from the examples of US–Mexico and European economic regionalization, these processes are typically characterized as the consequences of ‘growth spillover’. Non-state actors in the more developed region facing rising land and labour costs will try to exploit the relatively low production costs in a neighbouring, but cross-border area. In the USA–Mexico and China–Hong Kong cases outlined in this volume, the core urban sector essentially extends its economic influence over the border7 – hence the process is often referred to as ‘metropolitan spillover’ or as ‘extended metropolis’ (Chia and Lee 1993: 236). What distinguishes economic microregionalization from other means of exploiting divergent levels of development is geographical proximity. This is an important point to note about this level of regionalism. In a sense, while geographical propinquity is often regarded as one of the quintessential features of a region, microregions, much more than regions, are geographically close. A case in point is the ‘Asia Pacific’ region. In terms of identity, it is precisely because of the difficulty of using geographical proximity to link say Chile and Taiwan, that trade finance and other economic indices serve as core ingredients for imputing the diverse economies of the APEC process with an identity as part of the same ‘region’. And geographical proximity is usually expected to increase economic interaction – it minimizes transaction costs, and reduces transport time; it also eases travel for executives and managers and allows for face-to-face interaction. This will be particularly important in the microregion where managers from the core area wish to maintain crucial management functions in factories in the neighbouring developing area. In the case of the San Diego-Tijuana corridor, for instance, the launch of NAFTA encouraged not only multinationals to relocate plants on the Mexican side of the border, but also Japanese multinationals to relocate plants on the Mexican side and management on the US side of the border. Clearly, different state and non-state actors have different levels of ability to shape and response to globalization and different levels of regionalization. For those core economic participants in microregional projects, the impetus for participation is clear-cut: they can take advantage of their comparative advantage to utilize cheaper production costs in peripheral areas. They out-source production of those labour-intensive activities while retaining a close control over technology, management, quality, and so on. In short, business enterprises strive to maintain international competitiveness and

Shaun Breslin and Glenn D. Hook 11

survive by becoming part of a cross-border production system at the microregional level rather than remaining solely part of a national economy. For the peripheral areas, however, the impetus for participation might on the face of it seem less clear-cut. Why should they submit themselves, and indeed, deliberately emphasize their position, as a low-cost production site, eager to be exploited by external capital? The answer lies in a fundamental change in the approach of peripheral elites to the global political economy. Rather than fearing dependence and exploitation, the fear now is one of exclusion. As Bowles (1997: 225) perceptively notes: By 1991 the purpose of forming a regional trading bloc was no longer premised on the need to be more independent of the global economy but rather seen as a measure to ensure continued participation in it. The fear of developing countries was no longer one of dependence on the global economy but rather was seen as a measure to ensure continued participation in it. Microregionalism, then, might be seen as a means by which developing economies can benefit from the comparative advantage of neighbouring areas and participate in the global economy – albeit an uneven and unequal participation. That being said, the relationship between microregionalism and globalization needs to be considered in greater detail. In some of the literature, for example, a propensity exists to explain globalization as a technologically driven phenomenon. In their extreme forms, such technology-based understandings can lead to a rather rose-tinted view of the impact of globalization: In the developed countries of the West, new technology will lead to big productivity increases that will cause high economic growth – actually, waves of technology will continue to role out through the early part of the 21st century. And then the relentless process of globalisation, the opening up of national economies and the integration of markets, will drive the growth through much of the rest of the world. An unprecedented alignment of an ascendant Asia, a revitalised America, and a reintegrated greater Europe – including a recovered Russia – together will create an economic juggernaut that pulls along most other regions of the planet. These two metatrends – fundamental technological change and a new ethos of openness – will transform our world into the beginnings of a global civilisation,

12 Microregionalism and World Order

a new civilisation of civilisations, that will blossom through the coming century. (Schwartz and Leyden 1997: 116)8 Technological change is clearly important. We share Oman’s (1999: 36) view that a ‘principle macroeconomic force shaping those dynamics and driving “globalization” … is the ongoing development, formidable competitive strength, and spread … of post-Taylorist “flexible” approaches to the organization of production within and between firms’. The results of these new modes of capitalist production are plain to see in many different parts of the world. Whether in Europe, the Americas or East Asia, subnational parts of national economies are being tied into the global capitalist economy. This interrelated trend means cross-border linkages are gradually becoming established between and amongst national economies. It can be seen, for example, in the expansion of trade and investment in East Asia as a result of growing land and labour costs in Japan and the NICs. These cross-border activities have been a crucial driver of both microregionalization, and wider Asia Pacific and East Asian economic regionalization in general. Illustrative of this trend is the Yellow Sea Economic Zone, where the subnational economy of Kyushu is increasingly becoming tied into a cross-border production system involving the Yellow Sea coastal regions of China and South Korea.

Clarifying terminology Across national borders The majority of the literature on microregionalism concentrates on cross-border economic interactions between geographically contiguous areas. However, in four of the cases in this volume, subnational areas are separated by sea – the Baltic Sea, the Yellow Sea (including the Tumen River case study), and the Taiwan Straits. Rather than perceive seas as barriers, we use the concept of ‘liquid continents’ to highlight the fact that sea-routes have, for thousands of years, been a major means of economic interaction. As noted above, this was also the case in forging international economic links in the pre-state era. Importantly, the ending of the Cold War played a crucial role in ‘unfreezing’ some of these historic links across the sea. Economic regionalization In one of the most influential works on post-war economic regionalism, Ballassa (1961) used the term ‘economic integration’ to

Shaun Breslin and Glenn D. Hook 13

refer to the creation of formal cooperation between states – the movement towards a free-trade area, a customs union, a common market, an economic union, or complete economic integration9. In some of the cases under discussion here, we do see the emergence of formal microregions with clear boundaries and parameters inscribed by state elites. However, in keeping with our general understanding of the distinction between regionalism and regionalization above, other forms of microregionalization exist where state actors and intergovernmental dialogue are far less important. Thus, ‘regional economic integration’ here is used to refer to the processes of reducing the economic significance of national political boundaries within a geographical area, either as a result of inter-state dialogue, or through non-state directed forces (Anderson and Blackhurst 1993: 1). In other words, what is significant to our discussion is not whether economic and other interactions should be regarded as regional ‘integration’ or not, but that economic regionalization at whatever level is seen as a multifaceted and interrelated process that can include cooperation, harmonization, and convergence as well as integration, per se. Below the national level In general, microregionalism refers to subnational levels of regionalization, whether in the political, economic, security or social dimensions, albeit with the economic usually being most salient. However, there are exceptions to this general principle arising from the special position of ‘city states’, particularly in East Asia. In the case of Singapore and Hong Kong in particular,10 microregionalism can be seen as a mechanism of linking subnational areas of neighbouring states with these city-states (see the concept of ‘metropolitan spillover’ considered above). Given the size of these ‘city-states’, it makes little sense to talk of subnational parts of Singapore and Hong Kong. What this suggests is that students of international relations in general, and international political economy in particular, need to take care to avoid simply considering the nation as the unit of analysis. Subnational governments across the world are taking increasingly important roles in shaping local economic futures – often in conjunction with international capital. Indeed, as the experience of competition from regions in Europe to attract Japanese investment shows, this is far from just an issue for developing states. This emphasis on the role of subnational governments creates a four-way matrix of relationships: local government to international non-state; local government to local government; non-state to non-state; and local government to national government.

14 Microregionalism and World Order

State actors This understanding places an importance on considering different types and levels of state and sub-state actors. In many cases, the key state actors are national state leaders. In others, it is local leaders of subnational political authorities that take the initiative. For example, Franco-Spanish microregionalism has emerged through dialogues between local state elites in Catalonia, Lanquedoc-Roussillon and Midi-Pyrenees, while plans to create a Japan Sea Zone have primarily emanated from subnational political and bureaucratic elites in the Japanese city of Niigata. In other cases, the role of supra-state or regional actors also has to be considered. An appropriate example here is the promotion of microregional integration between Singapore and adjacent areas of Malaysia and Indonesia. This policy was officially proposed by the then Deputy Prime Minister of Singapore, Goh Chok Tong, in December 1989. After considerable debate and negotiation between regional leaders, developing economic micro-regionalization (or what they termed ‘growth triangles’) was endorsed as an official ASEAN policy at the fourth summit in Singapore in January 1992 as a ‘parallel and supportive mechanism of regional economic cooperation’ (Chia and Lee 1993: 230). As such, micro-regionalism was a result of not only inter-state dialogue, but of negotiation within a higher regional organization in the shape of ASEAN.

International economic integration and national economic fragmentation? One important element of microregionalization is the establishment of export processing zones (with various nomenklatura). These zones represent a deliberate attempt to place part of the national economy within an international division of labour. Typically, these zones entail encouraging inward investment by emphasizing international comparative advantage in terms of cheap labour and land, and preferential fiscal policies, rather than in the nation as a whole. The vast majority of the production in these zones is for export to other markets. But while these zones mark a deliberate attempt to internationalize part of the national economic space, one of the consequences can also be to denationalize the national economic space. This occurs when exportbased production relies not only on foreign investment, but also on imported components and other materials. As a result, these areas are in many ways more firmly locked into the international economy than they are part of the domestic economy. As Lardy (1995: 1080) notes in

Shaun Breslin and Glenn D. Hook 15

relation to Chinese export-led growth: ‘rapid export growth from foreign invested firms, a large share of which is export processing, has limited backward linkages and the domestic content of exports is very low. To some extent export industries appear to be enclaves’. Lardy’s observation’s echo Bernard and Ravenhill’s (1995: 197) argument that ‘foreign subsidiaries in Malaysia’s EPZs were more integrated with Singapore’s free-trade industrial sector than with the “local” industry’. These ‘enclave economies’ do not form part of what Jin Bei (1997: 65) calls the ‘national economy’ since the enclave economies: ‘do not primarily involve the actualisation of … [national] productive forces, but the actualisation of foreign productive forces… or the economic actualisation achieved by turning … [national] resources into productive forces subject to the control of foreign capital owners.’ Similar trends are identified by Heron and Payne in their contribution to this volume on Caribbean America. They note that ‘production sharing enclaves’ have served to increase the involvement of the Caribbean apparel sectors in the US production system. However, this has not generated horizontal linkages and integration within the apparel sectors in the Caribbean itself. Even in stronger states, microregional projects can also influence, or result from, disunited national economic spaces (if not fragmentation). For example, both Taylor and Hook, in their chapters on the Maputo Corridor and the Yellow Sea Zone respectively, note that microregional initiatives were initiated by attempts in the dominant regional states to redress uneven national patterns of development. In South Africa, the logic of promoting transnational Spatial Development Initiatives was officially explained as needing to redress the structural spatial imbalances that resulted from the apartheid era, when economic policy favoured those areas and sectors that provided support for the National Party. In Japan, microregional projects represent a deliberate attempt to reorient the economy of Fukuoka prefecture and the cities of northern Kyushu away from the rest of Japan, and more towards East Asia, with a more particular focus on China and South Korea. Similarly, in the case of Okinawa, which remains as a peripheral subnational part of the Japanese economy, local political and economic elites are seeking to revitalize the local economy by developing cross-border economic links with Taiwan and the Shanghai region of China. In the face of the bursting of the Japanese economic bubble and tight finances at the national level, marginalized parts of the national economy like Okinawa have been forced to look to cross-border opportunities as a way to revitalize the local economy.

16 Microregionalism and World Order

What this means in practice, however, is the integration of certain subnational parts of national economies, while other subnational parts are marginalized. In other words, there are peripheral parts of core economies, which are being left outside these various regionalist projects, at the same time as subnational parts of peripheral national economies are being integrated into microregional and other cross-border regionalist projects. For example, in the case of China, microregionalization is contingent on both wider East Asian regionalization, and globalized production and commodity-driven production networks.

Aims of the book This project was not conceived as an attempt to find a single explanation for understanding the emergence and significance of microregionalism. On the contrary, the underlying assumption is that the case studies will reveal different implications. In other words, microregionalism is not conceived as a single type of project, nor is microregionalization viewed as a single process; rather, both are seen as historically and spatially contingent. Our task is to understand and explain the reasons for the differences which emerge from these different historical and spatial conditions. In keeping with the first two volumes in this series, the analysis is divided into three main levels of regional interaction and cooperation – political, economic and security relationships, with the social implications of these relationships, particularly in terms of norms and ideology, playing a supplementary role in some of the chapters. Given the nature of the microregionalist projects and microregionalization processes being assessed, traditional concepts of security are not expected to be at the fore. National security remains, after all, predominantly the preserve of national governments. Nevertheless, non-traditional understandings of security are very much part of the process of regional cooperation below the national level. Its importance can be seen, for example, in the cooperative police action and subnational and cross-national cooperation in controlling the drugs trade and criminal activity that threaten a state’s security – a theme that is particularly important in the case study of Caribbean America. Similarly, cross-border environmental problems and illegal migration are increasingly viewed as key issues in national security, with an understanding by national state elites that, in certain cases,

Shaun Breslin and Glenn D. Hook 17

such problems may be best dealt with through collaboration amongst affected local, rather than national, elites. Nevertheless, the nature of microregionalism suggests that the nexus between politics and economics will dominate the discussion in these cases. While we have not been prescriptive in forcing a common template on the contributors to this volume, a number of key questions underpin our attempt to move forward the debate on microregionalism. First, we ask if microregionalist projects work best when they reflect, rather than attempting to shape, new cross-national economic spaces. To use Scalapino’s (1991–2) terminology, are they most efficacious when they encompass ‘natural economic territories’ rather than artificially trying to create ‘new economic territories’. Put another way, does economic microregionalization follow or lead economic activity? This issue is very much related to the question of what dynamics lead to the creation of microregional interaction, and the relationship between ‘elite-led’ and ‘market-led’ processes. And this leads us to our second major line of investigation, namely, the relationship between these processes, and the relationship between microregional actors. An obvious starting point for our analyses is an identification of the major actors involved in each case study, and, on a very simple level, placing the case studies into one of our two main types – is it primarily microregionalism or primarily microregionalization? Clearly, however, as we hope this introduction has established, neither microregionalism nor microregionalization are either mutually exclusive, or pure types. From this observation arises a number of secondary questions that emerge from an attempt to identify the relationship between these actors – both across national boundaries and within individual states. How does microregionalism take place across national boundaries? For example, what mechanisms exist for dialogues between state elites, either at the national or the local level? Where such mechanisms do not exist – primarily for dialogue between local state elites – then how do elites create the political space in which dialogue can take place? In the case of US–Mexico relations, a legal basis exists for such interaction through the Border Liaison Mechanism. At the non-state level, we also ask what is the importance of associations of businessmen in particular in providing informal forums for cross-national dialogue – the East Asian Businessman’s Forum, the Taiwanese Business Association in Dongguan in China, and the numerous associations that exist in the Black Sea region?

18 Microregionalism and World Order

A key question that emerges here is whose interests are being represented in the promotion of a specific microregionalist project? For example, in his chapter on the Maputo corridor, Taylor argues that while the project has been conceived and promoted by the private sector in South Africa, economic microregionalization has proceeded with the active support of the South African state. Similarly, though economic integration between Hong Kong and southern China has primarily been driven by the investment decisions of non-state actors, the actions of state actors in the PRC have been significant – in establishing the SEZs in Guangdong, in reducing barriers to trade and investment, in providing start-up incentives, in relaxing border controls for Hong Kong business elites, and in providing the hard infrastructure necessary to move goods and individuals around the microregion. Finally, we ask what are the implications of microregionalism for world order? The hyper-globalization thesis associated with Kenichi Ohmae goes too far. As is clear from the previous two volumes in this three-volume series, no one is suggesting that the state is irrelevant, or that the state system is on the verge of collapse. Far from it. Even where we identify non-state actors as the major driving force in microregionalism, we suggest that states and non-state actors remain important facilitators, if not collaborators, in microregionalist projects. Of course, it might simply be the case that microregional projects have no impact or importance whatsoever. Microregionalism might founder in the face of conflicting national and local priorities, and/or conflicts over the role and scope of the region. For example, despite significant diplomatic activity involving policy-making elites from international organizations, states, and sub-state political authorities, the Tumen River Delta project has yet to emerge as a functioning unit of economic activity, as Hughes’ chapter clearly points out. Black Sea microregionalism is also slow in emerging. Having said that, however, with the passage of time microregionalism might emerge as new levels of (primarily economic) governance in a globalized world. On one level, microregionalism might be perceived as an emerging layer of economic governance between the nation-state and the global economy – a mechanism through which the domestic meets the international and the global. Microregions might, then, emerge as new sites of competency, and potentially authority, that could complement the role of the nation-state. If they succeed in promoting development and growth, then the legitimacy and authority of the participating national governments may be enhanced by participation in microregionalist projects.

Shaun Breslin and Glenn D. Hook 19

Alternatively, microregionalism might be seen as a challenge to the existing ‘Westphalian’ authority of national governments and nationstates. For example, in Europe, the expansion and consolidation of the EU might lead to the creation of new layers of governance below the national level and across national borders. Microregionalism might simply be the right size and level of economic governance as states lose power ‘upwards’ to the ‘super-region’, and ‘downwards’ to the global economy. Again, as subnational areas cooperate and integrate across national boundaries, they may become more oriented towards each other than they are towards their respective national governments. In Russia, we see different parts of the country being integrated into two very different higher-level regional economies – one part into the peripheries of Europe, another into East Asia. How these two subnational areas subsequently interact with each other, and interact with Moscow, is another question altogether. If the economic fortunes of Shenzhen and southern China become contingent on the decisions of non-state actors in Hong Kong, then subnational policy-makers in southern China might base their policies on what pleases Hong Kong business elites rather than the plans and programmes of national policy-makers in Beijing. What this suggests is a gradual process whereby, due to competency at the microregional level, authority and legitimacy will follow. If the trend towards regionalism is any indication, the new world order could involve governance on multiple levels, including the regional, subregional, and microregional as well as the national; in multiple dimensions of power, the political, economic, security and cultural; and in multiple sites of competency. In other words, the state, as under the Westphalian system, will be transformed from the site of governance, as in the orthodox realist view, to one site of governance. For instance, in the case of the transborder problem of acid rain, or the subnational problem of the pollution of transborder rivers, a regional or subregional organization, on the one hand, and a subnational organization, on the other, might have greater competency to deal with these international tasks in comparison with the national state, the key traditional actor in dealing with international tasks. With time, these levels of regionalism and subnational authority might emerge as new levels of governance, with legitimacy and authority, not simply competency, to carry out these tasks. If such trends were to continue, the study of different levels of regionalism would in the future add to our greater understanding of the emergence of new sites of governance

20 Microregionalism and World Order

and the transformation of world order this implies. In this sense, analyzing the link between regionalism and governance is central to future research in this field.

Notes 1. Glenn Hook wishes to thank the Asian Studies Frontier Research Project, Rikkyo University, for support of this project. All research at the Centre for the Study of Globalisation and Regionalisation at the University of Warwick is funded by the UK Economic and Social Research Council, and Shaun Breslin gratefully acknowledges their support for this project. 2. For example, Mittelman (1999: 28), Hettne (1999), Hettne and Söderbaum (2000), Breslin and Higgott (2000), Schulz, Söderbaum and Öjendal (2001: 16). 3. The geographic connotations of North and South might be slightly problematic here as we are considering microregional projects which, by definition, are between geographically contiguous areas. As such, it might make more sense to talk about regionalism between more and less developed states. 4. Different terms are used by different authors to make the same distinction. Earlier writing on regional integration tended to use the terms ‘informal integration’ or ‘soft regionalism’. Higgott (1997) prefers the terms de jure and de facto regionalism to describe the two different processes in East Asia. 5. With the aid and support of the UNDEP. 6. Mitrany’s (1944) definitive statement on functionalism and regionalism is found in A Working Peace System. 7. See also Breslin (2000). 8. This quote is taken, with permission, from Higgott and Reich (1998) which provides an excellent summary of different explanations of globalization. 9. It is also used by economists to refer to the movement toward one price for any single piece of merchandise, service, or factor of production in different states. See Drysdale and Garnaut (1993: 189). 10. And to a lesser extent, Macao.

References Anderson, Kym and Richard Blackhurst (1993) ‘Introduction and Summary’, in Kym Anderson and Richard Blackhurst (eds), Regional Integration and the Global Trading System, New York: Harvester Wheatsheaf, pp. 1–15. Ballassa, Bela (1961) The Theory of Economic Integration, London, Allen & Unwin. Bernard, Mitchell and John Ravenhill (1995) ‘Beyond Product Cycles and Flying Geese: Regionalization, Hierarchy, and the Industrialization of East Asia’, World Politics, (47): 171–209. Bowles, Paul (1997) ‘ASEAN, AFTA and the “New Regionalism”, Pacific Affairs, 70 (2): 219–33.

Shaun Breslin and Glenn D. Hook 21 Breslin, Shaun (2000) ‘Decentralisation, Globalisation and China’s Partial Re-engagement with the Global Economy’ New Political Economy, 5 (2): 205–26. Breslin, Shaun and Richard Higgott (2000) ‘Studying Regions: Learning from the Old, Constructing the New’, New Political Economy, 5 (3): 333–52. Chia Siow Yue and Lee Tsao Yuan (1993) ‘Subregional Economic Zones: a New Motive Force in Asia-Pacific Development’, in Fred Bergstein and Marcus Noland (eds), Pacific Dynamism and the International Economic System, Washington: Institute for International Economics, pp. 225–69. Drysdale, Peter and Ross Garnaut (1993) ‘The Pacific: an Application of a General Theory of Economic Integration’, in Fred Bergstein and Marcus Noland (eds), Pacific Dynamism and the International Economic System, Washington: Institute for International Economics, pp. 183–223. Gamble, Andrew and Anthony Payne (1996) ‘Conclusion: the New Regionalism’, in Gamble and Payne (eds), Regionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 247–64. Grugel, Jean and Wil Hout (eds) (1999) Regionalism Across the North–South Divide: State Strategies and Globalisation, London: Routledge. Hettne, Björn (1999) ‘Globalisation and the new Regionalism’, in Björn Hettne, András Inotai and Osvaldo Sunkel (eds), Globalism and the New Regionalism, Basingstoke: Macmillan/UNU/WIDER, pp. 1–24. Hettne, Björn and Frederik Söderbaum (2000) ‘Theorising the Rise of Regionness’, New Political Economy, 5 (3): 457–73. Higgott, Richard (1997) ‘De Facto and De Jure Regionalism: the Double Discourse of Regionalism in the Asia Pacific’, Global Society, 2 (2): 165–83. Higgott, Richard and Simon Reich (1998) ‘Globalisation and Sites of Conflict: Towards Definition and Taxonomy’, University of Warwick, CSGR Working Paper 01/98. Hiroshi Kakazu, Min Tang and Myo Thant (eds) (1998) Growth Triangles in Asia: a New Approach to Regional Economic Development, New York: Oxford University Press/Asian Development Bank. Hook, Glenn and Ian Kearns (eds) (1999) Subregionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan. Hurrell, Andrew (1995) ‘Regionalism in Theoretical Perspective’, in Andrew Hurrell and Louise Fawcett (eds), Regionalism in World Politics, Oxford: Oxford University Press, pp. 37–73. Jin Bei (1997) ‘The International Competition Facing Domestically Produced Goods and the Nation’s Industry’, Social Sciences in China, 18 (1): 62–75. Lardy, Nicholas (1995) ‘The Role of Foreign Trade and Investment in China’s Economic Transformation’ China Quarterly, Dec. 1065–82. Lowenthal, Abraham and Katrina Burgess (1993) The California–Mexico Connection, San Diego: Stanford University Press. Mitrany, David (1944) A Working Peace System: an Argument for the Functional Development of International Organization, London: Oxford University Press for the Royal Institute of International Affairs. Mittelman, J. (1999) ‘Rethinking the “New Regionalism” in the Context of Globalisation’, in Björn Hettne, András Inotai and Osvaldo Sunkel (eds), Globalism and the New Regionalism, London: Macmillan, pp. 25–53. Morata, Francesc (1997) ‘The Euro-region and the C-6 Network: the New Politics of Sub-national Cooperation in the West-Mediterranean Area’, in Michael

22 Microregionalism and World Order Keating and John Loughlin (eds), The Political Economy of Regionalism, London: Frank Cass, pp. 292–305. Ohmae, Kenichi (1995) The End of the Nation State, London: HarperCollins. Oman, Charles (1999) ‘Globalization, Regionalization, and Inequality’, in Andrew Hurrell and Ngaire Woods (eds), Inequality, Globalisation and World Politics, Oxford: Oxford University Press, pp. 36–65. Payne, Anthony (1998) ‘The New Political Economy of Area Studies’, Millenium, 27 (2): 253–73. Payne, Anthony and Andrew Gamble (1996) ‘Introduction: the Political Economy of Regionalism and World Order’, in Andrew Gamble and Anthony Payne (eds), Regionalism and World Order, Basingstoke: Macmillan, pp. 1–20. Rorig, Fritz (1967) The Mediaeval State, London: Batsford. Rosenau, James (1995) ‘Governance in the Twenty-first Century’, Global Governance, 1: 13–43. Scalapino, Robert (1991–2) ‘The United States and Asia: Future Prospects’, Foreign Affairs, Winter: 19–40. Schulz, Michael, Frederik Söderbaum and Joakim Öjendal (2001) ‘Introduction: a Framework for Understanding Regionalization’, in Michael Schultz, Frederik Söderbaum and Joakim Öjendal (eds), Regionalization in a Globalizing World: a Comparative Perspective on Forms, Actors and Processes, London: Zed Books, pp. 1–21. Schwartz, Peter and Peter Leyden (1997) ‘The Long Boom: a History of the Future, 1980–2020’, Wired, July: http://www.wired.com/wired/archive/5.07/ longboom_pr.html. Shaw, Tim (2000) ‘New Regionalisms in Africa in the New Millenium: Comparative Perspectives on Renaissance, Realisms and/or Regressions’, New Political Economy, 5 (3): 399–414. Smart, A. (2000) ‘The Emergence of Local Capitalisms in China: Overseas Chinese Investment and Pattern of Development’, in Si-Ming Li and Wing-Shing Tang (eds), China’s Regions, Polity, & Economy: A Study of Spatial Transformation in the Post-Reform Era, Hong Kong, University of Hong Kong Press, pp. 65–95. Smouts, Marie-Claude (1998) ‘The Region as the New Imagined Community’, in Patric Gales and Christian Lequense (eds), Regions in Europe, London and New York: Routledge pp. 30–8. Thambipillai, Pushpa (1998) ‘The ASEAN Growth Areas: Sustaining The Dynamism’, Pacific Review, 11 (2): 249–66.

2 San Diego–Tijuana: Microregionalism and Metropolitan Spillover Scott Grimes

Joined by geography but separated by an international border, San Diego and Baja California march forward toward a common destiny, sharing similar economic and social interests. Our two nations coexist in one binational region, with different governments, laws and languages and disparate economies. Hector Lutteroth Camou, Chairman, Grupo AFAL and Co-Chair, Tijuana Economic Development Corporation, writing in the editorial section of The San Diego Union-Tribune, 21 May 2000

Introduction The binational metropolis of San Diego–Tijuana has been described as a ‘hot zone’ of North American integration. Over the past two decades these twin cities have melded into one intertwined unit that local leaders boast is becoming one of the continent’s most vital regionstates. As one of the cross-border microregions that span both the developed and developing worlds, San Diego–Tijuana presents unique advantages and unique challenges in the context of global economic integration. Today the San Diego–Tijuana microregion is composed of a combined regional population in excess of four million. The region has clearly demarcated urban boundaries and visible patterns of commercial and cultural interaction across the international border. The nature of regional integration across a border between two nations creates unique challenges for local actors. In San Diego–Tijuana, these challenges have been placed in stark relief by the rapid growth of popula23

24 Microregionalism and World Order

tions on both sides of the border, and by the rise of Tijuana as a globally significant platform for manufacturing, especially in the electronics industry. Policy issues related to environmental sustainability, health, economic development and public safety frequently cross the border, while the twin objectives of migration control/law enforcement and international commerce have required new approaches to transborder collaboration. The usual barriers to effective cross-jurisdictional planning and governance on a regional basis are exacerbated between San Diego and Tijuana by the presence of a federally controlled international border. Local government officials on both sides of the border remain limited in the extent to which they can cooperate with their neighbours by centralized frameworks for decision-making. For example, federal control of customs and immigration functions means that local communities are not empowered to reduce the border-crossing inefficiencies that prevent stronger economic linkages developing between San Diego and Tijuana. On the other hand, the pressures of globalization and regionalization have demanded adaptive mechanisms that allow the two cities to increasingly function as a single administrative region. This chapter describes the process of cross-border regional integration that has characterized San Diego–Tijuana in recent decades and discusses the policy issues that have grown out of this integration. It explores the patterns of binational cooperation at a regional level, including formal institutional mechanisms and informal modes of cooperation, that have evolved to help make the San Diego–Tijuana microregion ‘work’. The chapter begins by reviewing recent evidence of the increasing integration of the twin cities of San Diego and Tijuana into a single binational microregion. The chapter outlines the theoretical and practical challenges to binational cooperation to address specific policy challenges in such areas as law enforcement, trade infrastructure development and public health. The chapter then discusses the mechanisms, both formal and informal, that evolved in recent years to permit transborder collaboration on a range of issues that effect regional development. The chapter concludes by discussing how the broader forces of globalization and regionalism have created new challenges and unique opportunities for this microregion. The major argument set forth is that modes of transborder cooperation have evolved in a pattern dictated by the constraints of the bilateral relationship and the demands of local civic forces.

Scott Grimes 25

The dynamics of transborder regional integration The 1990s saw the rapid acceleration of regional integration in San Diego–Tijuana. For many years border residents have viewed San Diego–Tijuana as a single binational region. Rapid urbanization on both sides of the border began a process of regional integration in the late 1960s and 1970s. In San Diego the expansion of a cluster of aerospace industries and the growth of the city as a tourism destination fueled rapid population growth. In Tijuana the introduction of the first maquiladora – twin plant or production sharing – plants began to attract attraction substantial intra-national migration from other parts of Mexico, as (mostly rural) Mexicans sought new employment opportunities at the border.1 Tijuana and Baja California developed as a centre for recreation and entertainment for many San Diegans, while the residents of Baja California entered San Diego to seek employment in agriculture or service industries. The process expanded in the 1980s as a construction and real estate boom added hundreds of thousands of new residents to San Diego County, while accelerated migration from other parts of Mexico spurred rapid population growth in Tijuana and its surrounding areas. In the 1990s the confluence of a series of factors began to accelerate and deepen the integration process. The passage of the North American Free Trade Agreement (NAFTA) combined with local comparative advantages to encourage significant, large-scale investments from transnational corporations in Baja California. This investment was concentrated in the consumer electronics sector, as transnational firms such as Sony, Sanyo, and Samsung built large-scale manufacturing facilities in Tijuana to serve the North American market. By 1998 there were over 700 maquiladora manufacturing companies in greater Tijuana, which employed a combined labour force of nearly 200 000 (INEGI 1998). The expansion of employment opportunities in Tijuana accelerated the pace of population growth, primarily due to inmigration from states in central and southern Mexico. Initially the maquiladora manufacturing system was intended to build a binational manufacturing environment based on a ‘twin-plant’ model, in which relatively simple ‘piece-meal’ manufacturing would be concentrated on the Mexican side of the border, while warehousing and distribution management would occur in a ‘twin’ facility north of the border. However, as investment expanded, transnational corporations began to locate more components of their North American operations in San Diego, as well as Tijuana. Many expatriate executives

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lived in San Diego and commuted south to manufacturing facilities on the other side of the border. Increasingly companies began to locate more specialized, value-added processes on the San Diego side of the border, including senior management, research and development, logistics management, and marketing. In 1993 Sanyo highlighted this trend by relocating its North American headquarters to San Diego, primarily to locate senior management in proximity to the company’s manufacturing facilities in Tijuana (Gerber 1999a; Curry 2000). The degree to which this binational region is now exposed to trends in the global economy was recently illustrated by the 1997 East Asian economic crisis. This crisis brought to a halt the expansion plans of major transnational corporations in the region. The cessation or delay of these expansion plans has had implications for both sides of the border. For example, as a result of the crisis Samsung suspended both the expansion of manufacturing facilities in Tijuana and the creation of a new R&D facility in San Diego. As the economies of East Asia recovered many of these expansion plans went forward, and in fact investment in the maquiladoras from Asian-based transnational corporations has accelerated in recent years. Nevertheless, as illustrated by a recent op-ed piece in San Diego’s major newspaper by a leading Tijuana citizen, Hector Lutteroth Camou, local leadership in San Diego – Tijuana increasingly views the region as a single economic entity that is subject to global forces (San Diego Union-Tribune, 21 May 2000). The rise of manufacturing in Baja California illustrates the variety of factors that impact on the location decisions of firms in an era of globalization. Tijuana offers multinational corporations the opportunity to manufacture in close proximity to the largest market in the world for consumer electronics. A comparatively low-labour-cost manufacturing environment is complemented by access to world-class transportation infrastructure in Los Angeles. The NAFTA trade regime and Mexican export promotion policies create a climate conducive to expansion and the vertical integration of manufacturing. Many firms report that San Diego’s quality of life also played a significant role in their location decisions. At the same time, manufacturers in Tijuana are constrained by very high rates of turnover within their workforces and by Mexico’s comparatively low levels of educational attainment and workforce training. In addition, the trafficking of illegal narcotics remains a serious problem in Baja California, corrupting law enforcement and constraining the blossoming of civil society. The growth of Tijuana as a manufacturing centre has also accelerated a transborder commuting phenomenon that has been in place in the

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region for many years. Every day executives and workers join tourists in day commutes south to Baja California. At the same time, the growth of the region has created a significant volume of northbound commuting traffic, which is composed primarily of Tijuana residents commuting to San Diego to work, shop, access recreational opportunities, or visit family. A 1994 study by San Diego Dialogue, a public policy institute located at the University of California San Diego, estimated that an average of 40 000 Tijuana residents crossed legally into San Diego each day to travel to work. Ten thousand of these regular border crossers are US citizens living in Tijuana, while the balance are Mexican citizens who work in the United States (San Diego Dialogue 1994: 16). Recent efforts to ease the process of legally crossing the border have continued this trend and expanded the volume of frequent border crossers. In 1998 an average of 3.3 million northbound border crossings occurred each month at the land port of entry at San Ysidro, making it the busiest border crossing in the world (San Diego–Tijuana Economic Review 1998).2 Regional integration is reflected in a deepening transborder regional culture, which is evidenced by the growth of binational kinship networks. The study conducted by San Diego Dialogue found that more than 400 000 trips are taken across the border each month by Tijuana residents going to visit extended families or friends living in San Diego (San Diego Tijuana Economic Review 1998: 6). These networks are expected to deepen over the coming decades as Latinos represent a greater percentage of the population of San Diego. San Diego County will add an additional one million residents over the next 20 years (San Diego Tijuana Economic Review 1998). Recent population estimates project that over 1.2 million Hispanics will live in the County by 2020, representing approximately one-third of the total population (San Diego Association of Governments April 1998). At the same time, Mexican demographic estimates project that Tijuana will grow by at least 1.5 million persons through the year 2015 (San Diego Association of Governments July 1998 and INEGI 1995). Regional integration has also advanced due to the significant volume of transborder trade in both goods and services that has developed in conjunction with the growth of the maquiladora sector. By 1999 there were over 1000 maquiladoras in Baja California. These firms imported a total over US $10 million worth of goods in 1997, including an estimated $6.8 million worth of component parts (California Trade and Commerce Agency 1998). The growth of the maquiladora has created a binational market in a variety of business services,

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including law, accounting, freight forwarding, construction and real estate services. The process of regional integration across the border is also reflected in new phenomena related to transborder regional ecology. Growth on the border has created stresses on the availability of water supply for the regional population, while combinations of industrial run-off and overtaxed sewage systems have placed new pressures on fragile estuaries and coastlines. Sewage spills and urban run-off in Tijuana routinely impact upon the beaches and coast of San Diego County. Issues related to environmental sustainability have forged new coalitions of crossborder stakeholders that seek to mitigate the impacts of rapid population growth and industrialization on the comparatively fragile ecosystems of the region (Ezcurra 1998). The integration of San Diego–Tijuana area would likely have proceeded without the intervention of global and macroregional forces, but clearly the introduction of these processes has accelerated the knitting of these twin border cities into a single metropolitan region. Regionalization processes, particularly those following the advent of NAFTA, have provided enabling conditions to encourage microregional integration. Global capital flows into San Diego–Tijuana have spurred population growth and urbanization and increased the movement of people and goods across the border. Globalization is also a major reason for the vast internal migration from the Mexican interior to the border. New microregional relationships The growth and integration of the San Diego–Tijuana microregion has served to recast the character of the cross-border relationship. Part of this evolving regionalism has been the growth of a binational civic network, composed primarily of business and nonprofit leaders from both sides of the border. This network has gone beyond formal city-tocity protocols and sister-city relationships to begin to examine collaborative approaches to addressing regional problems. Coalitions of leaders in San Diego have expanded their membership to include prominent citizens from Baja California, while grassroots networks dedicated to social equity, sustainable development and/or public welfare objectives have built parallel organizations on both sides of the border. Some of these groups have organized their binational activities to examine the nature of cross-border integration and to shape regional opinion, particularly the view of one side of the border from the other side. Perhaps the most important impact of these efforts has

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been to educate the San Diego public and opinion-makers to see Tijuana as an asset, rather than a liability, to San Diego. In the mid1990s processes of research and public education helped to reshape regional conceptualizations of the cross-border relationship, including the opinions and stances of policy-makers. This effort opened new opportunities for cross-border institutional cooperation. The process of defining the identity of the microregion as a binational metropolis has been complicated by state and national politics, particularly in the United States. In the early 1990s state and national candidates for elected office began to use the border and the phenomenon of illegal immigration as a wedge issue that played to the fears of dislocated workers in the United States. This process has been particularly fierce in California electoral politics, when first a governor’s race, and then a series of controversial statewide propositions, played on the fears of Anglos made nervous by the ongoing ‘Latinization’ of the state population. The process of regional definition was also complicated after 1994 by economic and political turmoil in Mexico. The devaluation of the peso and the assassination of presidential candidate Luis Donaldo Colosio created unique stresses on the population of Baja California that were not shared by San Diego. In a sense, however, these issues actually helped to deepen a sense of common identity in San Diego–Tijuana. For many regional residents of Mexican descent on both sides of the border the demonizing of Mexican immigrants has been strongly resented. Similarly, economic downturns in Mexico have had severe impacts on both sides of the border. In San Diego County, economic decline in Mexico has important implications, particularly for retailers in the southern portion of the county who depend on cross-border shopping (Gerber 1999b). Regional stakeholders have also found common ground in the tension that exists between regional and federal actors. At times local agencies on both sides of the border have been able to reach consensus regarding a preferred course of action, but were thwarted by the decisions of national-level policy-makers in both capitals. On balance, the process of cross-border integration has forced a stronger definition of regionalism in San Diego–Tijuana. At first glance defining the San Diego–Tijuana microregion seems comparatively straightforward. The binational region represents a single urban area bound on three sides by ocean and desert. To the north a large US Marines base at Camp Pendleton helps to demarcate the region from the larger urbanized area of Southern California. However, the definition of a binational region is complicated by ethnicity (Latino vs

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Anglo) and by debates over the inclusion of outlying subregions (such as Mexicali, Ensenada and Imperial County). It is also complicated by the presence of strong subregional identities on both sides of the border. From an administrative perspective, defining the region is challenged by the absence of a coordinating mechanism for municipal agencies in Baja California that can equate to the regional council of governments in San Diego County. Nevertheless the definition of the contiguous urban areas of San Diego County and Tijuana as a single microregion is increasingly accepted as a given. The pressures of global competition have raised the stakes for binational collaboration and created new motivations for local actors to confront the challenges posed by operating in a transborder policy environment.

Administering a border microregion The administrative character of the Mexican–US border is defined by its very nature. It is at the same time both a crossroads and a barrier. Many of the challenges related to transborder cooperation in San Diego–Tijuana arise from the contradictory nature of the missions of agencies charged with administrative functions on the border. For example, while some agencies see the facilitation of commerce across the border as their primary mission, other agencies seek to achieve law enforcement objectives that slow or inhibit cross-border commerce. There are even contradictions that exist within given agencies, which are often challenged to accomplish missions that work against each other in various ways. The challenges of administration also arise from the different nature of federal–local relations on either side of the border. Where US agencies have a reasonable degree of local autonomy in terms of interagency cooperation, including transborder communication, the centralization of power in Mexico creates limitations in the capacity of local agencies to devise operational responses to transborder regional issues. While reforms in recent years have begun to devolve significant responsibilities to state and local governments in Mexico, there remains a pronounced asymmetry between the capacity of local agencies to plan for the region’s future (Shirk 1999). Over the last several years a tentative consensus has emerged in the San Diego–Tijuana region regarding the major objectives that are sought via border development. First, regional actors seek to enable the effective flow of commerce across the border, both in terms of trans-

Scott Grimes 31

border commerce between local firms and in enabling the flow of component goods into maquiladora sector in Baja California and finished goods out to the United States. Second, the region seeks to realize specific law enforcement objectives. While there are still significant differences regarding approaches to and treatment of undocumented migrants from Mexico travelling into the United States, there is a widespread recognition of the importance of transborder cooperation in interdicting the smuggling of persons and illegal goods, particularly narcotics, across the border. Finally, actors on both sides have recognized the importance of fashioning sustainable development strategies for the border that ameliorate the impacts of development on species habitats, regional watersheds, and public health (Ezcurra 1998; Warner 1999 and the website of the transborder Watershed Research Program). Many of the administrative challenges confronted by San Diego–Tijuana derive from seeking to realize these objectives in a binational region. Multiple challenges exist to the achievement of these policy objectives. First, there are multiplicities of government agencies with overlapping and, at times, undefined responsibilities at the border. As noted above, this ambiguity often combines with serious federal–local tensions to constrain opportunities for binational cooperation on transborder issues. Second, there have traditionally been limited avenues for cross-border communication between policymakers. Prior to 1992 there were literally no mechanisms for formal cross-border institutional communication at the local level. Moreover, there was often little communication between agencies with overlapping jurisdictions on either side of the border. This fact frequently resulted in institutional paralysis on major issues impacting the development of the region. Binational cooperation on the administration of the border, particularly the operation of the land ports of entry, has also been complicated by the absence of local infrastructure financing alternatives in Baja California. Because municipal agencies are entirely dependent on state, and ultimately federal, funding to support their operations, it has been difficult to enter into joint discussions regarding capital projects that would enhance the operation of the border. In an era of global competition, this issue presents serious challenges for a binational metropolis trying to develop as a trading region. Local analyses suggest that San Diego–Tijuana has a significant opportunity to spur additional trade-related economic development if necessary infrastructure improvements can be financed and developed on both sides of the border. A 1999 study by Erie found that

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international air passenger demand in San Diego is expected to grow over 250 per cent by 2020, while demand for air cargo services will increase 400 per cent, and maritime cargo could grow by 250 per cent, during the same time period. For this period US/Mexican trade through the California land ports of entry will increase by 262 per cent. Erie concluded that San Diego–Tijuana could generate between $4 and $5 billion in new regional economic activity, and could add over 85 000 new jobs, if the facilities needed to meet this demand are developed (Erie 1999). Federal vs local The federal–local relationships on both sides of the border provide a critical policy context for binational cooperation. The integrated cities on the US–Mexico border have consistently pressured their respective national governments with demands for solutions to the problems created by population growth, rapid commercial expansion and the intensification of points of contact. The bilateral relationship is frequently characterized by institutional and regulatory uncertainty as agencies seek to respond to the new requirements being placed on them by the dynamics of the border. Local agencies demand more autonomy to solve their own problems, while at the same time requiring more assistance from the capital cities because of a lack of resources and a perception that their problems are generated by processes that are out of their control. Agencies at the US–Mexico border generally view their problems very differently than the capital cities. The capitals tend to look at their national borders as the delimitators of sovereign space, whereas the border communities view themselves more holistically, typically including the perspective of regional needs. This is particularly true of San Diego–Tijuana, where there is strong desire for autonomy and recognition of the need to create local solutions to local problems. However, in a border region, ‘local issues’ frequently become international issues. As a result, binational cooperation on policy issues must be sensitive to the unique policy environments that exist on either side of the border. Policy objectives developed on one side of the border must be pursued strategically, given the binational policy environment in which local actors operate. Prior to the 1990s there was an absence of incentives for local actors to share information or develop joint strategies for the effective administration of the border. Even after US legislation deployed significant new resources to the border in the late 1980s, there was still little evi-

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dence of effective inter-agency coordination or collaboration between local, state and federal actors in San Diego, and no process for communication with counterpart agencies in Baja California. Effective crossborder cooperation would only be spurred after the formation of binational civic networks that could articulate the governance concerns of local stakeholders to agencies on both sides of the border with a single voice. A common theme in civic conversations in San Diego–Tijuana has been the need to strengthen existing systems of governance and public finance, as well as to create innovative new mechanisms, in order to realize the opportunities presented by globalization. Governance, in this context, is more than the arrangements and processes of government. Rather it is a set of public, public/private, and private mechanisms for the region to chart and effect its global engagement. Central to governance is the process whereby public funds are raised and expended to enhance the competitive advantages of the region. In a cross-border region, governance must also include the ways in which federal, state, and local perspectives are brought to, and reconciled with, decisions that advance the position of the region in the global economy.

Seeking transborder solutions A range of pragmatic strategies for administering the San Diego–Tijuana binational region has evolved in the face of dynamic changes spurred by regional integration. These strategies developed in response to the accelerated pace of regional integration in the 1990s and have been shaped by the nature and constraints of the larger bilateral relationship between Mexico and the United States. Contemporary events have demanded new tools to address problems related to regional integration, devolution, and globalization processes taking place along the US–Mexican border. These processes have introduced not only a new series of issues and actors on the border but have also created space for institutional innovation. In the early- to mid-1990s the formation of binational civic coalitions, often driven by private sector firms, helped to focus the attention of national-level agencies on the challenges of transborder collaboration in San Diego–Tijuana. These coalitions served a neutral convening role in gathering institutional representatives from both sides of the border and building cross-border processes of institutional communication. At the same time civic leaders played a behind-the-

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scenes role in encouraging federal institutional leadership and local government agencies to sanction and engage in a systematic process to develop binational strategies to address administrative challenges facing the border region. Institutional responses In response to demands created at the regional level, a variety of formal and informal institutional mechanisms have been created for the administration of the border. The primary legal framework for the creation of these new cooperative mechanisms has been the Border Liaison Mechanism (BLM). The BLM was created in 1992 through a diplomatic protocol adopted by the US State Department and the Mexican Secretariat of Foreign Relations. The BLM mechanism allows for binational agency coordination at a local level without routing communications through the capital cities. BLM meetings are held on a quarterly basis and are directed by the respective Consuls-General of the border sister-cities. The mechanisms bring together the representatives of federal, state and local government agencies on both sides of the border, as well as civic stakeholders. These meetings are intended to provide a medium for local authorities to discuss regional issues and create proactive strategies for addressing regional problems. The main reason for the creation of the BLM was to prevent day-today administrative difficulties at the border from escalating into international crises. Prior to the establishment of the BLM, problems that emerged at the border would be responded to from the capitals, frequently through diplomatic notes. This method typically was not an effective or efficient response to time-sensitive problems. Moreover, relatively minor regional issues had the potential to become major points of conflict in the larger bilateral relationship. The BLM was established to create a vehicle for regular communication on a variety of issues of common concern between local agencies on both sides of the border. The BLMs seek to establish relationships and open dialogue between agencies, although they are not policy-making instruments. The shapes, characteristics and systemization of the BLMs also vary from region to region. Originally the BLMs were erected as a method for addressing the issue of border violence; however, they now address a full range of issues and involve a variety of actors in the border regions. By 1995 the San Diego–Tijuana BLM had evolved into a more inclusive process that invited in local government agencies and nongovernmental stakeholders. This created a broader and more proactive agenda for

Scott Grimes 35

the BLM as a whole and began the process of defining its work around specific working groups. In the case of San Diego–Tijuana, the general BLM acts as an umbrella for a series of issue-specific working groups, which include groups focused on public safety, migration, water supply and the operation of the land ports of entry. This more balanced agenda assures legitimization in front of a broad audience of local stakeholders. In San Diego–Tijuana the BLM process was accelerated because of the unique characteristics of binational civil society in the region. Specifically, the formation and expansion of binational civic networks created points of pressure to ensure local agency participation and encourage an inclusive process. In June 1998 a Presidential Accord signed by Presidents Clinton and Zedillo recognized that mechanisms for institutional cooperation on the border must be inclusive of local stakeholders and that such mechanisms must address a balanced agenda. This ‘new vision’ for Mexico–US relations in the border regions was based, to a large degree, on the San Diego–Tijuana model. While the BLM and other informal processes of collaboration have been effective vehicles for addressing short-term issues facing the border region, there are still questions as to whether these mechanisms can evolve into sustainable forms of binational regional governance. There is an ongoing tension between a vision of the BLM as a problemsolving vehicle versus a mechanism for long-range planning. In San Diego–Tijuana government actors have tended to view the BLM as a mechanism for the resolution of minor disputes and as a vehicle for information sharing. Civic actors, on the other hand, have sought to encourage the creation of processes through the BLM that would allow for binational regional planning. The BLM mechanism has been advanced as a possible solution to resolving the asymmetries that exist across the border in federal–local relations. Real concerns remain regarding the absence of institutionalization for these new vehicles for binational regional cooperation. Local participants stress than the BLM mechanism only provides an opportunity for cooperation and that local agency participation in the process is still voluntary. Some local stakeholders fear that these cooperative mechanisms may only be temporary, and that they are still too reliant on individual personalities and personal relationships. However, many local actors place greater importance on the maintenance and expansion of civic ties across the border. They argue that the best long-term prospect for the institutionalization of these mechanisms is the expanding sense of a single binational microregional identity.

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Lessons learned The experience of San Diego–Tijuana suggests several lessons related to developing effective microregional modes of collaboration, particularly in a transborder context. First, national and regional policy environments play an important role in defining the institutional possibilities for collaboration. In a cross-border context, the larger bilateral relationship between the two involved countries will have a crucial impact on whether and how regional collaboration can be effected. Second, institutional collaboration can extend beyond government-to-government partnerships. Many of the most productive and responsive regional strategies in San Diego–Tijuana have been pursued through public–private partnerships and independent sector collaborations. Third, institutional collaborations cannot outpace the broader integration of the microregion. At a minimum, legitimate and regular connections between civic elites need to be forged before institutional partnerships can function on a sustainable basis. Long-term collaboration, however, may ultimately be dependent on the development of a common regional identity. For this to occur in a cross-border context, regular opportunities must be created for interaction between residents from both sides of the border.

Regionalism, globalization and the challenges of cross-border development Kenichi Ohmae (1995), among others, has argued that subnational economic regions, including cross-border microregions such as San Diego–Tijuana, are now the primary engines of economic growth in an era of globalization. The rise of these natural regions, including such cross-border economic zones as Basel–Freiburg–Mulhouse at the juncture of Switzerland, Germany and France, and Singapore and surrounding states in Malaysia and Indonesia, comprise part of a set of actors who are ‘picking away’ at the sovereignty of nation-states. Supra-national organizations such as the World Bank, the IMF, the European Union and even trade pacts such as NAFTA and MERCOSUR, also serve to constrain the freedom of nations. Large multinational corporations control resources and people to rival many nation-states, and can often act more quickly and flexibly on the world stage. But subnational regions, whether global city-regions, cross-border regions such as San Diego–Tijuana, or regions such as Scotland, Quebec and Catalan, which seek internal autonomy, are especially significant independent actors in the processes of globaliza-

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tion (for details, see Arrighi and Silver 1999; Friedman 1999; and Micklethwait and Wooldridge 2000) Regions have arisen as essential ‘spatial nodes’ in the global economy. As one group of analysts recently noted, global firms in similar industries are tending to cluster in specific city-regions, in order to benefit from mutual proximity while using regions as ‘territorial platforms from which concentrated groups or networks of firms contest global markets’ (Scott et al. 1999). Despite the ‘death of distance’ impact of advances in communications and transportation technologies, firms still find it advantageous to form region-based industrial clusters. In an era of uncertainty, such clustering is beneficial to companies because it allows them to capture efficiencies, encourage creativity, and spur learning and innovation. Regions seem to offer natural advantages as actors seeking to pursue an effective engagement with the global economy. They are small enough to be able to connect with the lives of ordinary people but large enough to engage in meaningful ways with the global economy. Moreover, regions, like companies, can set fixed standards of quality that can then be marketed around the world. Just as companies struggle to attain internationally recognized quality standards, so regions can collectively set and deliver high standards in education, workforce training, transportation services and teleconnectivity. San Diego–Tijuana provides an interesting case study of how a microregion engages with the emerging global political economy. As described above, the twin cities of San Diego and Tijuana have spent significant energies simply developing mechanisms to communicate with each other and to solve common internal challenges. At the same time, however, the region has come to be viewed by many global actors, particularly transnational corporations, as a single ‘metropolitan space’. As such, it will increasingly be judged by a common set of standards and benchmarked against other microregions competing for clusters of high-value added economic activity. The decade of the 1990s was a period of unprecedented economic and social integration across the border. It was also the period when the twin-city region began to first act together on the global stage. The region’s economic development agencies, for example, sponsored joint trade missions to Asia and Latin America, cooperated in recruiting multinational investment to the region and established a trade and investment promotion office in Hong Kong. Such efforts, however, are only the first tentative steps in relating collectively to the globalization system. The region has no real capacity to speak with a single voice.

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The differences in educational levels, taxation and financing systems, language and supporting infrastructure between the two sides of the border paint stark contrasts for any visitor to the region. And, as noted above, the region’s vehicles for transborder collaboration remain precariously balanced and highly subject to the influences of each country’s national government. It remains an open question whether this microregion can develop the standards, mechanisms and vision for effective global engagement. However, there is an increasingly strong consensus in San Diego–Tijuana that globalization may offer the best prospects for the region to address its most important development challenges. Crossborder coalitions composed of the region’s civic leadership have issued calls for stronger forms of binational regional collaboration. Their arguments are often grounded in the imperatives placed on regions by the processes of globalization. These leaders argued that the region’s most pressing challenges require cross-border collaboration on a grander scale, such as constructing an aqueduct to carry water from the east, solving the region’s joint housing crisis, expanding airport capacity and building new land ports of entry in a timely manner (Grimes 2000). A call for stronger modes of microregional collaboration holds special significance due to the governance and fiscal reforms anticipated from the new presidential administration in Mexico. Leaders in San Diego are recognizing that they need to be ready to take advantage of reforms that may emerge from the administration of President Vicente Fox. It is likely that an ambitious package of reforms will emerge that holds great import for San Diego and Tijuana. Authority over governmental decision-making in Mexico is likely to be further devolved to state and municipal levels, while new financing tools, including the creation of a municipal bond market, may be introduced in the future. Such reforms would significantly strengthen the capacity of Baja to partner with San Diego to address regional issues and compete in the global economy (Shirk 1999). Forming a sustainable microregional identity If, as hypothesized above, effective regional collaboration requires the formation of a strong microregional identity, what are the prospects for this occurring on a sustainable basis in San Diego–Tijuana? The term ‘San Diego–Tijuana’ is not something that flows easily off the lips of most of the region’s current residents. It is ironic, in fact, to discuss microregional identity in a region where most of the northern half of the region’s residents do not travel regularly across the border and

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most of the southern residents are precluded by US law from entering the north. On the other hand, this is a region that roots for the same baseball team (the San Diego Padres) and, increasingly, for the same football (soccer) team–Mexico. The region shares radio and television stations, magazines and newspapers. San Diego’s electric utility buys power from Mexico. Mexican sewage is treated by a binational wastewater treatment financed largely by the US government. It is now possible for a high school student in the region to spend two years studying at a US high school, plus two years at a Mexican high school, and receive a diploma recognized in both countries. The basis for a common microregional identity is often rooted in what we don’t want to be. Many Catalans don’t want to be part of Spain. Many Scots don’t want to be part of Britain. Similarly, San Diego doesn’t want to be like the rest of Southern California and Baja California proudly believes it is unlike the rest of Mexico. It is possible that residents of the region will prefer to be ‘like’ each other, if only to avoid being part of something else. A stronger foundation for a microregional identity is likely to be rooted in common aspirations. For example, serious proposals have been put forward to have San Diego–Tijuana collectively bid to host a future Summer Olympic Games. While the odds on becoming the first cross-border metropolitan region to hold the Olympics are long, the act of trying would likely create significant momentum in expanding civil society relationships across the border. A more realistic approach might be to adopt and pursue a common set of objectives for regional development. The region does not yet, for example, have common standards for educational achievement, water quality or workforce safety. Defining standards and indicators for a mutually prioritized set of ‘quality of life’ factors might be a practical exercise in region building that could also help San Diego–Tijuana to articulate its competitive advantages to global actors. Over the long term, of course, the strengthening of a microregional identity will be driven by the demographic transformation of ethnicity in the region, particularly in San Diego County. Even with these changes, however, the resulting identity is likely to be something quite different than today’s Mexico. San Diego is an immigrant gateway not only for Mexico and Latin America, but also for new arrivals from countries around the world. Children in San Diego’s school districts speak over 40 languages. Whatever the future cultural identity of this microregion, it is likely to be quite different than the Anglo-Hispanic hybrids that have formed on other parts of the Mexican–US border.

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Conclusion San Diego and Tijuana are seeking to create solutions that address the long-term development issues challenging the sustainable growth of this cross-border microregion. In order to make the region a more effective competitive force in the global economy, joint solutions will need to be sought on such issues as housing, education, trade infrastructure, water and energy. Existing cooperative mechanisms have helped to enhance communication across the border and to shield local policy-makers from the turbulent forces of national politics and bilateral relations. However, new pressures have emerged from the forces of globalization that raise the stakes for cross-border collaboration. Civic leaders in San Diego–Tijuana have argued that stronger, more proactive collaboration is necessary to maintain the region’s unique high quality of life. Progress on these issues will be dependent on the ability of the region to inventory its needs, create cooperative long-term strategies, and implement those strategies through powerful instruments of regional action. It may also require the ongoing formation of a strong binational civil society and a more robust sense of a single regional identity.

Notes 1. The maquiladora law allowed for the construction of manufacturing facilities in Mexico and the importation, duty-free, of inputs for assembly and re-export outside of the country. The law was intended to help build Mexico’s manufacturing base without introducing unfair competition to local industries. 2. San Diego Dialogue’s analysis revealed that most border crossings are not illegal crossings of migrants travelling north to seek permanent employment in the United States, but rather day commutes of residents of the San Diego–Tijuana microregion, who cross for a variety of purposes. Legal crossers travelling for short periods of time to the other side of the border comprise an estimated 96 percent of all crossings of the Mexican/U.S. border in San Diego–Tijuana each year.

References Arrighi, Giovanni and Beverly J. Silver (1999) Chaos and Governance in the Modern World System, Minneapolis: University of Minnesota Press. California Trade and Commerce Agency (1998) California, NAFTA and the Maquiladora Industry, Sacramento: California Trade and Commerce Agency, 1 June.

Scott Grimes 41 Curry, James (2000) San Diego/Tijuana Manufacturing in the Information Age, San Diego: San Diego Dialogue, University of California San Diego. Erie, Steven (1999) Towards a Trade Infrastructure Strategy for the San Diego/Tijuana Region, San Diego: San Diego Dialogue, University of California, San Diego. Ezcurra, Exequiel (1998) Conservation and Sustainable Use of Natural Resources in Baja California, San Diego: San Diego Dialogue, University of California San Diego. Friedman, Thomas L. (1999) The Lexus and the Olive Tree, New York: Anchor Books. Gerber, James (1999a) Whither the Maquiladora: Growth Prospects after 2001, San Diego: San Diego Dialogue, University of California San Diego. Gerber, James (1999b) The Effects of a Depreciation of the Peso on Retail Sales in San Diego and Imperial Counties, San Diego: San Diego Dialogue, University of California San Diego. Grimes, Scott (2000) The Global Engagement of San Diego/Baja California–A Report of the Forum Fronterizo, San Diego: San Diego Dialogue, University of California San Diego. INEGI (Instituto Nacional de Estadistica Geografia e Informatica) (1995) Population and Housing Census, Mexico City: INEGI. INEGI (1998) Instituto Nacional de Estadistica Geografia e Informatica, Mexico City: INEGI. Micklethwait, John and Adrian Wooldridge (2000) A Future Perfect: the Challenge and Hidden Promise of Globalization, New York: Crown Business. Ohmae, Kenichi (1995) The End of the Nation-State: the Rise of Regional Economies, New York: Free Press. San Diego Association of Governments (1998) 2020 Regionwide Forecast. San Diego: SANDAG, 2 April. San Diego Association of Governments (1998) 2020 Regionwide Forecast, San Diego: SANDAG, 2 July. San Diego Dialogue (1994) Who Crosses the Border?, San Diego: San Diego Dialogue, University of California San Diego. San Diego–Tijuana Economic Review (1998) San Diego: San Diego Dialogue, University of California San Diego, April, p. 28. Scott, Allen J., John Agnew, Edward W. Soja and Michael Storper (1999) Global City Regions – A Conference Theme Paper, Los Angeles: UCLA School of Public Policy and Social Research, 4. Shirk, David (1999) The New Federalism in Mexico: Implications for Baja California and the Cross-Border Region, San Diego: San Diego Dialogue, University of California San Diego. Transborder Watershed Research Program, Southwest Center for Environmental Research and Policy, San Diego State University, at http://typhoon.sdsu. edu/twrp/twrphome.html. Warner, David (1999) Health and Medical Care in San Diego and Tijuana: Prospects for Collaboration, San Diego: San Diego Dialogue, University of California San Diego.

3 Microregionalization across ‘Caribbean America’ Tony Heron and Tony Payne

In the last years of the twentieth century and the first few years of the twenty-first century regionalism has been seen as one of the most important organizing concepts in the emerging world order. Much of the theoretical literature in this area has focused upon regionalism as a ‘state-led project designed to reorganise a particular regional space along defined economic and political lines’ (Gamble and Payne 1996: 2). What is also acknowledged within this literature – although itself the focus of considerably less scholarly attention – is the twin process of regionalization, involving the complex web of societal entanglements which often precede the establishment of formal institutional arrangements. The importance of this latter process is particularly evident in contemporary US–Caribbean relations. Here, the trend towards regionalism – in the context of the signing of the North American Free Trade Agreement (NAFTA) and the initiation of the Free Trade Area of the Americas (FTAA) process – has highlighted the many informal entanglements which now bind the Caribbean to the US, and vice versa. This chapter seeks to explore these links. Although these entanglements are expressed at both macroregional and subregional levels, attention is mainly given here to the manifestation of these processes at the microregional level. The chapter suggests that the present trajectory of US–Caribbean relations is increasingly being determined by a process of ‘microregionalization’ that involves the creation of a political economy within which Caribbean and US actors concerned with their interrelations have to go about their business. The argument develops in three stages. First, we proceed by considering the historical development of US–Caribbean relations and note that the ability of the US to penetrate Caribbean state/society complexes – not just militarily and economically, but also ideologically 42

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– has been a key defining feature of their interrelations. It will be suggested that the 1980s, in particular, were critical years in shaping more intense patterns of integration. Second, we explore these contemporary patterns of integration through the lenses of the microregional framework and identify as the most pertinent instances the recently emerging new economic and security agendas in US–Caribbean relations. At this point we introduce the concept of ‘Caribbean America’, which has previously been defined as a new transterritorial structural context linking the political economies of the US with the various countries that make up the Caribbean (Payne 1998a). Thirdly, we focus upon the more formal political aspects of these activities by seeking to identify the ways in which they are governed. Ultimately, we suggest that ‘Caribbean America’ is giving rise to the formation of a nascent, new political system that, despite its many disparate and contradictory elements, is increasingly shaping the conduct of US–Caribbean relations.

US–Caribbean relations in the twentieth century Throughout the twentieth century the United States was both able and willing to wield power and influence over the Caribbean. In the formative years this practice was informed by a vision of the Caribbean as an empire composed, not of colonies, but of ‘small, politically unstable republics with fragile economies’ within which ‘the United States, on occasion for genuinely unselfish, and at other times, for blatantly selfish motives, would impose political order, economic tutelage, and civic morality’ (Langley 1982: 13–14). This vision went through various manifestations, ranging from the ‘big stick’ diplomacy of Theodore Roosevelt to the ‘dollar diplomacy’ of William Howard Taft designed to safeguard US investments in what were contemptuously described as ‘banana republics’, to the system of protectorates established by Woodrow Wilson. The cumulative thrust of US policy toward the Caribbean in this period justified military intervention in Cuba (1889–1902), only ending after the US had imposed the so-called Platt Amendment giving it the right to intervene in Cuban affairs and establish military bases on the island more or less at will, Haiti (1915–34) and the Dominican Republic (1916–24). In summary, it can be said that in these early decades of the century the Caribbean, with the exception of the remaining European colonies in the region, came steadily and ever more firmly under US economic and political domination.

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With the inauguration of Franklin Roosevelt’s ‘good neighbour policy’ in 1933 – which led, amongst other things, to the abrogation of the Platt Amendment and the withdrawal of US troops from Haiti – the interventionist impulses of the US were, at least temporarily, resisted. In addition, Roosevelt’s ‘good neighbour’ policy also sought to promote inter-American cooperation on a multilateral basis in the light of the external threat posed by the rise of the Axis Powers. This cooperation culminated in the Act of Havana of 1940, which declared the neutrality of the Americas in the war in Europe and, at the same time, constituted an agreement that an attack on any one of the signatories should be considered as an act of aggression against them all. InterAmerican unity during the Second World War undoubtedly consolidated US power in the region, particularly so in the Caribbean. Under the 1940–1 ‘Destroyers for Bases’ agreement the US sold fifty battleships to Britain in exchange for 99-year leases on land on which to build naval and air bases in the Bahamas, Jamaica, St Lucia, Antigua, Trinidad and British Guiana. Thus, for the first time, US political influence began to encroach upon the English-speaking Caribbean, which had hitherto been considered as ‘off limits’. After 1945, as is well known, the US assumed the global hegemonic role for the ‘containment’ of communism wherever it arose, particularly so with the newly emerging states of the Third World. In terms of its perception of Latin America and the Caribbean this meant a return to the aims originally set out in the Monroe Doctrine of 1823, namely, to prevent any extra-hemispheric powers encroaching into its legitimate ‘sphere of influence’ in the Western hemisphere. This involved, on the one hand, the creation of a new political framework for managing hemispheric affairs, established with the signing of the Inter-American Treaty of Reciprocal Assistance (the Rio Pact) in 1947 and the creation of the Organization of American States (OAS) in 1948. This new diplomatic structure was, nevertheless, insufficient in itself to perform the new and vital role that the US assigned to the Caribbean in its global strategy of containment. Put simply, what was distinctive about the Caribbean in the Cold War years was the way in which the US perceived its own standing as a ‘hegemonic power’ and its associated credibility in the eyes of both its enemies and its allies in all parts of the world to be dependent in some measure on its capacity to maintain and demonstrate control in its immediate ‘backyard’ (see Sutton 1988). It was this highly symbolic role played by the Caribbean in the Cold War period that accounts for the series of US decisions to step outside

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of the diplomatic framework it had itself created in the hemisphere in order to seek to shape outcomes through the traditional means of destabilization and intervention. The instances of such responses in the Caribbean were many and varied over the Cold War period: Cuba (1959 onwards), British Guiana (1963–4), the Dominican Republic (1965), Jamaica (1972–80) and Grenada (1983) are only the most notorious. The administration of Jimmy Carter tried to introduce a more modulated approach by promoting human rights and ideological pluralism, but ultimately failed to escape the pressure to use the region to demonstrate ‘resolve’ in the struggle against the Soviet Union and in the end stood charged with having ‘lost’ for the ‘West’ two countries, Nicaragua and Grenada, both of which experienced socialist revolutions in 1979. With the inauguration of President Ronald Reagan in January 1981, the Central American and Caribbean region, which came to be referred to as the Caribbean Basin, was seen as the obvious starting point to redress the weaknesses in the wider manifestations of US hegemony displayed during the Carter period. Reagan’s strategy, however, went further than containment to embrace the ‘roll back’ of Soviet influence. As Reagan (1983a: 32) himself put it, ‘if we cannot defend our selves [in the Caribbean Basin], we cannot expect to prevail elsewhere. Our credibility would collapse, our alliances would crumble, and the safety of our homeland would be put in jeopardy’. This rationale helps to explains the extent of US military involvement in the Caribbean Basin in the 1980s, specifically in Central America the arming of conservative forces, in government and opposition respectively, in El Salvador and Nicaragua and in the Caribbean the intimidation and eventual invasion of tiny Grenada. The threat that the latter posed to perceptions of US control over the region was paradoxically rendered the greater precisely because of its small size. After all, if Grenada could successfully pursue its chosen revolutionary course, what might be achieved by larger states in the region? The president, from this perspective, was quite right to decry those who denigrated the importance he attached to Grenada because its best-known export was nutmeg. ‘It is not nutmeg that is at stake down there’, Reagan declared in March 1983, ‘it is the United States’ national security’ (Reagan 1983b). Reagan’s strategy was not, however, confined to the military sphere; with the launching of the so-called Caribbean Basin Initiative (CBI) in 1982, and notwithstanding the problems into which the CBI ran, of which more later, the US succeeded in attaching itself to the argument

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that social and economic underdevelopment was at the root of the Caribbean’s new political instability. The CBI in effect served as a vehicle for promoting the merits of market-led and export-oriented development strategies – a message that, by the end of the decade, Caribbean elites throughout the region (Cuba excepted) had embraced. A final point worth noting about US policy toward the Caribbean in the Reagan period was the extent to which concerns with geopolitical stability in the region were accompanied by a new emphasis on so-called ‘non-traditional’ security issues, including narcotics, immigration and even the promotion of democracy. Crucially, the cumulative effect of these issues helped to broaden US security perceptions of the Caribbean and served to justify the granting of new extra-territorial functions to US law enforcement agencies, such as the Drugs Enforcement Administration (see Sutton 1993). In the process, the boundaries between the ‘domestic’ and the ‘foreign’ in US–Caribbean relations became increasingly blurred. All in all, then, the Reagan years, although seldom recognized as such at the time, represented a remarkably successful phase in the reassertion of US power in the region. Despite many contradictory elements, the overall strategy managed to articulate a coherent ideological framework, capturing political, economic and military activities, which was sufficient to reorder the Caribbean in a manner more consistent with wider US interests and goals. In the post-Cold War period the Caribbean’s strategic importance to the US has, inevitably, declined. Nevertheless, the Caribbean has played a small, though not insignificant, role in the most recent phase of US hemispheric policy wherein the US has sought to embrace the concept of regionalism as a response to its perceived decline as a global hegemonic power (Payne 1996). Although these developments can be traced to the ‘dual-track’ strategy toward trade liberalization that emerged in the latter part of the Reagan years (Jackson 1987), the turn toward regionalism was first set out by President George Bush in June 1990 in his ‘Enterprise for the Americas Initiative’ (EAI). Out of this emerged first the prospect and then the reality of the North American Free Trade Agreement, as well as a series of other programmes, treaties and summits bearing upon hemispheric matters and fully extending the agenda beyond trade, investment and debt reduction issues to include narcotics, migration and even democratization. The Clinton administration initially maintained and subsequently deepened the thrust of this policy, and there can be no doubt that relations between the US and the rest of the Americas have been closer of late than for

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many years. The US sees Latin America and the Caribbean as a part of the world where it has a greater natural trading advantage than its main economic rivals and it thus envisages hemispheric free trade (as manifest in the commitment to bring about a Free Trade Area of the Americas made at the so-called ‘Summit of the Americas’ in Miami in 1994) as working to its benefit. It has also recognized the merits of a flexible political framework within which to manage other hemispheric problems. In other words, the US strategy has not been to create a closed regional bloc (as some had feared), but rather to organize the Americas in a way consistent with and supportive of US interests in a post-hegemonic world order (Payne 1996). The Caribbean has not been a high priority in this process – Mexico has always been the key – but it has been embraced by the various initiatives and has been forced to react, in one way or another, to the new US agenda for the hemisphere as a whole.

The microregionalization of US–Caribbean relations: ‘Caribbean America’ In many ways, the trend towards regionalism in the Americas reflects an acknowledgement of a process of ‘silent integration’ (Weintraub 1990) that has been taking place in the hemisphere for some time. This process has been most pronounced in US–Mexican relations, where the spreading tentacles of multinational corporations unleashed by the maquiladora programmes has been a dynamic source of economic integration between the two countries. Such a process has increasingly embraced the ‘offshore’ Caribbean. Although of a smaller order and scale than in the Mexican case, such activity has nonetheless been highly significant in reconfiguring US–Caribbean relations. The following section seeks to identify the most pertinent instances of this process; defining this as microregionalization, it concentrates on two broad areas: trade and investment and drugs and migration. The new economic agenda: trade and investment Launched with a great fanfare in February 1982, the CBI (codified into law as the Caribbean Basin Economic Recovery Act (CBERA)) was, as already indicated, the Reagan administration’s attempt to promote ‘security through development’ by offering an innovative package of trade and investment incentives to designated Caribbean states. In practice, though, the centrepiece of the CBERA, the granting of dutyfree status to some 6000 designated products, was tempered by the fact

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that a third of these products already entered free under the General System of Preferences (GSP) and a number of other products, in which the Caribbean possessed a comparative advantage, were omitted altogether.1 Despite the relative modesty of the CBI package in terms of benefits for the Caribbean, it has, nevertheless, had the effect of tying the region ever more tightly to the US. The Caribbean textile and apparel sector, which represented one of the few economic success stories for the region in the 1980s, was one area to fall victim to protectionist lobbying by domestically-orientated US firms. Nevertheless, the Caribbean textile and apparel sector has taken advantage of investment incentives provided through the US tax code provision 807 (now superseded by the Harmonized Tariff Schedule 9802), which provided production-sharing incentives for CBI beneficiaries and US firms.2 These provisions permit duty exemption of the value of US-made components that are returned as part of articles assembled abroad; for the purpose of US customs duty, items are evaluated only on the basis of the value added by the foreign assembly operation. In addition to this, a number of CBI beneficiaries also gained from the Special Access Program (also known as 807A) which offers additional quotas to those provided under the terms of the international Multifibre Agreement.3 In essence, what these measures add up to is not so much a form of economic aid towards the Caribbean, but rather a mechanism for enhancing the international competitiveness of the US textile and apparel industries. In fact, the strategy behind the 807/9802 programme has, in the words of a 1988 Economist Intelligence Unit (EIU) report, been to ‘curb and, in the longer term, effectively to discourage the emergence in the Caribbean of more highly integrated garment enterprises capable of producing items with a higher local added value – certainly insofar as they were primarily orientated toward the US market’ (Steele 1988: 4). From a wider perspective, the promotion of production-sharing arrangements in the apparel sector also allowed US firms to come to terms with the overall restructuring of the global apparel industry. According to Gereffi (1994), the marketing chain of apparel goods changed dramatically in this period: buyer-driven chains increasingly came to supplant producer-driven chains, with the consequence that large US retailers were able to buy directly from East Asian producers at the expense of US clothing manufacturers. The 807/9802 scheme was thus seen as a much-needed mechanism – by taking advantage of low wages in the Caribbean – to allow US clothing firms to remain competitive in their own domestic market (ECLAC 1999).

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For the Caribbean, the production-sharing option offered equally pressing, though less lucrative, advantages: namely, a means to guarantee export receipts and employment levels at a time of falling commodity prices, declining investment levels, and the debilitating consequences of structural adjustment and debt servicing. An emphasis on assembly operations is not, of course, new and much of the Export Processing Zone (EPZ) legislation dates from the late 1960s and 1970s, though these areas did not receive significant levels of investment until the mid-1980s. Since then, there can be no denying the dramatic impact that export processing has had upon the Caribbean. By June 1999 the CBI region as a whole accounted for 18 per cent of total US apparel imports; while its share of the 807/9802 apparel trade had grown to 55 per cent (USITC 1999; ECLAC 1999). For some Caribbean economies these developments, while offering undeniable benefits in terms of employment and foreign exchange earnings, portend a worrying scenario. The Dominican Republic, for instance, is now reliant upon the export of apparel, almost exclusively through the 807/9802 scheme, for nearly half of all of its merchandize exports. For this reason, the merit of assembly operations as a development strategy must be questioned.4 Such operations almost exclusively take place within ‘free trade zones’ which, given the extremely competitive environment in which they necessarily exist, have propelled Caribbean states into a series of ‘incentive wars’ with one another, including, amongst other things, competitive devaluations and bidding to offer the longest tax holidays. In the worse cases this has led to a situation where up to 40 per cent of Caribbean exports to the US provide virtually no fiscal income to the host governments (Mortimore 1999: 131). In addition, many of these activities are, to all intents and purposes, isolated from the rest of the domestic economy by prohibitive legislation which limits the possibility of either backward (sourcing) or forward (marketing) linkages creating spillover into other areas, thus preventing the creation of a more integrated ‘full package’ Caribbean apparel sector (Willmore 1994). Although production-sharing enclaves within the Caribbean have failed to promote a more integrated apparel sector at the domestic level or further the process of integration within the Caribbean as a whole, they have, nevertheless, succeeded in deepening the involvement of these sectors within the US apparel production complex. Although highly skewed, this complex has integrated part of the Caribbean into a ‘regional commodity chain’5 that ties the assembly operations into a network of production, distribution and marketing within the US. The

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Caribbean clearly constitutes the bottom link in this chain and its reliance on low wages inevitably makes it vulnerable to ‘footloose’ investment. Nevertheless, the region has one major factor in its favour: namely, proximity to the US market. Increasingly, competitiveness in the global apparel industry is predicated not only upon low-cost production, but also upon the ability to respond to rapidly changing market conditions through swift product turnover. In this sense the Caribbean is at a distinct advantage over other potential offshore production sites due to its close geographical proximity to the US textile mills, which are heavily concentrated in the south eastern part of the US.6 Although this linkage has arguably heightened the Caribbean’s external dependence, it has also generated a significant constituency within the US acting ‘for’ the Caribbean, albeit in ways that are perhaps not beneficial to the region as a whole. The most important groups in this respect have been the peak associations of the US textile and apparel industries, the American Apparel Manufacturers Association (AAMA) and the American Textile Manufacturers Institute (ATMI), both of whom have, in recent years, reversed their historical resistance to foreign imports by seeking to embrace the benefits of offshore production (Dickerson 1995). From 1993 onwards, both the AAMA and the ATMI were part of a wider constituency that actively lobbied the Clinton administration for some form of ‘NAFTA parity’ for the Caribbean. In a number of important ways NAFTA threatens the Caribbean, not just in terms of superseding the preferential trading terms offered to the Caribbean by the CBI, but, more specifically, by offering Mexico a more competitive and integrated base in the North American apparel chain, thereby potentially damaging Caribbean assembly operations. According to the Caribbean Textile and Apparel Institute, based in Kingston, Jamaica, in the 1995–96 period alone 150 apparel plants across the region were closed, with the loss of some 123 000 jobs, as a result of trade and investment diversion to Mexico (Gayle 1998: 70). This problem has prompted the major US apparel and textile producers to highlight the extent to which the viability of Caribbean assembly operations and their own competitive edge in the global marketplace are intertwined. Accordingly, American textile and apparel associations, including both the AAMA and the ATMI, have lobbied for legislative passage of a bill offering a package for the Caribbean similar to that enjoyed by Mexico under NAFTA, arguing that such an arrangement was vital if the US was to resist competition from ‘full package’ East Asian apparel imports.7 What makes the actions of this coalition particularly telling

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is that the US textile industry is heavily concentrated in a small number of (mainly eastern coast) politically powerful states, a factor which gives the industry significant influence over US textile trade policy as a whole (Steele 1988; Watson 1994). The role of eastern coast states in the ‘NAFTA parity’ campaign can be seen most strikingly in Florida and, in particular, in Miami, which in many ways acts as the US ‘gateway to the Caribbean’. Miami has established itself as the hub for US/Caribbean 807/9802 operations: Balkwell and Dickerson (1994: 10) estimate that between 3500 and 5000 apparel-related firms are currently active in south Florida, including contract cutting, warehouses and sewing machine supply. More generally, the state is also the Caribbean’s largest trading partner in the US. In 1999, total Caribbean trade with Florida was worth US$22.8 billion and some 40 per cent of total US exports to Latin America and the Caribbean passed through the state (Americasnet 2000). All in all, the state of Florida and its inhabitants have benefited from healthy economic links with the Caribbean, and the state has clearly been a major beneficiary of the CBERA and 807/9802 legislative packages. Nevertheless, in the same way that NAFTA threatens to undermine the Caribbean assembly operations and the competitive privileges enjoyed by US textile and apparel firms, Florida, as the principal beneficiary of these linkages through its position at the ‘gateway to the Caribbean’, is also threatened by this legislation. This threat has promoted a more proactive approach on the part of representatives of Florida, who have sought to push the Caribbean and its linkages with the US up the political agenda. The effort has been disparate and unstructured in nature and has been mediated at different times via the state’s senators and its representatives in the House, the state governor and his executive agencies and various government/business partnerships, such as Enterprise Florida and the Florida Partnership of the Americas. Nevertheless, by these diverse means and agents ‘Florida’ as a political actor has taken a lead in putting the case for NAFTA parity for the CBERA countries, including the tabling of bills in Congress on numerous occasions. In the process Florida as a ‘sub-state’ actor has become increasingly involved in the politics of regional integration and, certainly since the 1994 Summit of the Americas, has played a key role in the discussion of the future likely shape of the FTAA. The culmination of this activity came in May 2000 when President Clinton signed into law the Caribbean Basin Trade Partnership Act

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(CBTPA) as part of a wider package of legislation designed to offer investment incentives to apparel assembly operations in sub-Saharan Africa. Significantly, the CBTPA was part of the first piece of trade legislation to have been approved by a reluctant Congress since the 1994 Mexican peso crisis (Miami Herald, 19 May 2000). The CBTPA offers NAFTA parity for those goods that had been statutorily excluded from the CBERA, including canned tuna, petroleum and petroleum products, and leatherwear. Nevertheless, the provisions relating to textiles and apparel – in many ways the crux of the bill – still proved, in the end, to be highly contentious. In essence, the point of contention centred on a dispute between the textile and apparel industries over the precise wording of the ‘rules of origin’ provision. The ATMI, on the one hand, had favoured a restrictive interpretation that would allow for duty-free treatment only for fabric that was made and cut in the US.8 The AAMA, on the other hand, favoured more liberal language that would also grant preferential market access to fabric of Caribbean or third country origin. In the end, though, the textile industry’s position prevailed, with the CBTPA offering NAFTA ‘parity’ in terms of duty-free and quota-free access for certain apparel goods assembled by CBI beneficiaries from ‘fabric wholly formed in the United States from yarns wholly formed in the United States, if assembled in that country with thread formed in the United States’ (Americasnet 2000). Notwithstanding these problems, the CBTPA, in a wider sense, represents the first step to the eventual accession of Caribbean states into NAFTA or a similar free trade agreement. The bill also represents a symbolic victory – albeit a partial one – for those groups which have been actively pushing for NAFTA parity for the Caribbean; in particular, it is illustrative of the way that actors within the US, by doing no more than articulating their own sub-state and sectoral interests, have served also to deepen the US–Caribbean integration process. Nonetheless, the more favourable constituency towards the Caribbean that is slowly being fostered in the US, on this matter at least, does not as yet spread to all issues; nor does it treat all Caribbean states in the same way. Indeed, the recent and protracted dispute within the World Trade Organization (WTO) between the US Trade Representative’s Office and the European Union over the latter’s banana regime, which is perceived by the US as offering unfair advantages to Caribbean banana producers at the expense of the ‘dollar bananas’ produced in Central and South America (see Sutton 1997), highlights a number of fissures that currently exist within the wider

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region. Not only does the banana dispute pitch the Caribbean against many of its neighbours in Central and South America; more crucially, it also highlights the increasingly divergent interests within the Caribbean. As Rosenberg and Hiskey (1994: 105) point out, the banana dispute has pointed to the ‘widening split [within the English-speaking Caribbean] between countries still tied predominantly to their former colonial powers and those that have succeeded in establishing a presence in the North American market’. This split is likely to be further exacerbated by the contrast between the increasing insistence of the US upon reciprocity in trade issues and the continuing commitment of the EU, for the moment, to the notion of preferential access (Rosenberg and Hiskey 1994).

The new security agenda: drugs and migration Running parallel to these various trade and investment linkages, there have also been a number of important security issues that have similarly served to integrate more closely the societies and the political economies of the US and the Caribbean. Admittedly, much of the discourse surrounding these issues has been voiced from a US perspective as it has sought to articulate a suitable post-Cold War security paradigm for Latin America and the Caribbean as a whole. Nevertheless, such problems are real and have served to produce a new series of entanglements binding the two regions still closer together. Drugs Although the Caribbean is popularly known for its production, consumption and export of marijuana (which is actually only produced in Belize and Jamaica), the real significance of the region in terms of international narcotics trafficking is as a transshipment point between the cocaine-producing countries of South America (Colombia, Peru and Bolivia) and the lucrative North American market (Griffith 1997). The Caribbean archipelago, with its complex of tiny islands, inlets and coves, is particularly well suited to the purpose of smuggling, and this, in part, explains why successive US administrations have failed to make inroads in their ‘war on drugs’. Geographical proximity to the US market is also an important factor, with many of the most important transhipment points, such as the Bahamas, located as close as 40 miles from the Florida keys. In the end, though, the overriding factor propelling the US–Caribbean drug connection is demand: the US is by some margin the single largest drug-consuming country in the

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world. In terms of cocaine abuse alone, the US Department of State has estimated domestic consumption at between 150 to 175 metric tons, with an estimated value of between US$15–17.7 billion (US Department of State 1993: 21). By 1995 General Barry McCaffrey, US ‘drug czar’ and former head of the US SouthCom military command, estimated that around 300 metric tons of the approximately 575 metric tons available worldwide in 1994 was consumed in the US (Griffith 1997: 55), roughly 70 per cent of which is believed to have passed through the Caribbean en route to its market. This demand has fuelled a highly organized and transnational ‘drug commodity chain’ (Wilson and Zambrano 1994) linking up production, distribution and, finally, retail sale in the US market. The Caribbean, for its part, enjoys a longestablished position as a favoured transshipment point for the Colombian Medellin and Cali cartels, which deploy a wide variety of smuggling techniques throughout the central Caribbean. Such scenarios vary from small shipments (500–2000 kilograms) via airdrops and boat-to-boat transfers to commercial shipments of multi-tons of cocaine through the port of Miami.9 What is more, the Caribbean also plays a pivotal role in another vital area of the drug commodity chain – one which links the informal to the formal economy – namely, money laundering. Along with tourism and assembly operations, offshore banking is one of the few areas where the Caribbean, or at least parts of it, has managed to establish and maintain a comparative advantage (Maingot 1994). The Caribbean islands, particularly the European dependencies, which have embraced offshore finance most readily are also the islands most heavily implicated in drug trafficking (see Payne and Sutton 1994). Globally, the proceeds of the drug trade are estimated to be in the region of US$300bn, a third of which is centred in the US. Much of this is held offshore, where it is converted into financial assets that appear to possess legitimate origins. The part played by the Caribbean in this process is well documented. In its 1999 International Narcotics Control Strategy Report (INCSR), the US Department of State cited the following Caribbean countries and dependencies as been implicated in the laundering of monies gained from drug trafficking and other illegal activities: Antigua and Barbuda, the Bahamas, the Cayman Islands, Dominica, the Dominican Republic and the Netherlands Antilles (US Department of State 1999). A final point to recognize in relation to the Caribbean offshore banking sector is the extent to which it is part of a wider, and globally-oriented, financial region with the state of Florida, and especially the city of Miami, at its centre (Maingot 1994; Roberts

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1994). In many ways, Florida represents the financial centre of the south-eastern United States, accounting for 33 per cent of all commercial bank deposits and 51 per cent of all savings and loans deposited in this region (Maingot 1994: 267). Clearly, the growth of Florida as a major financial centre and the development of offshore banking in the Caribbean are not unrelated. Overall, the growth of drug smuggling and money laundering in the Caribbean has had serious and deleterious consequences for formal political institutions. For many Caribbean nations, the cumulative factors of small size, scarce resources and economic vulnerability have conspired to corrupt democratic institutions to the extent that the drug trade is now considered perhaps the most serious threat to democratic peace and stability in the region (West Indian Commission 1992). Few Caribbean states have avoided experiencing damaging political manifestations of the narcotics phenomenon in one form or another. This has ranged from relatively trivial scandals, such as petty corruption by low ranking public officials and ministers, to the emergence of so-called ‘narco-states’, in which the entire political process has come to be subverted to the powers and prerogatives of drug interests. Moreover, the corrosive effect of drug interests upon Caribbean societies is not restricted to small island mini-states; it has also penetrated the larger, more powerful states, even those with strong progressive ideologies, such as Cuba. Indeed, the 1989 trial and subsequent execution of General Arnaldo Ochoa, a hero of Cuban involvement in the Angolan civil war, on charges of ‘engaging in hostile acts against a foreign country’ via the drug trade dramatically illustrated the power of the narcotics interests.10 After all, as Maingot (1994: 153) has asked, ‘if a tightly controlled society such as Cuba could be so deeply penetrated and threatened by the drug cartels, was any society in the Caribbean immune?’ In terms of US–Caribbean relations, the regional narcotics phenomenon has generated a number of responses, the most important of which during the 1980s has been the attempted extension of US domestic law enforcement to cover the Caribbean. Underpinning this concept within Washington’s foreign policy-making community is the belief that it is only through extending the extra-territorial reach of the US state that it can compete with the transnational and highly sophisticated drug cartels. Elliott Abrams, the former Assistant Secretary of State for Inter-American Affairs, is one who has articulated this line of reasoning, arguing that, although ‘full colonial status may be a non-starter … a voluntary, beneficial erosion of sovereignty

Tony Heron and Tony Payne 57

should not be’ (Abrams 1996: 90). This type of thinking lay at the heart of the so-called ‘shiprider agreements’ originally signed between the Clinton administration and six of the smaller eastern Caribbean states in 1995 but later applied to the entire English-speaking region. These shiprider agreements, in effect, gave the US the right to enter the territorial waters and air space of Caribbean states to interdict suspected drug traffickers. Although many Caribbean governments quickly signed up to the US version of these agreements with greater or lesser enthusiasm in the early part of 1996, those of Barbados and Jamaica initially refused, arguing that their sovereignty over the policing of national space had to be maintained. Ultimately, however, US diplomatic pressure was brought to bear and they later reluctantly agreed to sign slightly amended agreements (see Payne 1998b). Migration The recent pattern of migratory flows has also served to further and complicate the entanglement of the US and the Caribbean. Caribbean migration to the US has a long history and, particularly since the 1950s, successive waves of Cubans, Haitians, Dominicans, Jamaicans and Puerto Ricans have made the journey northwards. The turning point, however, came in 1980 with the Mariel exodus from Cuban in which an estimated 125 000 refugees landed on the shores of south Florida, creating the impression within the US that officials had lost control of their borders. Following the passing of the 1986 Immigration Reform and Control Act, successive administrations have tended to view the issue as a security threat and have sought to stem the tide of Caribbean migrants entering the US. Nonetheless, the numbers of Caribbean people entering the US – both legally and illegally – continues to rise. In fact, the 1999 Immigration and Naturalization Service (INS) report estimated that approximately 758 434 migrants of Caribbean origin entered the US legally between 1988 and 1994, thereby accounting for almost 10 per cent of the total number of immigrants entering the US in that period. In addition, the report also estimated that, as of 1996, roughly 350 000 Caribbean illegal immigrants were resident within the US (USINS 1999). All in all, the effect of these labour flows to the US from the Caribbean has been to create a number of overlapping transnational ties that bind the two regions together on a number of levels. Firstly, the settlement of large Caribbean enclaves within east coast cities such as Miami and New York has created a sizeable constituency within the US capable of promoting the Caribbean within the US foreign policy

58 Microregionalism and World Order

agenda. The most significant group in this respect is, of course, the Cuban exiles. Through organizations such as the Cuban National Foundation, the Cuban community within Miami has been successful in bringing pressure to bear on successive US administrations to maintain a hard-line policy towards Cuba. Through Congressional links, the Cuban lobby has also been highly instrumental in promoting the passage of specific pieces of anti-Castro legislation, such as the 1992 ‘Cuban Democracy Act’ and the 1996 ‘Cuban Liberty and Democracy Act’ (popularly known as the Toricelli and Helms–Burton Acts respectively). Nevertheless, more recent events surrounding the protracted case of Elian Gonzales, who was rescued from the sea in an attempt to reach the US and then successfully reunited with his father in Cuba despite the fierce attempts on the part of Cuban exiles to have him remain in the US, suggests that the influence of the Cuban lobby may have reached something of a highpoint. Notwithstanding this point, the lobby at least illustrates the power that Caribbean actors living in the US can wield. Other Caribbean American groups have not, however, managed to project such a high-profile image as the Cuban exiles; some suffer from debilitating public images, such as the Jamaicans who are widely and indiscriminately viewed in the US as ‘criminals’, courtesy of the bad publicity attracted by the activities of criminal gangs of Jamaican posses living in cities such as New York (see Griffith 1997). Similarly, Haitians within the US have also suffered at the hands of popular media stereotypes; at the time of the US military intervention in Haiti in 1994, they were often labelled within popular political discourse as too ‘primitive’ to be able to cope with democracy. Indeed, this type of thinking was perhaps instrumental in US strategic calculations at the time of the 1994 intervention, with the fear of further Haitian migration to the US being cited by President Clinton as the main justification for the restoration of the (otherwise worryingly radical) Aristride regime (Grosfoguel 1996). Despite this, on another level, those Caribbean émigrés who do settle within the US generally maintain healthy ties with their county of origin (the Cuban case excepted, of course), thus generating another source of ties between the US and the Caribbean. Many of these diaspora communities, such as Dominicans living in New York and Cubans and Haitians living in Miami, attempt to recreate the cultural patterns of their mother country, leading ultimately to the ‘Caribbeanization’ of many of these cities. The migratory pattern of these groups does not, however, proceed in a linear fashion and is, in fact, often circular, with many migrants returning to their country of origin after a while, either

Tony Heron and Tony Payne 59

permanently to establish businesses in the export sector or temporarily to recruit employees or visit relatives. In the case of the Dominican Republic, for example, it has been recently estimated that one-fifth of all international visitors to the island were Dominican nationals, accounting for one-third of all revenues from tourism (Guarnizo 1994). A further, important source of revenue received by Caribbean states as a result of these binational societies comes from remittances sent back by émigrés to their families and friends; in the Dominican case again, revenue from such sources has been placed as second only to tourism in terms of foreign exchange earnings (Guarnizo 1994). Others migrants, particularly those with experience in assembly operations, are sometimes recruited to ‘export processing enclaves’ within the US that rely upon migrant – and mostly illegal – labour. Such activity invariably takes place in the informal US economy beyond the reach of labour regulation in areas or cities with high (illegal) migrant populations, recreating the sweatshop conditions of the Caribbean EPZs and representing a potent source for the continued transfer of labour between the Caribbean and the US (Taplin 1994).

The governance of ‘Caribbean America’ Underpinning the recent trajectory of US–Caribbean relations, which we have termed microregionalization, there are a number of unspoken ideological assumptions that have served to enframe a new politics. These assumptions, at the level of the state, refer to the degree to which Caribbean elites have broadly accepted the conceptions of politics, security and development offered by Washington (see Payne and Sutton 1993). This ideological convergence can, to a large degree, be attributed to the Reagan administration that, as we have seen, successful reordered the region to the point where, in almost every area, it was able to lay down the parameters of what could be done and even what could be thought. Such a strategy, nevertheless, was not mediated solely via state, bureaucratic and diplomatic channels; it was also sustained through the whole series of linkages described here that have served to penetrate the cultural and ideological fabric of Caribbean state/society complexes. Thus, just as we have spoken of the microregionalization of trade and investment and of politics and security, we must also conceive of patterns of ideology and culture operating at the transnational, sub-state level. Much of this, of course, is simply a corollary of these aspects of microregionalization: those Caribbean actors principally engaged in sectors oriented towards the US – whether it be

60 Microregionalism and World Order

tourism, export processing or even narcotics – are more likely to accept or aspire to mainstream American ideas and values. To summarize our argument, then, we have suggested that, in recent years, US–Caribbean relations have been transformed by a series of informal entanglements across a range of issues, including trade, investment, narcotics, migration and the transfer of ideas and culture, in ways that have had the effect of binding these two parts of the world ever closer together. Implicit within this argument lies the idea that traditional notions of inter-state relations and foreign policymaking, derived from conventional international relations discourses, are inappropriate for understanding contemporary US–Caribbean relations. This is not to suggest that states are irrelevant. Clearly, the symbolic rhetoric and behaviour of the state-to-state world is of vital importance, but, in our view, it does not catch the essence of the contemporary US–Caribbean relationship. This has now been reconfigured as a series of transnational and interlocking regimes in which different actors within the US state/society complex and within the various Caribbean state/society complexes engage each other in different arenas where there are no longer automatic priorities. The evidence drawn from the newly emerging US–Caribbean economic and security agendas clearly points to a form of political activity that is both multilayered and transnational in scope. This suggests to us that future research into the changing nature of US–Caribbean relations will be best served by placing the notion of governance at the centre of its enquiries. This term has its own specialist literature in the public policy field, but Rosenau has introduced it to international studies with good effect. He uses the concept of governance to refer to ‘spheres of authority … at all levels of human activity … that amount to … systems of rule in which goals are pursued through the exercise of control’ (Rosenau 1997: 145). Others have begun to pick up the term and, as Higgott and Reich (1998: 19) have lately argued in a survey of the burgeoning literature on globalization, more attention needs to be directed towards the micro level of analysis, focusing, in their words, ‘on the politics of subsidiarity within the wider international political theory of geo-governance.’ From this perspective, the future study of US–Caribbean relations, in the light of the evidence put forward in this chapter, can clearly benefit from this mode of enquiry. Indeed, it makes sense to think of ‘Caribbean America’ as constituting a new mode of transterritorial governance (see Payne 2000). As such, it is obviously far from complete and major adjustments of behaviour by Caribbean actors (in particular) are still required if they are to take due advantage of it. But,

Tony Heron and Tony Payne 61

notwithstanding those qualifications, there is now unlikely to be any return to old patterns of international relations in respect of the US–Caribbean relationship. This shift also has wider implications for the way in which the whole US–Latin American and Caribbean relationship is in future to be understood. Specifically, the evidence presented here does much to undermine the conception of Latin America and the Caribbean as a distinct and homogenous grouping. This can now be seen to have been largely a product of the security imperatives of the Cold War. Instead, what the post-Cold War experience suggests thus far is that processes of regionalization are fragmenting the hemisphere into a series of subregional groupings. Augusto Varas (1992: 48) has referred to this as ‘post-Latin America’ and conceives of it as a situation involving the emergence of ‘several subregional systems with different economic, political and strategic weights’. Specifically, he identifies four subsystems within this scenario: a North American region in which US hegemony remains preponderant and incorporating Canada, Mexico, Central America, as well as the Caribbean; a depressed Andean subregion; an embryonic Brazilian–Argentinean axis; and the remaining individual states, such as Chile, looking for the best way to integrate into various political, economic and security groupings (Varas 1992: 48). Crucially, what is implicitly acknowledged within this notion of ‘post-Latin America’ is the extent to which regionalization involving North and South America is contingent upon geographical proximity, with the implication that it is principally those states belonging to the Caribbean Basin (including Mexico) that are likely to be constituted as part of an enlarged North American political and economic nexus. Moreover, within these subregions there are likely to be specific microregions such as ‘Caribbean America’, the case examined here – where the level of transnational entanglement is greater even than elsewhere in the subregion.

Notes 1. The main exemptions from the CBERA were textiles, leatherwear, canned tuna, and petroleum and its derivatives. Although sugar was nominally included within the legislation, it was severely restricted by quotas, which suffered dramatic cuts during the 1980s, thus weakening further benefits from CBERA. For a good, though somewhat technical, assessment of the CBI see Schoepfle (1997); for more critical surveys, see

62 Microregionalism and World Order

2. 3.

4. 5. 6.

7.

8.

9. 10.

Newfarmer (1985); Phillips and Shaw (1987); Griffith (1990); and Deere et al. (1990). For more details on these provisions, see USITC (1997). At the time of writing six CBI beneficiaries are eligible for the Special Access Programme: Costa Rica, the Dominican Republic, El Salvador, Guatemala, Haiti and Jamaica. Interestingly, also, prior to the implementation of NAFTA, Mexico had benefited from a parallel agreement under the terms of the so-called ‘special regime’. For more details, again see USITC (1997). For a good critique of the EPZ development model in the Caribbean context, see Kaplinsky (1993). For further elaboration of this concept, see Gereffi and Korzeniewicz (1994). Balkwell and Dickerson (1994) place typical transportation times for Caribbean apparel assembly operations at around four to six days, compared to 21 days for Far Eastern sources. For more details, see, respectively, American Apparel Manufacturers Association, Statement before the Senate Committee on Finance, 26–28 January 1999; and Carlos Moore, Executive Vice President, American Textile Manufacturers Institute, Testimony before the Subcommittee on Trade of the House Committee on Ways and Means, 23 March 1999. This position contrasts significantly with the so-called ‘yarn forward’ rule that was agreed to by the textile industry as part of the NAFTA agreement. In contrast to the CBTPA, yarn forward only requires that the fabric is made and cut in either the US, Mexico or Canada to be given tariff-free and quotafree treatment. What is more, NAFTA signatories can also benefit from Tariff Preference Levels (TLPs) which allow for the use of any fabric as long as it is cut and sewn in the US, Mexico or Canada (Welling 2000). Justifying this discrepancy, industry sources suggest that stricter rules of origin were required for the CBTPA to prevent competitors for East Asia taking advantage, particularly through the practice of illegal transhipment. Confidential interview with senior ATMI official, Washington DC, 15 September 2000. See W. Mitchell, Drugs Enforcement Administration, Statement before the Senate Caucus, 22 June 1998. For an excellent account of the events leading up to General Ochoa’s execution, see Oppenheimer (1992).

References Abrams, E. (1996) ‘The Shiprider Solution: Policing the Caribbean’, The National Interest, Spring, cited in T. Munroe (2000) ‘Co-operation and Conflict in the US–Caribbean Drug Connection’, in I.L. Griffith (ed.), The Political Economy of Drugs in the Caribbean, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 183–200. Americasnet (2000) ‘Trade Development Act of 2000: a Florida Opportunity’, [http://www.Americasnet.net/eng/index.htm]. Balkwell, C. and K.G. Dickerson (1994) ‘Apparel Production in the Caribbean Basin: a Classic Case of the New International Division of Labour’, Clothing and Textiles Research Journal, 12 (3): 6–15.

Tony Heron and Tony Payne 63 Deere, C.D., P. Antrobus, L. Bolles, E. Melendez, P. Phillips, M. Rivera and H. Safa (1990) In the Shadows of the Sun: Caribbean Alternatives and U.S. Policy, Boulder, CO: Westview Press. Dickerson, K. G. (1995) Textiles and Apparel in the Global Economy, Englewood Cliffs, NJ: Prentice Hall. ECLAC (1999) Foreign Investment in Latin America and the Caribbean: 1999 Report (Santiago: ECLAC, LC/G. 2061). Gamble, Andrew and Anthony Payne (eds) (1996) Regionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan. Gayle, D.J. (1998) ‘Trade Policies and the Hemispheric Integration Process’, in T. Klak (ed.), Globalization and Neoliberalism: the Caribbean Context, Oxford: Rowman and Littlefield, pp. 65–86. Gereffi, G. (1994) ‘The Organization of Buyer-Driven Global Commodity Chains: How US Retailers Shape Overseas Production Networks’, in G. Gereffi and M. Korzeniewicz (eds), Commodity Chains and Global Capitalism, Westport, CT: Praeger, pp. 95–102. Gereffi, G. and M. Korzeniewicz (eds) (1994) Commodity Chains and Global Capitalism, Westport, CT: Praeger. Griffith, I.L. (1997) Drugs and Security in the Caribbean: Sovereignty Under Siege, Pennsylvania: Pennsylvania State University Press. Griffith, W.H. (1990) ‘Caricom Countries and the Caribbean Basin Initiative’, Latin American Perspectives, 17: 33–54. Grosfoguel, R. (1996) ‘The Geopolitics of Caribbean Migration’, in J. Rodríquez Beruff and H. García Muñiz (eds), Security Problems and Policies in the Post-War Caribbean, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 201–24. Guarnizo, L.E. (1994) ‘Los Dominican Yorks: the Making of a Binational Society’, Annals of the American Academy of Political and Social Science, 533: 70–86. Higgott, R. and S. Reich (1998) Globalization and Sites of Conflict: Towards Definition and Taxonomy, Centre for the Study of Globalization and Regionalization Working Paper No. 1, University of Warwick. Jackson, J.H. (1987) ‘Multilateral and Bilateral Negotiating Approaches for the Conduct of US Trade Policies’, in R.M. Stern (ed.), US Trade Policies in a Changing World Economy, Cambridge, MA: MIT Press, pp. 63–75. Kaplinsky, R. (1993) ‘Export Processing Zones in the Dominican Republic: Transforming Manufactures into Commodities’, World Development, 21 (11): 1851–65. Langley, L. (1982) The United States and the Caribbean in the Twentieth Century, Athens: The University of Georgia Press. Maingot, A.P. (1994) The United States and the Caribbean, Basingstoke: Macmillan – now Palgrave Macmillan. Mortimore, M. (1999) ‘Apparel-based Industrialization in the Caribbean Basin: a Threadbare Garment?’, CEPAL Review, 67: 119–36. Newfarmer, R.N. (1985) ‘Economic Policy Toward the Caribbean Basin: the Balance Sheet’, Journal of Interamerican Studies and World Affairs, 27 (1): 63– 98. Payne, A.J. (1996) ‘The United States and its Enterprise for the Americas’, in A.M. Gamble and A.J. Payne (eds), Regionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 93–129.

64 Microregionalism and World Order Payne, A.J. (1998a) ‘The New Political Economy of Area Studies’, Millennium: Journal of International Studies, 27 (2): 253–73. Payne, A.J. (1998b) ‘The New Politics of Caribbean America’, Third World Quarterly, 19 (2): 205–19. Payne, A.J. (2000) ‘Rethinking United States–Caribbean Relations: Towards a New Mode of Transterritorial Governance’, Review of International Studies, 26 (1): 69–82. Payne, A.J., and P.K. Sutton (1993) ‘Introduction: the Contours of Modern Caribbean Politics’, in A.J. Payne and P.K. Sutton (eds), Modern Caribbean Politics, Baltimore: The John Hopkins University Press, pp. 1–27. Payne, A.J., and P.K. Sutton (1994) ‘The Off-limits Caribbean: the United States and the European Dependent Territories’, Annals of the American Academy of Political and Social Science, 533: 87–99. Phillips, G.O., and T.O. Shaw (eds) (1987) The Caribbean Basin Initiative: Genuine or Deceptive?, Baltimore: State University Press. Oppenheimer, A. (1992) Castro’s Final Hour, London: Touchstone. Reagan, R. (1983a) Presidential Address, cited in R. Pastor, Whirlpool: US Foreign Policy Toward Latin America and the Caribbean, Princeton, NJ: Princeton University Press. Reagan, R. (1983b) Speech to the National Association of Manufacturers, cited in W.M. Leogrande (1998) Our Own Backyard: the United States in Central America, 1977–1992, London: University of North Carolina Press, p. 202. Roberts, S. (1994) ‘Fictitious Capital, Fictitious Spaces: the Geography of Offshore Financial Flows’, in S. Corbridge, R. Martin and N. Thrift (eds), Money, Space and Power, Oxford: Blackwell, pp. 91–115. Rosenau, J.N. (1997) Along the Domestic–Foreign Frontier: Exploring Governance in a Turbulent World, Cambridge: Cambridge University Press. Rosenberg, M.B. and J.T. Hiskey (1992) Florida and the Caribbean Basin Countries in the 21st Century: Is Geography Destiny?, Florida Caribbean Institute, Florida International University, Dialogue no. 137. Rosenberg, M.B. and J.T. Hiskey (1994) ‘Changing Trading Patterns of the Caribbean Basin’, Annals of the American Academy of Political and Social Science, 533: 100–11. Schoepfle, G.K. (1997) ‘US–Caribbean Trade Relations Over the Last Decade: From CBI to ACS’, in R. W. Palmer (ed.), The Repositioning of US-Caribbean Relations in the New World Order, London: Praeger, pp. 101–50. Steele, P (1988) The Caribbean Clothing Industry: The US and Far East Connections, London: The Economist Intelligence Unit, Special Report No. 1147. Sutton, P.K. (1988) ‘The Caribbean as a Focus for Strategic and Resource Rivalry’, in P. Calvert (ed.), The Central American Security System: North–South or East–West, Cambridge: Cambridge University Press, pp. 18–44. Sutton, P.K. (1993) ‘US Intervention, Regional Security, and Militarization in the Caribbean’, in A. J. Payne and P. K. Sutton (eds), Modern Caribbean Politics, London: The John Hopkins University Press, pp. 277–93. Sutton, P.K. (1997) ‘The Banana Regime of the European Union, the Caribbean, and Latin America’, Journal of Interamerican Studies and World Affairs, 39 (2): 5–36. Taplin, I.M. (1994) ‘Strategic Reorientations of US Apparel Firms’, in G. Gereffi and M. Korzeniewicz (eds), Commodity Chains and Global Capitalism, Westport, CT: Praeger, pp. 205–22.

Tony Heron and Tony Payne 65 US Department of State (1993) International Narcotics Control Strategy Report, Washington, DC. US Department of State (1999) International Narcotics Control Strategy Report, Washington, DC. US Immigration and Naturalization Service (1999) The Triennial Comprehensive Report of Immigration, Washington, DC. US International Trade Commission (1997) Production Sharing: Use of US Components and Materials in Foreign Assembly Operations, 1992–95, Washington, DC. USITC Publication 3032. US International Trade Commission (1999) Production Sharing: Use of US Components and Materials in Foreign Assembly Operations, 1995–98, Washington, DC. USITC Publication 3265. Varas, A. (1992) ‘From Coercion to Partnership: a New Paradigm for Security Co-operation in the Western Hemisphere?’, in J. Hartlyn, L. Schoultz and A. Varas (eds), The United States and Latin America in the 1990’s: Beyond the Cold War, London: University of North Carolina Press, pp. 46–63. Watson, H.A. (1994) ‘Global Restructuring and the Prospects for Caribbean Competitiveness: With a Case Study from Jamaica’, in H. A. Watson (ed.), The Caribbean in the Global Political Economy, London: Lynne Rienner, pp. 67–90. Weintraub, S. (1990) ‘The North American Free Trade Debate’, Washington Quarterly, 13: 119–30. Welling, H. (2000) ‘Caribbean Boon: Lurching after NAFTA’, Apparel Industry Magazine, August. West Indian Commission (1992) Time for Action: The Report of the West Indian Commission, Black Rock, Barbados: West Indian Commission. Willmore, L. (1994) ‘Export Processing in the Caribbean: the Jamaican Experience’, CEPAL Review, 52: 91–104. Wilson, S. and M. Zambrano (1994) ‘Cocaine, Commodity Chains, and Drug Politics: a Transnational Approach’, in G. Gereffi and M. Korzeniewicz (eds), Commodity Chains and Global Capitalism, Westport, CT: Praeger, pp. 297–315.

4 Microregionalization across Southern China, Hong Kong and Taiwan Katsuhiro Sasuga

This chapter represents an initial stage in the evaluation of contending interpretations of microregionalization across southern China with particular reference to China’s reintegration with Hong Kong and Taiwan.1 The focus of the present analysis is on the emerging division of labour across southern China, Hong Kong and Taiwan in relation to trade and investment activities which promote the relocation of foreign firms’ processing facilities into southern China. In this respect, in keeping with a production networks perspective, microregionalization across southern China, Hong Kong and Taiwan is seen as facilitating broader processes of East Asian regionalization as well as globalization. Most studies of the economic relations between China, Hong Kong and Taiwan seek to explain those relations in terms of three distinct geographical layers: ‘Greater China’ or ‘the Chinese Economic Area’ (mainland China, Hong Kong, Taiwan and Macau); ‘Greater South China’ (Hong Kong, Guangdong, Fujian and Taiwan); and ‘Greater Hong Kong’ (the Hong Kong–Guangdong nexus).2 There has been little interest in examining the processes and consequences of spatial restructuring across southern China in relation to the broader dynamics of East Asian regionalization and globalization.3 The three-layered pattern of China’s economic relations is usually defined narrowly in terms of horizontal political and economic groupings of regions that benefit from their geographical proximity but lack formal institutional arrangements. However, the pattern of the economic interconnectedness of ‘the three Chinas’ is increasingly determined by a deep-rooted restructuring at the regional and firm levels as an expression of a new international, 66

67

MANCHURIA Changchum

Jilin

Zhangjiakou

Anshan

NORTH KOREA

BEIJING

Datong

Tianjin Shijiazhuang Taiyuan Handan

YELLOW

Zaozhuang Zhengzhou Xuchang

Xi'an

SEA

Nagasaki

Nanjing

Huainan

Kyushu

Shanghai

Xuzhou Hangzhou

Congqing

EAST CHINA SEA

C H I N A Luzhou

Nangchang

Changshai

Pingxiang

Shaoyang Duyan Guilin

Guiyang Kunming Kaiyuan Gejiu

Hengyang Ganzhou Quanzhou Shaoguan Xiamen Liuzhou

Wuzhou

U RY

K

TAIWAN Kaohsiung

Haiphong Nam Dinh

A VIENTIANE

Haikou

Babuyan Islands

Hainan

PHILIPPINE

A

HANOI

Taipei

HONG KONG MACAU

Zhanjiang

Okinawa

Fuzhou

Guangzhou

Nanning

L

Nagoya Osaka

Kyoto

Hiroshima

Xuzhou

Xiangfan Yichang

Pusan

Kwangju

Sendai

TOKYO

Taejon

Tai'an

Baoji

Honshu

JAPAN

SEOUL SOUTH KOREA

Zibo

Changzhi

Morioka

Akita

SEA OF JAPAN

PYONGYANG

Tangshan

Jinan

Sapporo

Nakhodka

Fushum

Shenyang

Hokaido

Vladivostok

IS LA ND S

M

Baicheng

A

YU

IN

R NE

LI GO ON

Sanya

E

O

SEA

Baquio

S

S

Hue Da Nang

Luzon

THAILAND A

Otlezon City

VIETNAM

MANILA

PHILIPPINES

N

BANGKOK CAMBODIA

Legaspi Calbayog

H

I

Mindoro

Ho Chi Minh City

Puerto Princesa

H

Gulf of Thailand

Samar

Ranay

C

PHNOM PENH

T

Palawan

Iloilo

Leyte

Negras

Cagayan de Oro

Sulu Sea

Mindanao

U

O

Davao

Zamboanga

S Kota Kinabalu Taiping MALAYSIA Kuantan

KUALA LUMPUR

Sibu

SINGAPORE

IA

SARAWAK

S AY

AL

M BORNEO

Pontianak

General Santos

SABAH

BRUNEI

Samarinda

Southern China, Hong Kong and Taiwan

Celebes Sea

Manado

68 Microregionalism and World Order

regional and hierarchical division of labour within and between regions. This process is exhibited more in an outward hierarchical integration than in an internal horizontal integration. Indeed, it has not yet had much effect on the promotion of China’s national economic integration. The first section of this study considers the pattern of China’s reintegration with the global economy, and concentrates on the significance of international commodity chains. It discusses the particular example of China’s processing trade arrangements and especially those in the electrical goods industry.4 The second section examines the empirical processes of deepening economic linkages between Hong Kong and the Pearl River Delta in Guangdong province in China. It considers the intra- and inter-firm divisions of labour based on the ‘front-shop, backfactory’ model and the features of cross-border production networks. The third section deals with the specific case of Taiwanese foreign direct investment (FDI) in the Pearl River Delta, which has contributed greatly to the development of cross-border relations. The fourth section considers the spatial impact of microregionalization on the Pearl River Delta and briefly considers the implications for China’s national economic integration. The fifth and concluding section summarizes the main arguments and offers an overall perspective on this innovative form of microregionalization across southern China, Hong Kong and Taiwan. The analysis seeks to demonstrate that the pattern of China’s economic integration with Hong Kong and Taiwan is closely linked to the emergence of international commodity chains, and that Hong Kong and Taiwan operate as overlapping nodes in global production networks through their use of the Pearl River Delta as a key production site. The territorial concepts of ‘Greater China’, ‘Greater South China’ and ‘Greater Hong Kong’ are inadequate because they are based on groupings of homogeneous regions and ignore the significance of emerging hierarchical microregionalization across Southern China, Hong Kong and Taiwan, and its linkages with the global economy through international production networks and commodity chains.

Patterns of China’s reintegration with the global economy International commodity chains The concept of international commodity chains helps to explain how peripheral countries are linked to the global market (Hopkins and Wallerstein 1986; Gereffi and Korzeniewicz 1994). In most industries

Katsuhiro Sasuga 69

there is usually a specialization of activities, with each individual organization being linked to, and playing its role in, the wider production and distribution system.5 With the rapid development of liberalization, deregulation, information technology, and communication in the 1990s, the pace of the globalization of commodity chains accelerated. The result was more intense industrial competition between firms. This competition is most visible at the regional scale, where specific industrial infrastructures and political and economic conditions shape patterns of cross-border interaction. This is illustrated by the new regionalism of East Asia, which has been greatly influenced by changes of manufacturing and trade patterns. In the economic success of Japan, the NIEs (South Korea, Taiwan, Hong Kong and Singapore), the ASEAN 4 (Indonesia, Malaysia, the Philippines, Thailand) and China, the electrical goods industry has played an especially important role in developing cross-border linkages in the international market.6 The major driving forces behind the expansion of the electrical goods industry in Asia are pragmatic technological transfer strategies, FDI, the subsidiaries of multinational corporations, Japan’s role in building technology bases, and overseas Chinese firms (Das 1998: 67). Firms have sought to create more efficient production and procurement systems. At the regional (East Asian) level, however, an international division of labour based on national economies is being replaced by a division of labour rooted in regional, intra- and inter-firm networks – a division of labour which is one of the key characteristics of microregionalization. In this context, it is especially important to understand the roles of East Asian NIEs in relation to commodity chains, in particular through their links with Japan. East Asian NIEs have undertaken a number of key roles: (1) a commodity-export role; (2) a commercial-subcontracting role, using imported components from Japan; (3) an export-platform role, using Japanese FDI; (4) a components supplier role, acquiring original equipment manufacturing (OEM) from Japanese manufacturers; and (5) an independent exporter role, using original brand names (Gereffi 1992: 106). Industrialization in East Asia, therefore, is the result of an integrated system of global production and trade, supported by new forms of investment and financing, and promoted by specific government policies. An understanding of international commodity chains is especially important in terms of the increasing economic relations between China and the NIEs (especially Hong Kong and Taiwan). In particular, these relations involve an extension of the export-oriented assembly of manufactured goods, using imported

70 Microregionalism and World Order

components from the NIEs and Japan. This extension has brought about complex patterns of relations, with the NIEs themselves becoming major investors through their status as recipients of inward FDI from advanced countries. China’s inward FDI and foreign trade China’s impressive economic performance, especially in the coastal provinces, owes much to the growth of inward FDI. Between 1979 and the end of 1999, China absorbed a total of US$307.77 billion of inward FDI (actual use). By 1999, there were 235 681 foreign affiliates in China, which accounted for 34 per cent of the world’s total number of foreign affiliates of MNCs (UNCTAD 2000). In terms of accumulated inward FDI until 1999 (actual use), Hong Kong was the largest investor in China (50.1 per cent), the USA (8.4 per cent) was second, Japan (8.1 per cent) was third, and Taiwan (7.8 per cent) was fourth (Ko-ryu-, 15 April 2000). However, these figures do not necessarily reflect the origins of FDI accurately. For example, perhaps as much as a quarter of all FDI from Hong Kong is ‘recycled’ investment from China itself – a result of mainland Chinese investors attempting to appear ‘foreign’ in order to take advantage of tax breaks and other incentives that are offered to foreign investors. Also, much of the Taiwanese FDI in China is by small and medium-sized firms which do not register officially with the Taiwanese authorities. Initially, such investment tended to be routed through Hong Kong. More recently, Taiwanese investors have looked towards tax havens as bases for reinvestment into China. Thus, by 1999, the Virgin Islands became the fourth largest supplier of total inward FDI into China based on actual use (Zhongguo Tongji Nianjian 2000). A further complication is that Hong Kong and Taiwan are also used as conduits for reinvestment in mainland China by foreign firms (mainly US, European and Japanese). Hitherto the primary motivations for FDI in China have been the location advantage of low-cost labour and land, preferential government policies, and access to the rapidly growing internal market (Zhang 2000). In addition, for Hong Kong and Taiwanese firms, there are also advantages arising from geographical, cultural and linguistic proximity, which help to reduce transaction costs. From a Chinese viewpoint, there are five advantageous factors for foreign investors: (1) political and social stability; (2) continuous economic growth; (3) the maintenance of a stable exchange rate; (4) a high level of foreign exchange reserves and a favourable balance of payments; (5) further

Katsuhiro Sasuga 71

deepening economic reform and improvement of the legal system (Hu 1999: 38). However, of equal importance is the role of inter-organizational linkages in exploiting the scale of advantages and flexibility. For offshore manufacturing activities based on an export-oriented strategy, low-cost factors of production are especially important. Foreign investors have been attracted by China’s official adoption of an export-oriented strategy based on the principle of comparative advantage in production through the international division of labour. The proliferation of coastal special economic zones (SEZs), open cities and open areas, all of which are allowed to give preferential treatment to foreign firms, has acted as a magnet to attract FDI. Inter-organizational linkages (such as subcontracting, outsourcing and production networks) are not confined to regional clusters or to the nation-state but cut across national boundaries. Table 4.1 Geographical distribution of FDI in China in national total (actual use) (percentages) Year and Total Region, Department

1987 1991 1993 1995 1997 1999 US$2.314 US$4.366 US$27.515 US$37.521 US$45.26 US$41.83 billion billion billion billion billion billion

Beijing 4.11 Tianjin 5.49 Shanghai 9.25 Guangdong 26.06 Fujian 2.20 Jiangsu 2.03

5.61 3.02 3.32 41.75 10.67 4.86

2.42 1.97 11.48 27.62 10.42 10.34

2.88 4.05 7.71 27.13 10.76 13.83

3.52 5.55 9.34 25.88 9.27 12.01

4.90 4.38 7.03 28.91 9.98 15.07

Coastal Provinces (Total)

55.92

89.75

86.10

86.53

85.29

85.35

Central and Western Province

6.74

5.4

12.34

11.91

14.01

13.70

5.51

1.56

1.57

0.7

0.95

Central Department 37.38

Note: The coastal provinces are defined as Beijing, Tianjin, Hebei, Liaoning, Shanghai, Zhejiang, Fujian, Guangxi, Jinagsu, Guangdong, Hainan and Shandong. Figures are based on the author’s calculations. Sources: Zhongguo Tongji Nianjian 1999 and 2000; Mitsubishi So-go- Kenkyu-sho (1996) and Kaku Shishi (1999).

72 Microregionalism and World Order

In the 1990s, inward FDI in China was concentrated mainly in the coastal areas (see Table 4.1). These areas are very attractive to investors because they have better infrastructure (such as ports) and a better quality of labour. Among China’s coastal provinces, Guangdong’s dominant position is clear, but with the spread of a new open area towards the north, the gap between it and other coastal provinces is decreasing. But the growth of inward FDI does not tell the whole story of the process of the reintegration of China with Hong Kong and Taiwan, especially the growth of intra- and inter-firm linkages. Equally important are the growth and pattern of manufacturing exports. Foreign firms7 now play a very important role in the Chinese economy, accounting for nearly half of China’s foreign trade. They employ more than 17.5 million people, equivalent to about 10 per cent of the country’s non-rural labour force (Li 2000: 112). It is important to note that nearly half of the total trade is carried out in the form of processing-trade arrangements. Here, the Chinese government or partner provides plant, labour, water, electricity, and other basic facilities, and foreign investors supply the machinery, equipment, materials, and design of products and take responsibility for marketing. They also pay the processing fee for the Chinese side (Sit 1998: 896). In terms of transactions, foreign investors bring components into China as imports and take the processed products back as Chinese exports (Breslin 1999; Yabuki and Harner 1999). The processing trade accounted for 56.9 per cent of China’s total exports and 44.4 per cent of total imports in 1999. In particular, electrical goods exports from China through the processing-trade arrangements accounted for 90 per cent of China’s total electrical goods exports in 1999 (Kokusai Bo-eki, 16 May 2000). China’s trade statistics in recent years give a very crude indication of processing trade flows. For example, China has recently run continual trade surpluses with the US and EU (major markets), and trade deficits with Taiwan (FDI and component suppliers). Table 4.2 presents a more refined view, and identifies the main countries and regions that contribute to China’s processing trade. In 1999, a total of 58 per cent of the materials and components for the processing trade were imported from Japan, Taiwan and South Korea, while around 80 per cent of total exports through the processing trade went to the major markets in North America, Japan and the EU. Guangdong’s inward FDI and foreign trade It is difficult to overestimate the importance of investment from Hong Kong and Taiwan in facilitating China’s reintegration into the global

Katsuhiro Sasuga 73 Table 4.2

China’s processing trade by country and region, 1999 (US$100 million)

Country and region

Exports

Imports

Balance

Export share (per cent)

Import share (per cent)

Japan United States Hong Kong EU Taiwan South Korea Others

188.8 298.2 239.4 165.5 24.9 39.8 152.1

184.5 52.5 53.4 42.4 142.7 99.3 161.1

4.3 245.7 186.0 123.1 –117.8 –59.5 –9.0

17.0 26.9 21.6 14.9 2.2 3.6 13.8

25.1 7.1 7.3 5.8 19.4 13.5 21.8

Total

1108.7

735.9

372.8

100.0

100.0

Source: Chu-goku Tosho, July 2000.

trading system. But in many ways, it is only a very partial reengagement on the Chinese side. The vast majority of Chinese exports are produced along the coastal seaboard – and, in particular, in Guangdong. In 1999, this single province accounted for around 40 per cent of China’s total trade. Of this total, nearly 80 per cent was a result of the processing trade, primarily from (or at least through) Hong Kong. In 1998, the Virgin Islands became the second largest source of investment in Guangdong (GDTJNJ 1999), largely due to the activities of Taiwanese investors noted above.8 The ranking of Guangdong’s main trading partners reflects China’s pattern of processing-trade arrangements (see Table 4.3). More than 40 per cent of Guangdong’s imports come from Japan and Taiwan, while more than 70 per cent of Guangdong’s exports go to the US and the EU markets. But even this provincial level of analysis is in some ways misleading. FDI in Guangdong is further concentrayed on the Pearl River Delta (Zhujiang Sanjiaozhou).9 In 1998, the Delta’s industrial output value was equivalent to 87.4 per cent of the total value of Guangdong’s industrial output, and the Delta’s exports value accounted for 88.1 per cent of the total value of Guangdong’s exports (Maruya 2000: 143). It is therefore important to undertake further disaggregate analysis, focusing on smaller units below the provincial level in China.

Hong Kong and the Pearl River Delta In the pre-reform period, Guangdong was a relatively poor and marginal province in terms of industrial development, largely because it

74 Microregionalism and World Order Table 4.3 Guangdong’s trade relations by country and region (value, US$100 million, and per cent) Year and total Country and region for exports

1995 565.92

1998 756.18

1999 777.05

Percentages Hong Kong and Macau Taiwan Japan ASEAN United States EU Others Total

39.3 2.5 11.5 3.8 22.6 11.4 8.9 100.0

35.9 2.3 9.2 4.1 25.1 13.2 10.2 100.0

34.6 2.1 8.7 4.1 26.0 14.0 10.5 100.0

Year and Total Country and region for imports

1995 473.80

1998 541.80

1999 626.63

Percentages Hong Kong and Macau Taiwan Japan ASEAN United States EU Others Total

12.8 19.0 24.7 8.7 7.4 8.1 19.3 100.0

7.8 19.8 21.4 10.8 8.3 7.7 24.2 100.0

6.6 19.7 21.3 10.3 8.6 8.7 24.8 100.0

Source: GDTJNJ (2000).

was forced into a front-line role under the national defence strategy. The ‘open door’ policy, adopted in 1979, dramatically changed Guangdong’s economic role in China. Its success owes much to the development of economic relations with overseas Chinese business communities, especially in Hong Kong. Hong Kong’s expansion into the Pearl River Delta The expansion of Hong Kong economic interests into southern China was a result of both push and pull factors. At the end of the 1970s, Hong Kong manufacturers began to experience labour shortages, rising

Katsuhiro Sasuga 75

costs of labour and land, and higher environmental costs. At the same time as these push factors were undermining the competitive advantage of Hong Kong exports, the establishment of Shenzhen’s SEZ, adjacent to Hong Kong, provided just what Hong Kong now lacked – abundant land, inexpensive labour, and ‘flexible’ policies on employment. In addition, tax breaks for new investments and an improved infrastructure strengthened the pull factors. With the enhancement of the investment environment in the Delta, the full-scale advance of Hong Kong manufacturing firms across the border began in the late 1980s. Hong Kong firms responded quickly to the emergence of this new lifeline, which has been described metaphorically as ‘like fish finding the water’ (Ash 2000). The most popular form of industrial linkage between Hong Kong and Guangdong is in the arrangements for the processing trade. From 1979 to 1995, Hong Kong investors signed 23 605 cooperative production contracts with Guangdong, with an actual use of capital of $US 14 billion (Sit 1998: 896). The shift of Hong Kong manufacturing to the Pearl River Delta initially focused on labour-intensive production processes (such as shoes, sports goods, toys and travel goods), but later spread to value-added products (for example, electrical and electronic goods, and telecommunications equipment). In the 1990s, product development operations, some managerial functions and even financial departments moved across the border. Many Hong Kong manufacturing firms now leave only management, sales and procurement functions in Hong Kong. Table 4.4 reveals the increasing share of processing trade in Hong Kong–mainland trade. The processing trade based on re-exports from the mainland accounted for 87.6 per cent of total re-exports of mainland products in 1998. It also shows that processing-trade arrangements have brought about a highly profitable pattern for Hong Kong firms except those in the textile industry. The rate of local procurement for plastics, toys, electrical goods and watches was over 50 per cent in the late 1990s. The low cost of labour and land in China were major incentives for the shift of Hong Kong manufacturing. According to research by JETRO, the monthly salary of factory workers in Shenzhen in 1999 was less than one-tenth of that in Hong Kong (Jetro Sensa-, April 2000), and the price of factory land in Shenzhen was around one-eighth of that in Hong Kong. From the investor’s viewpoint, the exchange rate with the RMB is also an important factor to be considered. For example, in the case of Japanese investors in China,

76 Microregionalism and World Order Table 4.4 The processing trade’s share in Hong Kong’s trade with the mainland (percentage) 1989

1991

1993

1995

1997

1998

Processing-trade exports as share of total exports to the mainland

53.0

55.5

47.9

49.0

48.6

48.1

Processing-trade exports as share of total domestic exports to the mainland

76.0

76.5

74.0

71.5

76.1

77.4

Processing-trade reexports as share of total re-exports to the mainland

43.6

48.2

42.1

45.4

44.7

44.1

Processing-trade imports from the mainland as share of total imports from the mainland

58.1

67.6

73.8

74.4

81.2

82.7

Processing-trade re-exports from the mainland as share of total re-exports of mainland products

n.a.

74.1

80.8

82.2

88.4

87.6

Rate of profit in processing trade

n.a.

12.2

23.5

23.2

21.3

17.2

Rate of local procurement

32.3

42.3

45.7

45.5

50.1

53.7

Textile goods

29.5

33.3

36.0

24.4

28.9

33.4

Plastic and toys

26.0

33.7

44.3

40.7

50.9

59.6

Machinery and electrical goods

25.6

39.2

37.5

47.3

51.8

53.9

Watches

21.9

27.9

30.2

36.5

50.8

54.9

Notes: 1. Rate of profit in processing trade = the total value of processing trade re-exports from Hong Kong minus the value of processing-trade imports from the mainland. 2. Rate of local procurement = the value of processing-trade imports minus the value of processing-trade exports such as parts. However, the value of processing products includes China’s processing fee. Therefore, the actual rate is lower than the quoted figure. Source: Maruya Toyojiro (2000) ‘Chugoku Kanan no Sangyo Shuseki to Ajia no Kokusai Bungyo (‘The Industrial Agglomeration in Southern China and the Rearrangement of the Asian International Division of Labour’), in Maruya Toyojiro (ed.), Ajia Kokusai Bungyo Saihen to Gaikoku Chokusetsu Toshi no Yakuwari (Rearrangement of the Asian International Division of Labour and the Role of FDI), Chiba: Ajia Keizai Kenkyusho.

between 1989 and 1999 the RMB dropped almost one-third against the Japanese yen. Hence, despite the continuous rise of the cost of

Katsuhiro Sasuga 77

labour and land in China, the weakening exchange rate has countered the rise of prices. The front-shop, back-factory model The basic model of Hong Kong’s extension of manufacturing activities in Guangdong is the ‘front-shop, back-factory’ system. According to this model, the headquarters in Hong Kong and the local branch plant in Guangdong establish an intra-firm division of labour. Front-shop activities focus on tertiary activities and the back-factory concentrates on production. In addition to these intra-firm linkages, the commodity chain is strengthened by strong inter-firm links. Typically, Firm A (manufacturer) and Firm B (parts supplier) both establish their own headquarter offices in Hong Kong focusing on sales, parts supply, and financing. Each also has a local branch office in Guangdong focusing on production. While bills and payments are exchanged between the two headquarter offices in Hong Kong, parts supply is carried out between the local branches in Guangdong through the bonded zone. These bonded zones, first established in Shanghai in September 1990, provide exemptions from tariffs on imports in order to encourage production by foreign firms. By 1997, five bonded zones (two in Shenzhen, one in each of Guangzhou, Zhuhai and Shantou) had been established in Guangdong. As a result of this inter-firm cooperation, transaction costs are significantly reduced, and the significance of the border between Hong Kong and the rest of China is greatly diminished (Maruya 2000).10 Industrial expansion in the Pearl River Delta owes much to Hong Kong’s developed expertise, its large pool of capital, skilled labour, and management personnel, and its access to equipment, technology and overseas markets. But it should not be seen as an ‘apolitical’ consequence of the action of non-state actors. Key political decisions – particularly on the Chinese side – underpinned the evolution of microregional economic integration. The decision to open to the outside world, the location of the Shanzhen SEZ on the border with Hong Kong, investment in infrastructure, fiscal policy and so on have all played crucial roles in facilitating cross-border relations. And the ‘success’ of the initial microregional integration between Hong Kong and Guangdong has further attracted inward FDI into Hong Kong from Japan, the US and Taiwan, which have sought to exploit the advantages of Hong Kong–Guangdong links. In turn, this

78 Microregionalism and World Order

trend has resulted in further industrial agglomeration in the Pearl River Delta.

Taiwan: between the Pearl River Delta and the global economy Taiwan and the international division of labour Before assessing the patterns of Taiwanese FDI in the Pearl River Delta, it is important to link this Taiwanese investment back to the wider international division of labour. In this way, we will see how rather than forming a narrow ‘Greater China’ production network, microregionalization in southern China is part of a wider process of global change. As the majority of Taiwanese investments in the Pearl River Delta are related to the manufacture of electronic goods, they will be the focus of the following analysis. And particular attention will be paid to the case study of computer production – a sector where the global linkages are perhaps most clearly observable. Taiwan’s own electrical goods industry was initiated in the 1960s and 1970s, when foreign firms such as RCA, Zenith, Philips, Matsushita, Mitsubishi and NEC went to Taiwan to set up wholly owned subsidiaries or local joint ventures for the production of electrical goods – mainly transistor radios, black-and-white television sets, calculators, electrical household appliances, and electrical components and parts. Such foreign-affiliated production accounted for more than 60 per cent of Taiwan’s electronics exports in the 1970s (Chung 1996: 17). The domestic firms successfully emulated the local transnational corporations (TNCs), and the electrical goods sector as a whole expanded steadily during the 1970s, becoming the biggest single source of Taiwan’s foreign exchange earnings by the early 1980s. In particular, the growth of PC-related industry was remarkable. By 2000, Taiwan had overtaken Japan to become the second largest exporter of PC-related products in the world (Ko-ryu-, 31 March 2001) and was the fourth largest producer of informational products (in volume) (Wu 2001: 57).11 The personal computer industry was established in Taiwan on the basis of both original equipment manufacturing (OEM) and original development manufacturing procurement activities and Taiwan’s own indigenous effort. According to the research by the Japan–Taiwan Interchange Association (Chiao-liu Hsieh-hui) in 1998, 60 per cent to 70 per cent of Taiwan’s PC-related products were in the form of OEM production.12 As a result, Taiwan’s PC industry has increased its share

Katsuhiro Sasuga 79

of informational production manufacturing in the world market.13 It is estimated that in 1998 almost 40 per cent of OEM orders for PC-related products came from the US, 30 per cent from the EU, and 10 per cent from Japan (Ko-ryu-, 30 June 2000). Among them notebook PCs accounted for the largest OEM production in terms of volume in 1998. In terms of OEM relations with US computer makers, Inventec Corporation and Arima Computer Corp produce OEM notebooks for Compaq, Acer Inc. and Quant Computer Inc. produce for IBM, and Compall Electronics Inc. and Quant Computer Inc. produce for Dell (Ko-ryu-, 30 June 2000). Acer, which is now the world’s sixth largest computer and computer equipment firm, still contracts with 130 firms to produce OEM products (Zhu 2000). In 1998, 72 per cent of PC monitors were produced outside Taiwan. In the same year, 45 per cent of desktop PCs were also produced outside Taiwan (Ko-ryu-, 30 June 2000). The US and Japan are the major trading partners for Taiwan’s PC-related production. The major offshore production site is now in mainland China, which produced one-third of Taiwan’s PC-related goods in 1999. In short, Taiwanese companies sign OEM agreements to produce goods for Japanese and US producers, which they then out-source to factories in China. Almost all of these finished OEM products are then exported to the US, the EU and ASEAN. Some are also ‘re-exported’ back to Taiwan itself. Taiwanese FDI in the Pearl River Delta With the growing shortage of labour and escalation of production costs in Taiwan, Taiwanese firms were forced to relocate their labour-intensive production processes in the mid-1980s. Although the initial focus was on ASEAN states, Taiwanese FDI in mainland China began in the late 1980s. In 1987, the Taiwan authorities abolished martial law and lifted the ban on kinship visits to the mainland. The foreign exchange regime was also liberalized to allow free capital movement under NT$5 million. With the increasing importance of the scale and cost of production, Taiwanese firms had to expand their production system abroad. The combination of liberalization in Taiwan and China’s open door policy created the opportunity for Taiwanese business to participate in Hong Kong–Guangdong links based on the ‘front-shop, back-factory’ model. Despite the political conflicts between Taiwan and the mainland, after 1991, when new laws and regulations were implemented by the Taiwan authorities, indirect investment from Taiwan into China was officially admitted through third countries (primarily through Hong Kong, later through the Central American islands belonging to the UK).

80 Microregionalism and World Order

In 1999, 41.2 per cent of Taiwanese outward FDI (approved base by Taiwanese authority) was invested in the Central American islands, a total which far exceeded that to Hong Kong (3.1 per cent) (Ko-ryu-, 15 May 2000), but almost all was thought to be reinvested in China. However, as political hostility between China and Taiwan remain unresolved, and trade, postal and shipping links are still impossible between Taiwan and China, Hong Kong has been, and will continue to be, an important channel to conduct trade and investment between Taiwan and China (Lin 2000). By 1999, the number of Taiwanese firms investing in the mainland was estimated to be about 44 000, and the total investment (actual use) from Taiwan reached US$24 billion – around 8 per cent of total inward FDI in China (Beijing Weekly, 6 June 2000). It is said that some 250 000 Taiwanese on the mainland run factories and firms, and are responsible for about 12 per cent of China’s total exports (Business Week, 14 August 2000). Although there are joint ventures with Chinese companies, Taiwanese firms prefer to wholly own their operations in China where possible. This is because Taiwanese firms found that when they invested in China through joint ventures or other cooperative operation firms, they often encountered managerial problems on the Chinese side (Ko-ryu-, 31 May 1998). Taiwanese electrical goods firms have tended to cluster, especially in the Pearl River Delta. By 1999, the number of registered Taiwanese firms in Guangdong was estimated to have reached 11 000 and the amount of investment had reached US$8 billion.14 Of these, some 3200 investments were in the city of Dongguan and the number of Taiwanese residents in the city was about 40 000 (Asahi Shinbun, 3 February 2000: 12). The level of industrial agglomeration in the electrical goods industry in Dongguan is remarkable, and Taiwanese electrical goods firms occupy a dominant position. By the end of the 1990s, Taiwanese firms employed a third of the city’s population (3.5 million) and contributed 70 per cent of the city’s exports (Ko-ryu-, 30 June 2000).

The impact on spatial restructuring in the Pearl River Delta The concentration of inward FDI and production networks through Hong Kong and Taiwan has restructured social and economic space in the Pearl River Delta. The rate of growth of Guangdong’s population in the last ten years is the highest among China’s provinces (37.5 per cent), a trend which made Guangdong the third most populated province by 2000 (Asahi Shinbun, 4 April 2001). The diffusion of FDI

Katsuhiro Sasuga 81

within the Delta has accelerated since 1990 owing to a surge of inward FDI, further decentralization, and the improvement of infrastructure across the whole Delta (Shen et al. 2000). Nevertheless, the spatial distribution of international economic relations in Guangdong remains uneven. It is particularly notable that, in economic terms at least, the dominant role of the provincial capital, Guangzhou, has significantly declined due to the rise of emerging cities such as Shenzhen and Dongguan. Not only within China, not only within Guangdong Province, but even within the Pearl River Delta, regional polarization is now emerging (Gu et al. 2001). Shenzhen and Dongguan Shenzhen and Dongguan have been successfully transformed into export-oriented manufacturing-based economies. They are, in many respects, more integrated with the economies of Hong Kong and Taiwan than they are with the rest of China. Perhaps more correctly, they are more integrated with manufacturing commodity-driven production chains than they are with the rest of China. The following survey of related statistics gives weight to this argument. Almost 70 per cent of Shenzhen’s imports and exports were under processing-trade arrangements in 1999 (Guoji Shangbao, 15 January 2000) and foreign firms accounted for 75.9 per cent of Shenzhen’s total industrial output in 1998. In the same year, the electrical goods industry accounted for more than 58.24 per cent of total industrial output in Shenzhen (Shenzhen Tongji Xinxi Nianjian 1999). Underlying these trends are not only economic factors but also regional policies targeting hightechnology enterprises. Shenzhen’s high-technology zone, which was established in 1996, has contributed to the concentration of high-tech industry. In 1999, IBM established a parts supply centre in Shenzhen, and many MNCs have chosen Shenzhen for their components supply centres. Because of Shenzhen’s proximity to Hong Kong, transportation costs are relatively low, and the developed infrastructure of Hong Kong induces further agglomeration. Dongguan is now the second largest trading city in Guangdong after Shenzhen. On a national scale, in 1998, Dongguan became the third largest exporting city after Shanghai and Shenzhen. In 1999, Dongguan’s imports and exports were valued at US$28.46 billion, which was equivalent to 20.3 per cent of Guangdong’s total imports and exports.15 This remarkable achievement owes much to the growth of assembling production in the electrical goods industry. Trade in assembling production accounted for 94 per cent of the city’s total

82 Microregionalism and World Order

imports and exports in 1999.16 In the same year, the share of electrical goods in imports (US$6120 million) was 46 per cent of Dongguan’s total imports. In 1999, 87.7 per cent of Dongguan’s imports came from Asia and 54.8 per cent of exports went to the US and EU markets (Guoji Jingji Xinxi, 24 January 2000). It is important to recognize here that Dongguan’s fortunes are inextricably linked with those of Shenzhen. In the 1990s, Shenzhen sought to upgrade toward high-value added industry and promoted a shift of assembling production outside the SEZ. Hong Kong and Taiwan firms needed to move out because they focused on labourintensive and relatively low-value added light industry. Furthermore, compared to Shenzhen, Dongguan was under much more lax central control over labour regulations, and had laxer regulations on employing migrants from China’s less developed regions. Indeed, job centres in Sichuan and Hunan provinces ensured a supply of cheap contract labour for the foreign factories in Dongguan. In essence, when Shenzhen became an increasingly expensive site for labour-intensive production, Dongguan stepped in and emphasized its lower-cost and comparative advantage. The city thus had an abundant supply of cheap labour (about two-thirds the average wage of workers in Shenzhen), thereby facilitating labour-intensive production; this includes some two million migrant workers. Additionally, many of these workers are willing to do overtime work for extra money and undertake intensive job training. Another reason is the improvement of transportation infrastructure. The opening up of the Guangzhou–Shenzhen–Zhuhai superhighway17 in the Pearl River Delta in 1994 improved Dongguan’s accessibility dramatically. From Hong Kong international airport, it takes only three hours to get to Dongguan by direct bus service (run by a Taiwanese firm) with 27 departures a day. While location and geographic endowment have played a role, it is difficult to overestimate the significance of action by the Dongguan city government in locating Dongguan within the existing pattern of microregional economic activity. It has invested heavily in the physical infrastructure (motorway networks, electricity supplies and telecommunication) and the social infrastructure (school education). In addition, a cooperative relationship exists between local authorities and investors. The Dongguan government has established various channels of communication with Hong Kong investors, and tailors the social infrastructure to meet their needs (Yeung 2001). This effort can also be seen in the relations that have been developed with the Taiwanese business community.

Katsuhiro Sasuga 83

The Taiwanese Business Association (TBA) 18 has played a crucial role in promoting Taiwanese business interests in mainland China. The major activities of the TBA are: (1) negotiation with the relevant authorities and the collection of information; (2) dealing with various problems faced by Taiwanese residents; and (3) supporting the establishment of an inter-firm network (Nagase 1999). The development of local networks, including local authorities and business, undoubtedly plays an important role in attracting further Taiwanese investment. In the case of Dongguan, the local authorities join the Dongguan TBA in an advisory capacity or in the role of honorary president (Nagase 1999: 28). The Taiwanese business community successfully established the first Taiwanese school (based on the Taiwanese method of education) for children of Taiwanese investors in mainland China in September 2000. The general secretary of the Dongguan TBA approved the role of local cadres in providing a supportive business environment, for example, through land and tax incentives (Sinorama, February 2000: 83). Thus, Dongguan’s experience implies the diffusion of FDI within the Pearl River Delta through physical infrastructure and the improvement of the business environment, including the development of local cooperative networks. Inter-regional trade and national economic integration In considering microregional integration between Hong Kong and Southern China, we emphasize the extent to which a new economic relationship emerges that transcends national boundaries. The parameters of the economic space do not correspond with the borders of the national political space. Alongside this analysis of integration, we should also consider the potential fragmentation of the old national economic space – or at least, the relationship between the new cross-national economic space and national economic spaces. To be fair, the level of regional interdependence and inter-provincial trade in pre-reform China was never particularly high. Indeed, Donnithorne (1972) categorized the Chinese economy before 1976 as being a ‘cellular’ one, with low levels of interaction between the different provincial cells. In the 1980s, inter-provincial trade assumed three main forms: centrally planned trade, provincial planned trade, and free trade. Among these, centrally planned trade was dominant until the mid-1980s (Zhou 1996: 130–1), but then there was a significant impact of inward FDI on inter-regional trade.

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There are no official data on inter-provincial trade, but we can use data for cargo transportation, purchases and wholesale transactions to assess the degree of inter-regional relations. However, Kumar (1994) has researched the flow of China’s domestic trade in terms of provincial domestic imports and exports and total retail sales. Table 4.5 reveals an increase in the foreign trade ratio compared with the ratio for inter-provincial trade in Guangdong. It suggests that while Guangdong is far from isolated from the ‘domestic’ economy, foreign trade is now relatively more important for the province than domestic investment flows from other provinces. In particular, the balance between the importance of the domestic and the international for Guangdong’s situation changed dramatically between 1980 and 1992. Inter-regional trade is also dependent on transportation infrastructures such as roads, waterways and railways. By using inter-provincial freight flows, several regional linkages can be identified. The share of railway transportation of freight has declined as road networks have been improved. In 1980, railway transportation accounted for 47.5 per cent of total transportation of freight (distance base) and 20.4 per cent of total weight cargo. By 1999, the share of railway freight had decreased to 31.3 per cent of total transportation freight (distance base) and to 12.7 per cent of total weight cargo (Mitsubishi 2000). This is almost certainly a reflection of the changing pattern of inter-provincial freight flows. Table 4.5

Inter-provincial and foreign trade ratios (1980–1992) (percentage)

Guangdong Shanghai Shaanxi Sichuan Liaoning

Trade

1980

1985

1990

1991

1992

Inter-provincial Foreign Inter-provincial Foreign Inter-provincial Foreign Inter-provincial Foreign Inter-provincial Foreign

41.4 15.7 221.6 76.8 66.4 0.3 46.3 7.9 50.5 49.6

32.8 28.0 125.1 83.0 56.1 3.3 33.4 5.2 35.3 69.6

20.1 52.7 79.9 100.7 45.6 15.0 39.9 12.0 44.8 65.5

19.0 65.9 77.4 106.5 47.5 21.3 42.8

18.4 67.4 n.a. 111.7 45.1 12.2 42.3 19.2 45.2 n.a.

14.7 48.1 70.8

Note: According to Kumar (1994), inter-provincial trade is defined as domestic exports + domestic imports/total retail sales for all provinces except Guangdong, where the denominator is provincial GDP. The percentage are based on value. Source: Kumar (1994: 332).

0.27 48.99 3.56 0.35 2.56 0.39 3.07 2.50

Guangdong Fujian Shanghai Beijing Hunan Sichuan Zhejiang Jiangsu 23.11 0.65 3.91 1.99 28.39 2.67 2.72 4.11

Guangdong 2.22 2.28 8.07 0.90 1.11 0.91 9.15 9.07

Shanghai 2.61 1.46 4.34 31.14 0.36 0.65 0.98 0.74

Beijing 12.68 4.47 4.17 1.09 35.82 1.28 6.95 1.05

Hunan 4.90 0.51 5.56 2.07 1.27 55.55 2.14 2.00

Sichuan

2.72 10.20 8.42 1.44 2.26 1.00 36.44 6.51

Zhejiang

Note: The figures are based on the author’s calculations. Data are taken from figures for inter-provincial rail freight (by volume). Source: Zhongguo Jiaotong Nianjian 1999 (China Transportation Yearbook 1999).

Fujian

Railway transport of freight between provinces, 1998 (volume of cargo, percentage)

To From

Table 4.6

2.22 3.83 4.86 2.15 1.20 2.08 1.56 34.19

Jiangsu

85

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Table 4.6 shows the volume of railway freight between provinces. Despite the plan for a south coastal region comprising Guangdong and Fujian,19 trade between these provinces was very small. Hunan was the most important trade partner for Guangdong; for Fujian, Zhejiang was the most important trade partner. In terms of the Fujian-Guangdong link, Fujian’s share of total railway freight from Guangdong has declined since the late 1980s.20 Thus, from the viewpoint of flows of freight, the development of economic links with Hong Kong and Taiwan has not had much effect on economic integration between Fujian and Guangdong. Of course, a wide range of domestic factors influence national economic integration, including the extent of physical infrastructure and the impact of local protectionism, but a full discussion of these considerations is beyond the scope of this study.

Conclusion This analysis has sought to demonstrate that the organization of production and the regional division of labour between the Pearl River Delta, Hong Kong and Taiwan have become de facto processes of microregionalization linked to the globalization of production networks and commodity chains. With the rise of global competition, firms have revised their production systems and moved towards more efficient production and procurement. An international division of labour based on national economies is being replaced by a division of labour rooted in regional, intra- and inter-firm networks which induce the industrial transformation of particular cities. Firms have become more important actors in deciding the location of production and leading the pattern of development of microregionalization. Nevertheless, the role of governments should not be relegated to an insignificant or even passive status. In particular, this study highlights the proactive role of city governments in making local economies attractive to investors, and facilitating microregional integration. As we have seen, microregionalization across southern China, Hong Kong and Taiwan is the result of the interplay of several organizational variables (such as commodity chains, network structures, organizational learning and social factors). Perspectives drawn from the international division of labour approach and commodity chains analyses help us to understand the relations between industrial change and the external economic effectiveness of intra- and inter-firm relations, and the way in which the cities in Guangdong have become closely linked

Katsuhiro Sasuga 87

to Hong Kong and Taiwan as well as to the broader global economy. Hong Kong and Taiwanese firms have expanded their production sites in the Pearl River Delta in order to overcome cost competition in production. Hong Kong firms’ ‘front-shop, back-factory’ model has become the foundation of the cross-border production networks across southern China and Hong Kong. The extension of Hong Kong industry into the Pearl River Delta has quickly attracted foreign – especially Taiwanese – manufacturers. Taiwanese firms utilizing inter-firm linkages have agglomerated in the Pearl River Delta, and Dungguan has been favoured as a location by Taiwanese electrical goods firms. It is important to understand the more specific role of the region (in this case, the Pearl River Delta) and its relation to the spread of commodity chains. The notion of international commodity chains helps us to understand how production sites in southern China are linked to the global market. OEM production has facilitated technological and knowledge transfer from advanced countries to Taiwan. Taiwan has now emerged as the major investor in the Pearl River Delta, concentrating on the assembly of manufactured goods. If we apply the experience of the East Asian NIEs to that of the Delta, then, as we have seen, there are several distinctive roles that the new production sites may play: a commodity-export role; a commercial-subcontracting role; an export-platform role; a components supplier role; and an independent exporter role (Gereffi 1992: 106). Hong Kong and Taiwan link the Pearl River Delta with the global market and remain a potent force, shaping China’s trade and investment relations as well as the pattern of China’s regional economic development. The Pearl River Delta is still well ahead of its competitors in China. But trade and investment relations with Hong Kong and Taiwan are also the main economic engines for other areas in China. The cities in the Pearl River Delta have successfully developed an export-oriented manufacturing base, which follows the path of development of the East Asian NIEs. Although their resource dependency on foreign firms is evident, Shenhzen and Dongguan have become leading cities in China by moving from a commercial subcontracting role to an export-platform role using imported components. Furthermore, Shenzhen is now seeking to upgrade to the role of a components supplier, focusing on high-value added industry. The growing interconnectedness across southern China, Hong Kong and Taiwan challenges the conventional geographical definitions of ‘Greater China’, ‘Greater South China’ and ‘Greater Hong Kong’. The overlapping of Hong Kong and Taiwan in terms of trade and

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investment links with cities in Guangdong is mainly due to the impact of hierarchical production networks linked to the global market. The commodity chains in the Pearl River Delta are thus the result of these inter-organizational linkages centred on Hong Kong and Taiwanese firms which are competing in the global economy. Despite the diffusion of FDI within the Pearl River Delta, each city’s economy in the Delta is linked more directly through the hierarchical division of labour than through horizontal relations. The impact of this microregionalization on China’s national economic integration is indeed negligible. Microregionalization across southern China, Hong Kong and Taiwan clearly lacks integration between Guangdong and even neighbouring Fujian Province, when compared with the close linkages between Guangdong, Hong Kong and Taiwan. There is a danger in reducing the study of regionalization to the dynamics of economic and technological space. As noted above, the role of government, political institutions, political processes, and political culture in shaping, limiting and encouraging new forms of regional activity is also of vital importance. As we have seen, the special zones (that is, the bonded zones) play a critical role in the smooth transactions of parts supply. China has indeed been eager to participate in the networks of international commodity chains by exploiting its comparative advantage. However, of equal importance is the way in which a variety of intra- and inter-firm linkages combining the scale of advantage of networks have affected regional transformation. The pattern of microregionalization cannot be led by a national policy alone. This calls into question the long-term effectiveness of policy incentives implemented by the central and local government to attract FDI. It is interesting to note in this respect that Taiwanese concentration in Dongguan does not seem to be well understood by the Chinese central authorities. Of course, the establishment of SEZs, the provision of preferential treatment, and the building of business infrastructure have been of critical importance in attracting inward FDI, but, as is illustrated by the concentration of Taiwanese electrical goods firms in Dongguan, because Taiwanese firms tend to develop and use intra- and inter-firm linkages, the degree of industrial agglomeration in the electrical goods industry has also become a critical factor in attracting further FDI in the age of global commodity chains. The pattern of development of this microregionalization thus highlights the increasing role of Chinese cities in creating the conditions for industrial agglomeration in the global economy. They have become more dynamic entrepreneurial agents than the provincial

Katsuhiro Sasuga 89

units. The cities are assuming more and more direct responsibility for maintaining business conditions. Dongguan’s success in attracting Taiwanese business partly derives from such efforts in creating cooperative relations with foreign investors. Microregionalization across southern China, Hong Kong and Taiwan requires closer cooperation between local authorities and the business community in order to respond to changing global economic conditions. In order to attract FDI, it has become vitally important for China’s political authorities (both central and local) to identify the comparative advantage of particular areas and to adopt innovative regional policy in order to induce industrial agglomeration in designated sectors.

Notes 1. ‘China’ refers to the People’s Republic of China (PRC). Although the PRC claims that Taiwan is a part of China, here ‘Taiwan’ refers to the territories governed by the Republic of China. 2. For examples of these approaches, see Drover, Johnson and Tao (2001), Sung (1998), Rowley and Lewis (1996), Hsiao and So (1997), Shambaugh (1995), Naughton (1997), Khanna (1995), Kwok and So (1995) and Jin (1995). 3. There are, of course, some exceptions. Breslin (2000), for example, argues that southern Chinese microregionalization, regionalization and globalization are symbiotic processes. Kwok (1995) also identifies regional transnational production networks in East Asia and Guangdong. Chung (1996) discusses division of labour between Taiwan and mainland China in electronics industry. Chen (1994) focuses on division of labour and commodity chains in the Greater South China Region (Guangdong, Fujian, Hong Kong and Taiwan. 4. The term ‘electrical goods industry’ refers mainly to consumer goods including electronic products (especially radios, compact disc players, personal computers and televisions) and household appliances such as washing machines and refrigerators. 5. The commodity chains approach highlights the role of producer-driven and buyer-driven chains in creating an overlapping and at times conflicting regional division of labour. According to Gereffi (1996), producer-driven commodity chains are those in which large, usually multinational, manufacturers coordinate production networks (including their backward and forward linkages). This is characteristic of capital- and technologyintensive industries such as automobiles, aircraft, computers, semiconductors and heavy industries. For example, according to Hill’s study (1989), the average Japanese auto manufacturers’ production system has 170 first-tier, 4700 second-tier, and 31 600 third-tier subcontractors. Buyer-driven commodity chains are those industries in which large retailers, designers and

90 Microregionalism and World Order

6.

7. 8. 9.

10. 11.

12.

13.

14.

15. 16. 17. 18.

19.

trading companies play a vital role in setting up decentralized production networks in a variety of exporting countries. The reason for focusing on the electrical goods industry is that the share of electrical goods in total exports in each East Asian country is very high. For example, in Taiwan it was 43.39 per cent (in 1999), in South Korea 34.63 per cent (in 1997), in China 22.7 per cent (in 1999), in Malaysia 50.88 per cent (in 1997), in the Philippines 27.70 per cent (in 1997), in Singapore 27.76 per cent (in 1997), in Thailand 30.83 per cent (in 1997), and in Indonesia 7.02 per cent (in 1997). See Higashi Ajia no Shiten (2000), Spring Special Edition. There are commodity chains perspectives on other East Asian industries, for example Snyder (1999) on the toys industry and Gereffi (1999) on the apparel industry. ‘Foreign firms in China’ refers to sanzi firms including equity joint ventures, contractual joint ventures and wholly foreign owned firms. Including exports routed through Hong Kong. The definition of the area of the Pearl River Delta varies. Here it refers to Guangzhou, Foshan, Zhaoqing, Qingyuan, Shenzhen, Dongguan, Huizhou, Zhuhai, Zhongshan and Jingmen. Note that the border still exists despite the return of Hong Kong to Chinese sovereignty. Taiwan was the third largest producer for these years but China became the third largest producer of informational products. This is partly due to the expansion of Taiwanese PC-related production in China. See Wu (2001: 57). The research targeted information hardware products which have a high rate of OEM, including notebook PCs, monitors, desktop PCs, motherboards, SPSs, CD-ROMs, cases, scanners, graphics cards, keyboards, UPSs, sound cards and video cards. See Koryu, 15 May 2000. For example, in 2000, the share of notebook PCs’ was 52.5 per cent of the world market. For monitors the share was 53.7 per cent, for desktop PCs 24.5 per cent, for motherboards 70.2 per cent, and for scanners 92.5 per cent, etc. See Wu (2001: 56). The figures are from Daiichi Kangyo- Bank, www.dkb.co.jp/houjin/ report/china/200003/. However, most Taiwanese firms are small and medium-sized firms, and many do not register officially with the authorities. Thus, the real number is higher than this figure. http://www.dkb.co.jp/houjin/report/china/200003/200003-2.html. The figures are from Daiichi Kangyo- Bank, www.dkb.co.jp/houjin/report/ china/200003/. This road was built by the BOT (build, operate, transfer) arrangement funded by Hopewell Holdings Ltd. (Hong Kong). The Taiwanese Business Association (TBA) is an officially approved association which seeks to encourage Taiwanese FDI. By 2000, there were 51 TBAs in China and 14 TBAs in Guangdong. After Deng’s ‘tour of the south’ in 1992, regional economic planning was revised. The plan for ‘Seven Greater Economic Regions’ included a proposal for Guangdong and Fujian to form a south coastal economic region.

Katsuhiro Sasuga 91 20. Fujian’s share of total railway freight from Guangdong was 0.42 per cent in 1986 and peaked at 0.55 per cent in 1988; it continuously declined in the 1990s: to 0.32 per cent in 1994 and only 0.19 per cent in 1999.

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94 Microregionalism and World Order Xianggang Jingji Nianjian 2000 (Hong Kong Economic Yearbook, 2000). Yabuki, Susumu and Stephen M. Harner (1999) China’s New Political Economy, rev. edn, Boulder, CO: Westview Press. Yeung, Godfrey (2001) ‘Foreign Direct Investment and Investment Environment in Dongguan Municipality of Southern China’, Journal of Contemporary China, 10 (26): 125–54. Yun, Lizhen (2000) ‘Jiakuai Changshihua Fazhan Cujin Guangdong Jingji Zengchang’ (‘The Development of Urbanisation, Promotion of Guagndong’s Economic Growth’), in Kuoda Neixu Cujin Guangdong Jingji Zenchang Guoji Yantaohui (Thesis Collection of the International Seminar of Expanding Domestic Demand and Boosting Economic Development of Guangdong), Guangzhou (China), Spring. Zhang, Xiaohe (2000), ‘Motivations, Objectives, Locations and Partner Selctions of Foreign Invested Enterprises in China’, Journal of Asia Pacific Economy, 5 (3): 190–203. Zhongguo Duiwai Jingji Nianjian 1999/2000 (China’s Foreign Economic and Trade Yearbook 1999/2000). Zhongguo Jiaotong Nianjian (China Transportation Yearbook), various issues (1986–2000). Zhongguo Tongji Nianjian (China Statistical Yearbook), 1999 and 2000 editions. Zhou, Zhenhua (1996) Zhongguo Jingji Fenxi 1995: Diqu Fazhan (Analysis of Chinese Economy 1995: Regional Development), Shanghai: Shanghai Renmin Chubanshe. Zhu, Yan (2000) Ajia Kajin Kigyo Gru-pu no Jitsuryoku (Analysis on Asian Overseas Chinese Business Groups), Tokyo: Daiyamondosha.

5 The Japanese Role in Emerging Microregionalism: The Pan-Yellow Sea Economic Zone Glenn D. Hook

Introduction The ending of the Cold War has exerted a profound influence on the Japanese role in the emerging East Asian regional order. Whereas the Cold War era of bipolar nuclear confrontation had reinforced the orthodoxy of the national government as the locus of power for instrumentalizing foreign and security policies, its ending, and the transformation in the structure of the international system that this implied, opened up new opportunities for foreign policy initiatives to be taken on different spatial scales by non-state actors. This is part of the ongoing transformation in structures of governance. Whilst in no way denying the continuing importance and efficacy of the sovereign state as a key site of governance in international affairs, globalization and the regionalization of political economy are at the same time engendering changes with which the state is not necessarily equipped to deal. In response, the national government has in some instances sought to share responsibilities with subnational actors in achieving political, economic and social objectives, or supported them in taking on a greater international role. In others, the new international environment itself has created the opportunities for subnational political authorities and other actors to take on a greater role. These actors have become involved increasingly in international affairs in order to realize their own interests and objectives. Whether these are political, economic or social, they are seldom limited to the boundaries delineated by the sovereign state. Indeed, it is precisely because their interests and objectives are in many cases borderless that subnational actors have become more prominent actors on the international scene. 95

96

Khabarovsk

ULAANBAATAR Harbin

MONGOLIA

Hokkaido

Sapporo Changchun

Vladivostok

Shenyang

NORTH KOREA

Sea of Japan

Honshu

BEIJING Tianjin

Yinchuan

Huang Ho

I N

A

Chongqing

ng

Osaka

Kitakyushi

Shikoku Kyushu

Jinan Chang J ia

Chengdu

TOKYO

SOUTH KOREA

JAPAN

Yellow Sea

Zhengzhou

Xi'an

H

Dalian SEOUL Jinan

Lanzhou

C

PYONGYANG

Shanghai

Wuhan Hangzhou

East China Sea

Nanchang

Okinawa

Fuzhou

Kunming

Guiyang

Taipei

Changsha Guangzhou

Taiwan

Nanning MACAU

HANOI

LAOS Chiang Mai

HONG KONG

Haiphong Hainan Dao

Mek

Paracel Islands

ong

THAILAND

Philippine Sea

Pratas Islands

VIENTIANE

Luzon

MANILA

BANGKOK

VIETNAM

South China Sea

CAMBODIA Cam Ranh

PHNOM PENH

Legaspi

PHILIPPINES Cebu

Ho Chi Minh City

Spratley Islands

Puerto Princesa

Mindanao

Davao Songkhla

MALAYSIA KUALA LUMPUR

BRUNEI Celebes Sea

MALAYSIA

Manado

Borneo

SINGAPORE SINGAPORE

Padang

PALAU

Zamboanga BANDAR SERI BEGAWAN

Kuching Pontianak

The Pan-Yellow Sea Zone

Samarinda

Palu

Sorong

Glenn D. Hook 97

This chapter examines the degree to which Japanese subnational political authorities, especially city and prefectural governments, and other non-state actors, are involved in reshaping the East Asian regional order. Whereas the national government is required to take into account Japan’s relations with the world in formulating policy, subnational governments often need only focus on that part of the world likely to influence their own interests. Of course, as part of the struggle over scarce resources, these actors will often seek to exert influence on the national government as a way to promote their own interests, whether domestically or internationally. The focus here, however, is on their international role. The chapter examines the role of Fukuoka prefecture and the cities of northern Kyushu, especially Fukuoka and Kitakyushu. Northern Kyushu’s general orientation is towards East Asia, with a more particular focus on China and South Korea, lately as members of the putative Pan-Yellow Sea Economic Zone. Specifically, the chapter investigates this Zone as an example of microregionalism and as part of the restructuring of the East Asian regional order. More generally, by studying this example of microregionalism, as manifest in international and transnational local-to-local interactions, the chapter aims to shed light on the nature of the contemporary regional order and the potential for new forms of regional governance to emerge in East Asia. Thus, through the example of subnational actors in northern Kyushu, the chapter aims to demonstrate how international activities by subnational political authorities, which were once regarded as the almost exclusive preserve of the national government in Tokyo, are being carried out on an expanding scale, and how the burgeoning of transnational economic and other activities linking parts of Japan to other parts of East Asia is helping to transform the nature of governance and the regional order. These activities involve things (import and export of products and resources; transfer of technology), money (capital transfers and investment), people (flows of businessmen, students, trainees and sight-seers), information (newspapers, books, television programmes and movies), and so on. Here the focus is on trade and investment.

Defining the Pan-Yellow Sea Economic Zone Defining the Pan-Yellow Sea Economic Zone is a sociopolitical process of inventing a new layer of identity at the microregional level. Its invention involves a range of actors seeking to enhance or realize their

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interests through the creation of a new spatial understanding of their location. It follows that, since inclusion and exclusion in the microregion will affect the potential to realize those interests, the process is contested. In this process of contestation different actors can be expected to propose different boundaries for the microregion. In other words, spatial relations must be imputed with meaning in order to include and exclude potential members of the Zone. Only in this way will it take on form and survive. As the name of this Zone implies, the Yellow Sea is being imputed with meaning as a way to draw new boundaries of inclusion and exclusion centring on the Yellow Sea. The putative members of the Pan-Yellow Sea Economic Zone thus differ depending on the particular proponent of the concept. At this stage, although no firm identity has been invented for the Zone, the idea of creating the Zone has spread across the Yellow Sea, with subnational political leaders, business leaders, academics, journalists, and others, taking on a role in spreading the idea of the Zone. The Zone has been defined in both a narrow and a broad sense, but is generally seen to consist of subnational parts of three or four countries bordering on the Yellow Sea: Japan, China, South Korea, and, in an ‘ideal’ case, North Korea. However, given the lack of diplomatic relations with Japan, along with the economic difficulties being faced by the North Korean government, the possibility of the microregion integrating parts of the North is limited. In some cases, as with the Japanese research centre seeking to promote the Pan-Yellow Sea Economic Zone, the International Centre for the Study of East Asian Development located in Kitakyushu, the focus is on a Zone including the northern part of Kyushu and parts of Yamaguchi, with the cities of Fukuoka, Kitakyushu and Shimonoseki, linked to China and South Korea (International Centre for the Study of East Asian Development 1994: 115). In others, the Zone is seen as part of a wider conception of the region. In the case of Fukuoka prefecture, for instance, the Zone appears as one of a concentric circle of zones, with an all-embracing image of a ‘West Japan–East/Southeast Asia Exchange Zone’. This Zone extends its embrace as far as an expanded Johor–Singapore–Riau Growth Triangle; the Baht Economic Zone; the Pan-East Asia Sea Economic Zone; the Pan-Yellow Sea Economic Zone; part of the PanJapan Sea Economic Zone (excluding the Russian Far East); and centres on the West Japan–Asia Greater Regional International Exchange Zone (Fukuoka Ken 1997: 63). This reinscription of the location of Fukuoka as a central part of the East Asian region, rather than as a peripheral subnational part of Japan, reflects the prefecture’s strategy of seeking to

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play ‘a leading role in promoting the formation of the West Japan–Asia Greater Regional International Exchange Zone, which seeks to push forward international exchange and solidarity with the Pan Yellow Sea and the Pan East China Sea regions’ (Fukuoka Ken 1997: 62, emphasis added). As the prefecture is required to promote the interests of all citizens, not just business, the Pan-Yellow Sea Zone thus appears as part of this broader attempt to promote exchange and solidarity in East Asia. In still other cases, the Zone is extended to the whole of Kyushu and Yamaguchi prefectures, as with the Centre for the Revitalization of Kyushu Regional Industry, which is a subnational actor concerned with the interests of business throughout the island of Kyushu (Kyushu Chiiki Sangyô Kasseika Senta 1996: 2). Finally, proponents do not always specify clearly the scope of the Zone, preferring instead to leave the sensitive question of inclusion and exclusion vague.

Background The cities of Fukuoka and Kitakyushu and, more generally, the prefecture of Fukuoka are linked with the Yellow Sea coastal provinces of China and the west coast of South Korea as a result of a range of transborder economic and other activities. It is the existence of especially economic links which gives credibility to the idea of a Pan-Yellow Sea Economic Zone. The local Japanese role in promoting the Zone has resulted from the complex interaction of both external and internal factors. A number of external developments and transformations can be regarded as the ‘pull factors’ which have led northern Kyushu to attempt to take the lead in promoting the Zone. These have occurred in the context of the internal ‘push factors’ driving Fukuoka prefecture and the cities of Fukuoka, Kitakyushu and Shimonoseki to see their future in an East Asian, microregional, rather than in a purely national, context. External developments: the pull As far as external developments are concerned, the three economies at the heart of the Zone – Japan, China and South Korea – are quite different at the national level in terms of industrial development, economic size and weight, the type of social and political system, and other such indices. During the Cold War, the difference particularly in political system tended to inhibit the forging of economic links at the national level, especially between China and South Korea, which did not establish official diplomatic relations until the 1990s. Despite this lack of

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formal economic relations, trade and other exchanges between the Yellow Sea coastal regions of South Korea and China were taking place from the mid-1980s. From this perspective, interlocal exchanges between South Korea and China, which went ahead without the active participation of Japan, provide part of the ingredients for the emergence of a microregional zone. During the early Cold War, the Yellow Sea coastal region of China developed as the heavy industrial core of the Chinese economy due to the pre-war role of Japan in developing the area and China’s post-war economic cooperation with the Soviet Union. However, with the termination of Soviet aid at the time of the Sino-Soviet conflict, and the decline in national government investment in the region, the quality of local infrastructure and industry suffered over the years. This historical background meant that, unlike in the case of other high-growth areas of China like Guangdong, state enterprises are at the core of the Yellow Sea coastal region’s economy. It also meant that the boost in economic growth had to await the adoption of China’s ‘open door’ policy in 1978, which promoted a degree of decentralization, the opening of coastal cities, and economic reforms, including the creation of special economic zones (1979) and later the setting up of special economic and technological development zones (1984). Fourteen ‘economic and technological development zones’, nearly half of the total, have been established in the Pan-Yellow Sea coastal region of China, suggesting the Chinese interest in nurturing links with Japanese and South Korean companies (Katsuhara 1997: 115). Thus, what was at the start regarded as an inefficient part of the national economy was by the 1990s emerging as an important centre of economic growth in China. It provided the possibility for Korean, and later Japanese, companies, to develop new trade and other economic and technological links within the microregion. This facilitated the emergence of a new regional division of labour and production system. It also stimulated interest in the potential for establishing a microregional economic zone embracing subnational parts of all three economies. At the same time, the ending of the Cold War and the changes in China provided a range of opportunities for subnational political authorities to play a more active role internationally. Given the proximity of Kyushu to the Yellow Sea coastal region of China, and the Chinese goal of economic development, the sister links established with Japanese cities and prefectures served as a conduit for Chinese subnational political authorities to put pressure on Kyushu actors to

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move forward with economic, technological and other forms of cooperation. Indeed, Fukuoka prefecture started to play a role in promoting the Pan-Yellow Sea Economic Zone after China put forward the idea. As far as South Korea is concerned, the introduction of the Zone’s concept was part of a national strategy to move the centre of Korean economic development away from the Japan Sea to the Yellow Sea coastal region of the country in order to exploit the economic potential of China. After the 1987 election of President Roh Tae Woo and his government’s adoption of ‘northward diplomacy’, an attempt was made to improve relations with China as well as North Korea and the Soviet Union. The improvement of Sino-Korean relations can be seen in the setting up of trade offices in September 1990 and the establishment of diplomatic relations in August 1992. The time between these two events spurred economic activity. With the normalization of relations, moreover, economic links between the western coastal region of South Korea and the Yellow Sea coastal region of China forged ahead. At the start, South Korean investments were small-scale, but gradually increased in size with investments in auto-parts, petrochemicals, home electronics, and so on. In this way, the ending of the Cold War and changes in South Korea linked to national development strategy stimulated cross-border trade and exchange with the Yellow Sea coastal region of China. The strengthening of links in this way helped to promote further exchange, with over 70 per cent of investment, in terms of both the amount and the number, taking place in the Yellow Sea provinces, including Shandong, Liaoning and Hebei, and the city of Tianjin (Ogawa 1995a: 2). Of these, investment in the province of Shandong, which actively sought investments from South Korea, is particularly significant. In line with the attempt to decentralize the South Korean economy, moreover, the government has in later years continued to promote the relocation of industry to the west coast and has sought to attract foreign investment to this region. To this end, the South Korean government has set up industrial zones and has sought actively to attract foreign investment, especially from high-tech companies in Japan. Internal developments: the push In the case of Japan, the growing weight of exports in the global economy created the need for manufacturers to set in motion a restructuring of their production systems. Their high degree of extra-regional dependence on the export-absorbing markets of North America and

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Europe was eroding sector after sector of these advanced economies, whether in steel, ships, home electronics or automobiles. The need for the Japanese to respond to the wide range of trade conflicts which emerged as a result, along with the requirement for more diversified markets, became particularly strong in the 1980s. It stimulated Japanese companies to transfer their production facilities to other parts of East Asia. At the same time, the necessity to maintain international competitiveness in the face of the increasing value of the yen, especially after the 1985 Plaza Accord, was also pushing them to set up manufacturing plants overseas. The large outflow of investment capital into South Korea and other Newly Industrializing Economies (NIES) in the 1970s was, by the 1980s, increasingly replaced by flows into the Association of Southeast Asian Nations (ASEAN) economies and, in the 1990s and the early twenty-first century, into China. As a result, by the late 1980s and early 1990s an East Asian regional production system was sinking roots (Mitchell and Ravenhill 1995; Hatch and Yamamura 1996). This increased the amount of intra-regional trade in East Asia as Japan started to play a role as an absorber, despite the downturn of the economy following the bursting of the ‘bubble economy’ at the beginning of the 1990s. For most of the Cold War period, the peripheral, subnational parts of Japan like Kyushu had been located spatially as part of a national development strategy, with Tokyo as the ‘centre’ and the regions as the ‘periphery’. In order to develop in the context of centralized planning, peripheral regions had sought to widen and deepen their links with the metropolitan heartlands, which were the centre of economic activity and growth. By in this way linking their own economies to the centres of the national economy, either by attracting companies from the metropolitan centre to the regional periphery or by accessing the metropolitan market, the periphery sought to benefit from the dynamism of the centre and develop economically. However, with the decline in Japanese international competitiveness in the wake of the yen’s rise, companies were pushed to other parts of East Asia, not pulled to the peripheral, subnational parts of Japan. In this way, the overseas move of Japanese production facilities turned the tide on relocating from the ‘centre’ to the ‘periphery’. The result was the ‘hollowing out’ of certain industries as East Asia became integrated as part of a regional production system centring on Japan. The external changes mentioned above stimulated and reinforced the national government’s promotion of internationalization both at home and abroad. Indeed, one of the striking features of the 1990s and

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the early twenty-first century is the proactive role the Japanese central government is playing in stimulating international activity by subnational actors. This policy has served as a means to push local governments to further develop a range of political, economic and social links with counterparts outside of Japan. Decentralization, with greater autonomy for subnational political authorities, is part of this process. At the same time, with overcrowding and overconcentration in Tokyo and other metropoles like Osaka, the central government is actively revitalizing the peripheral regions as a way to stimulate growth. For some of these regions, developing transborder economic and other links is a means to achieve this goal. In this way, peripheral regions and cities, which remained largely dependent upon the policies pursued by the central government during the Cold War, have gained greater freedom of action with its ending. Fukuoka prefecture and key cities in northern Kyushu have thus sought to pursue a new development strategy in an East Asian regional context.

Subnational political authorities As seen above, promoting the Pan-Yellow Sea Economic Zone by strengthening transborder economic links, once frozen by the Cold War, has appeared in the context of external ‘pull’ and internal ‘push’ factors. The response of Fukuoka to these external and internal changes has meant that, from 1992 onwards, the prefecture has helped to promote the Zone, although the business world took the initiative. Subnational political authorities like Fukuoka prefecture have played a role in internationalization for many years, promoting economic and human exchange with other subnational authorities in the microregion. It is part of the response they are being forced to make under the pressures of globalization, regionalization and, increasingly, the deregulation of the Japanese economy. As part of its strategy of promoting internationalization, Fukuoka prefecture in 1985 established a section within the prefectural office to promote international exchange. It has since carried out a variety of tasks, including the education of overseas trainees, developing sister-city relationships, and generally strengthening economic and human links in the region. Its attempt to establish the Pan-Yellow Sea Zone is part of the prefecture’s wider efforts to promote the West Japan–Asia Greater Regional International Exchange Zone as well as to internationalize the prefecture more generally. This is a crucial element in Fukuoka’s strategy of seeking ‘to play a role as the “western hub” of Japan, the

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“gateway to Asia” and the “intellectual centre of Asia” in the twenty-first century’ (Fukuoka Ken 1997: 3). The prefecture’s focus on Asia is clear from the activities it carries out as well as from the prefectural slogan, ‘Fukuoka, Asia’. Similarly, in the case of Kitakyushu, following the publication in December 1988 of a ‘Blueprint for Kitakyushu’s Rennaisance’, the goal has been to move from being a steel city to become an international city of technology and information – ‘A Core City of East Asia, A City able to Contribute to International Society’. In this sense, both Fukuoka and Kitakyushu are reinscribing their identity as the core of East Asia, rather than remaining as a peripheral subnational part of Japan. In this context, in 1989 Kitakyushu established a research institute in cooperation with the University of Pennsylvania as a way for the Mayor to realize his plan ‘to promote international exchange centered on Asia’ (Sueyoshi 1997: 2). From the early 1990s the International Centre for the Study of East Asian Development (ICSEAD), which was set up in 1989, has carried out research on the Pan-Yellow Sea Economic Zone, and sought to promote and institutionalize it. This can be seen, for instance, in the role the ICSEAD plays in supporting conferences held by political and business leaders in East Asia, as with the East Asian Businessman’s Forum. The Forum was inaugurated follow the Centre’s proposal of the Pan-Yellow Sea Economic Zone so that its ‘research on Asia could be fed back into the real economy’ (Nishi Nippon, 5 October 1994). Finally, another example of how subnational political authorities are now appearing on the world stage in order to promote their local economic and other interests is the setting up of overseas offices. The Fukuoka prefectural office, for instance, has set up offices in China and South Korea as a way to help businesses to exploit the opportunities in the Yellow Sea coastal regions and to offer administrative support. At the same time, they also encourage Chinese and South Korean companies to develop business links with Kyushu. This points to the key role prefectural and city goverments are playing in building links across the Yellow Sea, often quite independent of the central government. Sister-city relations The prefecture and cities of northern Kyushu have developed a number of sister-city and other sister relationships in different parts of the world as a way to engender a shared identity as human beings as well as the more utilitarian purpose of providing a possible base for economic and other exchange. Links with East Asia, especially the

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Yellow Sea coastal regions of China and South Korea, are particularly salient. This reflects the strong connections the west part of Japan maintains with Asia, where of the total of 241 sister agreements, 103 (or 43 per cent) are with Asia (Mitsubishi Sôgô Kenkyûjo 1997: 28). As far as links with the Yellow Sea coastal region of China are concerned, Fukuoka has established a sister relationship with Jiangsu Province (1992). The type of activities carried out in 1996 are illustrative: on the one hand, the prefecture despatched labour, technical and Japanese language groups to Jiangsu; on the other, Jiangsu despatched groups to observe firefighting techniques, robotics, agriculture and pharmaceuticals; trade missions; and trainees. At the same time, ‘friendship’ missions, sports exchange, and other cultural activities, were also carried out. Similarly, since 1978 Kitakyushu has maintained a sister-city relationship with Dalian. Activities have included participating in an Overseas Development Assistance (ODA) sponsored survey team examining the ‘Dalian Environmental Model Zone’; accepting trainees, sending a theatre group to Dalian, and other economic and cultural activities. Similarly, Yamaguchi’s Shimonoseki also has set up links with Qingdao (1979). As far as the Yellow Sea coastal region of South Korea is concerned, in 1992 Fukuoka joined with Saga and Nagasaki prefectures in signing a joint communiqué to cooperate with the southern cities and provinces of South Korea. In the same year these links began to be institutionalized as the annual meeting of the ‘Japan–South Korea Coastal Straits Mayors’ Conference’. Apart from these meetings, exchange of environmental technology, research into acid rain, promotion of exports, and youth exchange have also been carried out. Similarly, Kitakyushu established a sister-city relationship with Inchon (1988) and thereafter accepted local government employees for training, despatched economic exchange missions, took part in joint sports events and carried out other cultural exchange. The city of Fukuoka has also established links with Inchon (1988) and Pusan (1989). The cities have carried out a variety of cultural exchange, such as sports, theatre and music. Yamaguchi’s Shimonoseki also has set up links with Pusan (1976), carrying out similar activities. Institutionalization Such ‘sister relationships’ have helped to institutionalize links across the Yellow Sea. This institutionalization plays a crucial role in building up confidence and trust amongst the different actors in the Zone. At

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the microregional level, subnational political authorities are not normally involved in inter-state policy coordination – these remain the prerogative of the state. Questions of resources, authority, and competency – more generally, questions of governance – mean such coordination is traditionally outside their bounds. Nevertheless, even if international policy coordination remains centrally within the state’s remit, prefectural and city governments have started to institutionalize relations between subnational actors from different parts of the microregion. These links have been facilitated by the setting up in Fukuoka city of a South Korean and Chinese consulates general offices. At the same time, links have been institutionalized amongst subnational political authorities and business groups. At the prefectural and city level, the ‘Exchange Meeting of the Japan–South Korea Coastal Prefectures, Provinces and Cities’ has been held annually since 1991, with the participation of Fukuoka prefecture along with Fukuoka and other cities. At the same time, the Coastal Straits Mayors’ Conference, which includes the three prefectures of Northern Kyushu, Fukuoka, Saga and Nagasaki, along with mayors from Pusan and the three coastal provinces of South Korea, also holds an annual conference. These meetings have led to cooperation in a variety of fields, such as the exchange of pollution technology between Kyushu and South Korea from 1995 onwards, joint research on acid rain, and the development of a range of joint research projects. This followed the attempts from 1994 onwards to promote economic exchange by holding product fairs and developing a wide range of eonomic exchange. Clearly, pollution of the sea and air is not confined within the boundaries of the sovereign state. In short, the economic development of the coastal regions of the Yellow Sea microregion means that South Korea and China face the same sorts of problems Kyushu has already experienced as a result of the pollution caused by its steel and petrochemical industries. At the city level, the Yellow Sea City Conference has been held annually since 1991. It has been promoted actively by especially Kitakyushu and Shimonoseki, with participation of their sister cities in South Korea, Inchon and Pusan; and those in China, Dalian and Tsingtao. Again, in 1991 the Six East Asian Cities Economic Conference was held in Kitakyushu, with the participation of business leaders and academics as well as representatives of subnational political authorities. Thereafter, the mayors of these cities participated. In 1996 this annual meeting was renamed the East Asia (Pan Yellow Sea) City Conference and was expanded to include Tianjin and Weihai. By the

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mid-1990s meetings involving the mayors of these cities and meetings of specialists in areas such as pollution were being organized. More broadly, Fukuoka has taken the lead in promoting the Asia-Pacific City Summit, which was first held in the city in 1994. The meeting is held every two years, with the majority of the participants being drawn from different parts of Asia. The Japanese participants are mainly from Kyushu. The institutionalization of a range of seminars and meetings on a microregional level points to the growing role of subnational actors in international relations. This is not only in the case of cooperative attempts to combat pollution. As seen in the case of fisheries, as a borderless resource the prefectures of Kyushu have common concerns with other subnational parts of the Yellow Sea microregion in areas such as pollution control, maintaining stocks, controlling poaching, and other conservation efforts. Fukuoka, Saga and Nagasaki prefectures are involved in exchange with three provinces and one city in South Korea. A seminar to discuss fishing issues, involving Fukuoka prefecture and Cheju province, has also been held. Similarly, in the case of China, exchanges to promote the mutual understanding of fishery issues are carried out by Fukuoka prefecture and concerned parties in China. In this way, Japanese prefectures are seeking to hold dialogue directly with others in the region on international policy issues. Finally, as far as the business world is concerned, business leaders from Japan, China, South Korea, Taiwan and Hong Kong established the East Asian Businessman’s Forum in 1994. The first meeting, which was held in Kitakyushu, was the first time for Kyushu and Yamaguchi to be involved in such a large-scale conference on international economic affairs. At the meetings of the Forum business leaders have discussed a range of issues, including how to further develop the Pan-Yellow Sea Economic Zone (Nishi Nippon, 5 October 1994).

Economic links The economy of Fukuoka prefecture has been dominated by the heavy industrial sector – steel and petrochemicals – and processed food. In the 1990s and the early twenty-first century, in the wake of the decline in heavy industrial production and the ‘hollowing out’ of these industries, semiconductor and automobile manufacturers have become of increasing importance. At the same time, pushing forward with investment and trade in especially the Yellow Sea coastal region of China is a way for companies in Kyushu to help to revitalize the local economy.

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The potential emerged for stronger links to be developed in the wake of the Cold War’s ending, which served to reveal how economic and other forms of cooperation centring on the Yellow Sea could be in the interests of all three economies. Clearly, a key motivation for promoting the Zone has been economic complementarity and the potential to develop a microregional division of labour. Proponents of the Zone emphasize how benefits for all will arise through a combination of the export of Japanese capital and advanced technology to South Korea and China; the export of South Korean capital and medium-range technology to China; and the exploitation by Japan and South Korea of cheap Chinese labour and the import of China’s natural resources, such as non-ferrous metals and oil. The possibility for them to develop markets in China strengthens the links in this tripartite economic chain. Such economic complementarity provides the basis for expecting local microregional exchange to promote development in the coastal areas of the Yellow Sea. In other words, the microregion is seen in the context of comparative advantage as part of the regionalization of production. At the same time, as part of the wider process of responding to the pressures of globalization and liberalization, the Japanese national government has been attempting to increase imports. Foreign Access Zones (FAZs) have been established in various parts of Japan, based on a July 1992 law which aims to promote imports. By the end of 1994 13 FAZs had been approved, with nine of these west of Osaka, as in the case of Kitakyushu (approved 1993) and Shimonoseki (approved 1994). The FAZs include trade fairs, warehouses, research institutes and conference centres. The FAZ is an important part of the strategy for revitalizing the local economy in Kyushu and Yamaguchi, although competition as well as cooperation has developed amongst the cities of Fukuoka, Kitakyushu and Shimonoseki (Kawamoto 1995: 181). The local interest in developing links with East Asia can be seen from the surveys carried out by the local business organization, Kyushu Keidanren. The surveys started in 1980 and, although not restricted to the microregion, have focused on South Korea and China: China (1980), South Korea (1981), China (1986), China (1987), China (1988), South Korea (1989), and China (1990). In 1991, moreover, an economic mission was sent to the Yellow Sea provinces of Liaoning and Shandong (International Centre for the Study of East Asian Development 1994: 34). In this way, the local business organization has carried out a number of surveys in order to determine the possibility of further developing economic links in East Asia. This is

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indicative of the lead role the business world has taken in seeking to establish transborder, microregional links.

Microregional trade The extent of economic links can be seen from the trade relations amongst the three economies. When examined on a national basis, in 1994 the overall value of imports amongst the three economies was just over 21 per cent, with intra-regional import dependence of around 15 per cent for Japan, 30 per cent for China and 30 per cent for South Korea. Nearly two-thirds of Japan’s intra-regional imports are from China. As far as exports are concerned, in 1994 the overall value of exports amongst the three economies was nearly 16 per cent, with intra-regional export dependence of around 12 per cent for Japan, 25 per cent for China and 20 per cent for South Korea. In marked difference to imports, Japanese exports are balanced fairly equally between South Korea and China (figures from Kyushu Chiiki Sangyô Kasseika Senta 1996: 5–6). The following figures for 1994 show the aggregate trade by sector. In the case of China, Japan exports general machinery (26.6 per cent), electrical machinery (18.2 per cent), steel (17.2 per cent), textiles (8.0 per cent), and automobiles (7.6 per cent), whereas China exports to Japan textiles (36.4 per cent), crude oil (8.2 per cent), fishery products (6.0 per cent), fruit and vegetables (6.0 per cent), and electrical machinery (6.0 per cent). In the case of South Korea, Japan exports electrical machinery (27.3 per cent), general machinery (26.3 per cent), chemicals (13.9 per cent), steel (5.9 per cent), and precision machinery (4.2 per cent), and South Korea exports to Japan textiles (21.3 per cent), electrical machinery (17.1 per cent), steel (12.0 per cent), fishery products (9.1 per cent), and footwear (3.6 per cent) (figures from Kawamura 1996: 25). With the end to South Korean protectionism vis-à-vis automobiles and mobile phones in June 1999, moroever, trade relations between Japan and South Korea have strengthened, particularly in the provision of automobile parts (Kokusaibu Kokusai Kikaku Chôsa ka 2000: 4). When examined on a local basis, imports and exports show the difference between the structure of trade in Kyushu compared with the national level. In 1993, for instance, Kyushu imported just over 7 per cent of total national imports, with weighting in foodstuffs, 18.9 per cent (7.3 per cent nationally), crude oil, 22.5 per cent (14.1 per cent), and machinery and tools, 9.0 per cent (3.4 per cent). As far as exports are concerned, Kyushu exported just over 5 per cent of total national

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exports during 1993, with weighting in general machinery, 13.8 per cent (3.1 per cent nationally), electrical machinery, 19.1 per cent (4.2 per cent), and automobiles, 11.7 per cent (3.7 per cent) (Figures from Katsuhara 1995: 2).

Microregional investment When looked at nationally, Japanese investments in China have burgeoned after 1992, with a particular focus on the Yellow Sea coastal region. In 1996, for instance, the top level of investment was in Shanghai (19 per cent), followed by Liaoning (16.5 per cent), Jiangsu (10.7), and Shandong (8.5 per cent), which together made up over 50 per cent of total Japanese investments (Ro 1997: 60). These investments have been particularly in the manufacturing sector: for instance, in 1993, this was in the electrical sector, followed by textiles and machinery (Figures from Kyushu Chiiki Sangyô Kasseika Senta 1996: 72). The Japanese presence in the Yellow Sea coastal region can be seen from investments in the Sino-Japanese Dalian Joint Industrial Park. Historically, Japanese companies had invested in Dalian, but the creation of a new industrial park, which included an economic and technological development area, spurred further investments by Japanese companies. This project was pushed forward with support from both governments and with a combination of public and private funding, the lion’s share coming from Japan (Ono 1997: 135). As far as the Kyushu and Yamaguchi prefectures are concerned, the first thing to note is the low level of overseas investment by local companies until the 1990s, with an annual average of 11 cases in the period 1971–85, 46 cases (1986–90), and then a burst of activity after 1991, with 78 cases in 1991, 59 in 1992, 73 in 1993, and 66 in 1994 (figures from Kyushu Chiiki Sangyô Kasseika Senta 1996: 73). Most of these investments have been in Asia, particularly in China in 1993, with a doubling in investment to 40 cases in that year. Of the overall Japanese investment, however, the amount remains small, at less than 2 per cent for the period 1979–94, partly as a result of the fact that most Japanese companies are headquartered in Tokyo (Kyushu Chiiki Sangyô Kasseika Senta 1996: 74). In terms of sectoral investment by Kyushu companies, during the period 1990–July 1994 the majority of investment (53 per cent) was in the non-manufacturing sector, in contrast to the national trend.

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Manufacturing investment reflects the structure of the manufacturing industries in Kyushu. In descending order of cases they were in cement, bricks and ceramics (that is, bathroom ware); textiles, foodstuffs and electrical machinery. Investments in labour-intensive sectors such as textiles, electricals, and machinery, represent an attempt by Kyushu businesses to take advantage of cheap Chinese labour in the face of the rising cost of domestic labour and the eroding international competitiveness of Japanese products. Thus the companies play a role in promoting ‘reverse’ imports into Japan as well as exports to other parts of the world. Investment in the food sector reflects the attempt to maintain a stable, cheap supply of food for Japan and to produce processed food for the Japanese market. As far as the main investment in sectors such as cement is concerned, this is more to exploit the Chinese domestic market in the building sector, such as offices and homes (Kyushu Chiiki Sangyô Kasseika Senta 1996: 75). Next, as far as South Korea is concerned, when looked at nationally, significant Japanese investment goes back to the 1960s, with 1117 cases between 1962 and 1981, followed by 276 cases in the period 1981–6. Thereafter, investments declined gradually to 85 cases in 1993, before rising to 132 cases in 1994. Investment has been in both the manufacturing and non-manufacturing sector, with a particular focus on the service sector in 1993 and 1994 (Kyushu Chiiki Sangyô Kasseika Senta 1996: 51). As far as the Kyushu and Yamaguchi prefectures are concerned, the first thing to note is the low number of cases of investment in the 1990s, particularly in comparison with local investments in China. There was only one case in 1990, four in 1991, one in 1992, two in 1993, three in 1994 and four in 1995. The high cost of Korean labour helps to explain this low level of investment. At the same time, Kyushu companies with comparative advantage in technology have advanced into South Korea. As in the case of the robotics manufacture, Yasukawa Denki, or the CAD software maker, ASA System, these companies are seeking to establish a marketing platform (Kyushu Chiiki Sangyô Kasseika Senta 1996: 54).

Conclusion The above discussion suggests that, in promoting the Pan-Yellow Sea Economic Zone, subnational actors are responding to changes in the international as well as the domestic political economy.

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Globalization and the structural transformation implied by the ending of the Cold War, as well as the domestic needs of stimulating economic growth, are important in explaining the behaviour of subnational political authorities. In a variety of concrete ways, Japanese prefectures and cities are playing an international as well as a domestic role. Clearly, the amount of economic and other transborder activity in the area defined as the Pan-Yellow Sea Economic Zone has increased in the wake of the Cold War’s ending. The globalization and liberalization of the Japanese economy has set in motion dynamics which are stirring a variety of subnational actors to take part in transborder activities. This should not, of course, be exaggerated. But neither should the role now being played by subnational actors be ignored. For the complex and overlapping links now emerging amongst subnational and national actors in East Asia may sink roots gradually as part of an evolving layer of regional and microregional governance. As seen above, subnational actors are starting to gain at least some competency in areas once regarded as the exclusive of the state. What progress has been made in establishing the Zone? On one level, the extent of institutionalization remains limited. The meetings of mayors and international policy discussions related to pollution and fisheries illustrate how political institutionalization has been taking place. However, this has still to evolve into a substantial institutional framework for nurturing economic and other links and policy coordination in the Zone. Certainly, economic links were strengthened in the 1990s, but the early twenty-first century has not yet witnessed the realization of a microregional zone of economic cooperation. Ogawa’s statement still holds true: if an ‘economic zone’ is regarded as ‘an economic space tied together by close, mutually dependent relations’, then the Yellow Sea Economic Zone is ‘70 per cent an economic zone’ (Ogawa 1995b: 21). Finally, despite the discussion of the way different parts of the Japanese microregion are seeking to cooperate with the Yellow Sea coastal areas of China and South Korea, within Japan intense competition has emerged amongst cities and prefectures to establish their own role as an East Asian hub. In seeking to become the hub for the microregion internal competition goes hand in hand with attempts at external cooperation. For the successful realization of the Zone, an internal as well as an external division of labour may well need to be established.

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References Bernard, Mitchell and John Ravenhill (1995) ‘Beyond Product Cycles and Flying Geese: Regionalization, Hierarchy and the Industrialization of East Asia’, World Politics (47) 2: 171–209. Fukuoka Ken (1997) Fukuoka Shin Seiki Keikaku, Fukuoka: Fukuoka Ken. Hatch, Walter and Yamamura, Kozo (1996) Asia in Japan’s Embrace: Building a Regional Production Alliance, Cambridge: Cambridge University Press. International Centre for the Study of East Asian Development (1994) Kan Kôkai Chiiki Kôryû no Genjô to Dôkô, Kitakyushu: The International Centre for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyû Senta]. Katsuhara, Takeshi (1995) ‘An Overview on Cooperation in the Pan Yellow Sea Region’, Working Paper Series (B) 95–2 (December), Kitakyushu: International Centre for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyû Senta]. Katsuhara, Takeshi (1997) ‘Towards Economic Cooperation in the Pan-Yellow Sea Economic Region’, East Asian Economic Perspectives, 8 (March): 108–20. Kawamoto, Tadao (1995) ‘Hokubu Kyushu Yamaguchi no kôwan infura seibi to Kan Kôkai keizai ken’, in Yûhei Ogawa and Shinji Kowata (eds), Kan Nihon Kai Chiiki no Infura Seibi no Genjô, Kitakyushu: International Centre for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyû Senta], pp. 1–9. Kawamura, Seiji (1996) ‘1990 nendai zenhan ni okeru Nikkan Ryokoku no Chûgoku Kan Nihon Kai chiiki e no shihon shinshutsu to bôeki gaikyô, Working Paper Series Vol. 96–7 No. 52 (b) 26, International Centre for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyû Senta] (July). Kokusaibu Kokusai Kikaku Chôsa ka (2000) ‘Kan Kôkai chiiki o meguru saikin no ugoki’, Tsûsan Kyushu (August): 4–8. Kyushu Chiiki Sangyô Kasseika Senta (1996) Kan Kôkai Chiiki no Sangyô Kôryû no Kakudai ni kansuru Chôsa Hôkokusho, Fukuoka: Kyushu Chiiki Sangyô Kasseika Senta. Mitsubishi Sôgô Kenkyûjo (1997) Nishi Nihon o Nerau, Tokyo: Dôjidaisha. Ogawa, Yûhei (1995a) ‘Flow of Goods and People and Equipment of Infrastructures in the Pan Yellow Sea Economic Sphere: Can Ports of Northern Kyushu and Yamaguchi Areas Survive?’, in Yûhei Ogawa and Shinji Kowata (eds), Kan Nihon Kai Chiiki no Infura Seibi no Genjô, Kitakyushu: International Centre for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyû Senta] pp. 1–9. Ogawa, Yûhei (1995b) ‘ “Kan Kai Keizaiken” no keisei to Hokubu Kyushu Yamaguchi chiiki no kadai’, International Centre for the Study of East Asian Development (ed.), Kenshô. Kan Kôkai Chiiki Keizaiken, Kitakyushu: International Centre for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyû Senta], pp. 11–23. Ono, Kazunori (1997)’Kankokai keizaiken ni okeru chokusetsu tôshi to Shingaporu to Suzhou “kôgyô toshi’, Higashi Ajia e no Shiten, (September), Kitakyushu: International Centre for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyû Senta], pp. 130–40. Ro, Kwang-Uk (1997) Kankoku Nihon kigyô no taichû tôshikeitai no hikaku, Higashi Ajia e no Shiten, (September), Kita Kyushu: The International Centre

114 Microregionalism and World Order for the Study of East Asian Development [Kokusai Higashi Ajia Kenkyu Senta], pp. 59–63. Sueyoshi, Kôichi (1997) ‘Asia, Kitakyushu City, and the ICSEAD’, East Asian Economic Perspectives, 8 (March): 1–2.

6 Tumen River Area Development Programme (TRADP): Frustrated Microregionalism as a Microcosm of Political Rivalries Christopher W. Hughes

Introduction: TRADP’s ambitions and frustrations Following the end of the Cold War, region-building has held out to many – academic commentators and practitioners alike – the prospect of creating new avenues for economic cooperation and security, and for restructuring the international order to cope with the onset of the pressures of globalization. As is well documented, the revitalization in the late 1980s and 1990s of the European Union’s (EU) project of regional integration across the three dimensions of economics, politics and security, also helped at the same time to spur on regional projects in the Asia-Pacific and Northeast and Southeast Asia. Regional projects such as Asia-Pacific Economic Cooperation (APEC) and the ASEAN Free Trade Area (AFTA) certainly differ significantly from European examples in being predicated primarily upon cooperation in the economic dimension, and emphasizing the development of ‘soft’ rather than ‘hard’ institutional arrangements (Katzenstein 1997: 12). Nevertheless, it is difficult to argue that such regional projects have been left totally unaffected by the types of considerations embodied in the European region concerning the function of economic cooperation in generating political and security cooperation. Even the most hardened and shrewd of academics or policy-makers in the Asia-Pacific and East Asia, and especially in the perceived heyday of regional dynamism and APEC summitry in the early to mid-1990s and prior to the onset of the Asian financial crisis in 1997, would have found it difficult to suppress entirely hopes that macro and subregional economic cooperation 115

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could bring positive political and security benefits to each of the states involved and the region as a whole (Funabashi 1995: 9–10; Foot and Walter 1999: 259–62). Similarly, region-building on the micro-scale in East Asia has also not proved immune to this infectious optimism about the prospects of economic cooperation leading to political and security stability. Since the early 1990s, the microregional project which best illustrates these aspirations and which has been the most prominent of its type in Northeast Asia has been that of the Tumen River Area Development Programme (TRADP), involving the six national states of the People’s Republic of China (PRC), the Democratic People’s Republic of Korea (DPRK), the Republic of Korea (ROK), Russia, Mongolia and Japan. The Tumen River Delta is located at the point of convergence of the national and provincial borders of the DPRK, the Russian Far East (comprising Sakha Republic; Magadan Province; Chukotka Province; Kamchatka Province; Koryak Autonomous District; Amur Province; Khabarovsk Territory; EVA Jewish Autonomous Province; Primorye Territory, and Sakahalin Province), and northeast PRC (comprising the provinces of Heilongjiang; Jilin; and Liaoning). The subsequent rationale of TRADP has been that this unique contiguity of territories should also provide unique opportunities for cross-border economic interaction, and, on a wider scale, open up an economic axis linking Mongolia and the interior of Northeast Asia with the Sea of Japan. Indeed, the attraction of the project is that economic cooperation concentrated at the microgeographical and microregional level around the Tumen River delta would provide a focus and conduit through which to draw ROK and Japanese Foreign Direct Investment (FDI) into the larger Northeast Asia subregion. ROK and Japanese FDI would seek to exploit the economic complementarities of the region and knit together a market with up to 300 million consumers and a total GNP of US$3 trillion (Kakazu 1995; Marton et al. 1995; Taga 1994: 31; Tumen Secretariat 1996). In the case of TRADP, therefore, it is believed that geographical contiguities coupled with potential economic complementarities on the microregional scale can also drive forward on a larger subregional scale integration amongst the economies of the surrounding nation-states. In turn, the deliberately expressed hope of policy-makers involved with TRADP is that enhanced economic cooperation will generate, ‘improved political relations and stability’ across the region (Tumen River Area Development Programme 2000a). However, as will be elucidated later in this chapter, it is also clear that ambitions for TRADP to serve in the post-Cold War period as a

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microregional hub for enhanced economic, political and security cooperation across the entire Northeast Asia region have been largely frustrated. TRADP has been repeatedly revised and down-sized since its inception in the early 1990s, and, as the TRADP officials responsible for its promotion themselves acknowledge, investment in the programme has ranged from ‘disappointing’ to ‘unspectacular but solid’ (Tumen River Area Development Programme 2000b). Moreover, many commentators of a more ‘liberal-minded’ persuasion, both within and outside the Northeast Asia region, have expressed growing disillusionment with the failure of TRADP to bring as yet any significant political and security benefits.

TRADP’s mismatched microregionalization and microregionalism TRADP can then be seen to incorporate both the high aspirations but also the lowly frustrations of microregionalism. Given the dual character of TRADP, this chapter will endeavour to analyse the reasons for the slow progress of the project, and to utilize it as a case study in order to enhance our understanding of the factors which account generally for the varying dynamism of microregional processes across the world. More specifically, the evolution and success of TRADP will be analysed in accordance with the degree of interaction of the twin concepts of regionalization and regionalism outlined in the introduction to this volume. Although this chapter distinguishes regionalization and regionalism as two sets of processes and related actors and forces which account for the growth of regions, in practice they are mutually reinforcing and need to be present for the sustained success of regionbuilding. As in the case of the EU, and to some degree APEC, evidence of economic integration and regionalization can been seen to drive greater demands for conscious regionalism and the establishment of institutions to facilitate regional interacton, and this then creates a firmer basis for the unimpeded flow of regionalization forces. As will be demonstrated in the sections below, it is on this point that the chief explanation for the frustrations of TRADP’s microregionalism can be discerned. TRADP represents a case study in which the rich economic complementarities of the surrounding states argue strongly for enhanced economic cooperation and private sector-led regionalization over the longer term. However, TRADP also stands as a case study which demonstrates the ways in which the potentially successful operation of regionalization processes can become hamstrung by the

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defects of regionalism. In TRADP’s instance, these defects should not necessarily be attributed to a lack of regionalist sentiment or ambition on the part of the involved actors. On the contrary, as mentioned above, the majority of the actors share a common commitment to achieving the ‘holy grail’ of some form of functioning region in Northeast Asia. The defects of regionalism in TRADP lie instead in the over-proliferation of varying regionalist conceptions of the type and extent of region-building that the project should be designed to achieve, and the mismatched economic and political interests of the multifarious central and local nation-state, and also to some extent supra-state, actors involved. Most particularly, even though TRADP in many ways was initiated as a means to alleviate the political and security problems of Northeast Asia in the post-Cold War period, it is in fact these very issues which have impeded its own progress. For even though TRADP may be predicated on the belief that it can serve as a microregional focus for the territorial contiguities and economic complementarities of the surrounding states in order to serve as a springboard for wider regional integration, it should be remembered that it is equally likely to serve the reverse function as a microregional focus and intensifier of competing territorial claims and the political disputes of the major states, and thereby, somewhat ironically, may in fact undermine the process of regional integration. The end result has been that TRADP as a potential microregion has also fallen victim to becoming a microcosm of the political rivalries in the region. The following sections of this chapter are designed to elucidate in more detail this key argument that the mismatch of regionalism and regionalization processes has been responsible for the slow progress of TRADP. The first section provides a brief historical overview of microregional integration in Northeast Asia in order to demonstrate how the forces of regionalism and regionalization have moved both in conformity and conflict in the past, and subsequently accounted for the successes and failures of various regional projects. This section is also essential in providing an introduction to the key political problems of the past which continue to set the context for and hinder regionalism in the contemporary period. The next section then surveys the contemporary situation of the Northeast Asia sub and microregion, pointing out its diversity but also its latent economic complementarities. This is followed by a section which explains more fully the evolution of the TRADP concept and its hopes for exploiting the complementarities of the microregion, but also the defective nature of

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regionalism in Northeast Asia which has undermined the project’s success. Finally, the conclusion makes some further observations about the need for regionalism and regionalization to work in tandem, the lessons for our understanding of microregional processes elsewhere, and the prospects for TRADP in the future.

Historical perspectives on the Northeast Asia sub- and microregions Arguably, the first identifiable historical subregion in Northeast Asia with microregional elements was that of the Sino-centred regional order in existence from the Qing Dynasty through to the late nineteenth century. Although the use of anachronistic terminology should be avoided, there are grounds for viewing Chinese suzerainty and its associated tributary system as bringing into existence prototype forms of Northeast Asian sub and microregions. The dominance of the Chinese order and its loosely defined concepts of sovereignty acted as regionalist, or centripetal, forces to reduce barriers to interaction and draw the countries of the region together. Regionalization forces also functioned under Chinese suzerainty as it allowed for the development of a system of trading zones to exploit economic complementarities, such as those centred on the Kingdom of the Ryûkyûs, Kyûshû, Taiwan, and Eastern China to the south of the region, and the Yellow Sea, Sea of Japan and Sea of Okhotsk to the north (Hamashita 1997: 116). However, the ‘natural economic territories’ of this era were to be disrupted by the enforcement of the western imperial order on East Asia in the late nineteenth century through to the start of the Second World War. Imperialism in Northeast Asia initially adapted itself to the Chinese regional order through its exploitation of the treaty port system, but inevitably regionalism became subordinated to imperialism as the imposition of European empires on Southeast Asia and sections of Northeast Asia began to prise apart cross-regional linkages. The introduction along with imperialism of the concepts of the Westphalian state system and strict territorial sovereignty acted to partition the region and inhibit economic interaction. In turn, the overturning of regionalism by imperialism was to generate centrifugal forces which undermined ‘natural economic territories’, and dictated that the economies of the region should instead look outwards to the economic networks of the imperial powers.

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The lead-up to and outbreak of the Pacific War saw the displacement of the western imperial order by new sub and microregional orders centred on Japan. Japan’s attempt to remodel the region around the Greater East Asian Co-prosperity Sphere and enhance regional economic, political, and security interdependence represented the exact equation of regionalism with imperialism. This regionalist imperialism did encourage some economic regionalization, as Japan worked to incorporate its colonies into one major production chain centred on itself. For example, on the microregional scale, much of Japan’s industrialization efforts between the wars was concentrated upon Northeast China, the Korean Peninsula, and the Sea of Japan. In 1910, the Russian Far East accounted for around 10 per cent of Japan’s exports, and Northeast China and the Korean Peninsula between 17 and 18 per cent (Kan Nihonkai Kenkyûjo 1999: 1). Nevertheless, Japan’s introduction of this imperialism-based regionalism and regionalization into Northeast Asia ultimately failed, imposed as they were by military coercion, and leaving a legacy of economic malformation for those countries forced into the Japanese production chain – the most notable examples being the unbalanced development of the northern and southern halves of the Korean Peninsula (Hughes 1999: 117–18). Hence, following Japan’s military defeat in 1945 its Asian regionalist project sprung apart, to be replaced by a new Cold War regional order. The centrifugal forces of the Cold War spelled the suppression of regionalism by bipolarism, and compounded the imperial legacy of the economic, political, and security separation of the states of the region. The USSR’s Far Eastern provinces, the PRC, DPRK, the ROK, and Japan were all placed in separate economic blocs to varying degrees under the stewardship of the USSR and US, where free economic interaction between the constituent members of each of these bipolar camps was impeded. Japan was severed from its former colonies and markets in the Korean Peninsula and China, and was unable to resume significant trading and investment relations with the ROK until the normalization of relations in 1965, and with the PRC until normalization in 1972. Meanwhile, the continued hostility between Japan and the USSR throughout the Cold War seriously curtailed trade relations with the Russian Far East (Howell 1993). The Korean Peninsula was truncated across the 38th Parallel, leaving the ROK as a virtual island separated from the Northeast Asian continent and unable to trade with the USSR and PRC until the normalization of relations in 1990 and 1992 respectively. Similarly, the DPRK was cut off entirely from economic contact with the ROK and encountered great difficulties in trading with Japan,

Christopher W. Hughes 121

with which it has never maintained normalized diplomatic relations. Mongolia was integrated largely into the Soviet Comecon (Council for Mutual Economic Aid, or CMEA) system. Finally, the PRC was not only unable to trade with Japan and the ROK for a considerable time span during the Cold War, but, following the Sino-Soviet split, also curtailed its trading relations with the Russian Far East. The Sea of Japan, even though the natural route for interaction between these neighbouring economies, became a ‘cold sea’, or ‘sea of confrontation’ with reduced economic and political interdependency, and the states surrounding it again turned away to their respective economic blocs on the outside or periphery of the region – the PRC and the DPRK to the Soviet Union, the ROK and Japan to the US. Only military and security interdependency continued, as the USSR and US and their respective military allies confronted each other across the Sea of Japan.

The contemporary situation of the Northeast Asia sub- and microregions Divergent political economies The above description of the development and retrogression of the Northeast Asia sub and microregions up until the end of the Cold War suggests that not since the Chinese World Order has there been a regional grouping which combines effectively the two forces of regionalization and regionalism. Furthermore, not only does this historical description explain the failures of past regional projects, it also indicates how in the post-Cold War contemporary period Northeast Asia remains a divided region with deep-rooted obstacles to further integration. In terms of political relations, the Northeast Asia microregion continues in the post-Cold War period to be characterized by a fractured mosaic of states, which includes the divided nations of the DPRK and ROK, Russia, Japan and the Northern Territories, and further afield the PRC and Republic of China (ROC). Compounding national and territorial divisions is the divergence of the political economy of each state in Northeast Asia. Political and economic systems range from the still relatively isolated dictatorship in the DPRK, expressing a mix of revolutionary socialism, anti-colonialism, Confucianism, and self-reliance, or juche, ideology; to the PRC still under one-party communist rule, but embarked upon economic liberalization and re-engagement with the global economy; to Mongolia controlled by reformist socialist and communist parties; to Russia, which has

122 Microregionalism and World Order

undergone a rapid transformation to democracy and a market economy; to the ROK, which has long had a market economy, but more recently has made a transition to stable democracy; and finally to Japan, which has proved to have the most durable democracy and dynamic economy in Northeast Asia. This picture of the diversity of the domestic political systems of each national state is compounded by the fragmented nature of political and security links amongst them: Japan still to sign a peace treaty with Russia or to normalize relations with the DPRK; the DPRK and ROK approaching rapprochement but still in armed confrontation; and the PRC remaining suspicious of Japanese designs for hegemony in the region. Accompanying these variations in the political economies of the region are marked variations in stages of economic development. Japan remains the economic giant of Northeast Asia, weighing in with an impressive Gross National Product (GNP) of US$4591 billion, and an average income per capita of US$36 728 which is many times greater than that of its neighbours (Table 6.1). The ROK ranks second to Japan in terms of economic prowess due to its rapid industrialization and technological development, but still records less than a tenth of Japan’s GNP, and was hard hit by the East Asian financial crisis of 1997, although it is at present growing again strongly. The DPRK represents the ‘sick man’ of Northeast Asia with a GNP of only US$21 billion and even this is believed by ROK sources to be contracting at the rate of anything up to 5 per cent annually. By contrast, the PRC over the last decade has witnessed rapid economic growth at around 10 per cent per annum, although this has been characterized by increasing disparities between the booming coastal areas and economic stagnation in many interior areas (Breslin 2000: 213). The Russian Far East economy is also highly variegated, with some advanced technological and military industries, but also a heavy dependence upon resourceextractive industries and a shortage of labour. Mongolia brings up the rear in the Northeast Asia development stages with a GNP of just US$1 billion and a population of 3 million. This picture of economic diversity between the states in the Northeast Asia subregion is further reinforced by the types of internal economic disparities that occur within each individual state. The Sea of Japan coast of Japan, or ‘backdoor Japan’ (ura Nippon), is relatively underdeveloped compared to the Pacific side of the country (Furumaya 1998: 132–75; Kaneda 1997: 110–15), and in the Northeast PRC, Heilongjiang, Jilin and Liaoning provinces, which once enjoyed high levels of industrial development compared to the rest of the country,

Christopher W. Hughes 123 Table 6.1 1994

Leading indicators of Northeast Asia’s geography and economy in

Population Area (million) (1000 sq. km.) Japan 125 ROK 44 DPRK 23 PRC 1199 Northeast China 102 Russia 148 Russian Far East 8 Mongolia 2 Total [1541] (304)

Population density (per sq. km.)

GNP (US$ billion)

Per capita GNP (US$)

Comparison with Japan

378 99 125 9596

331 444 184 125

4591 381 21 522

36 728 8660 913 435

4.2 40.2 84.4

787 17 000

130 9

60 268

588 1811

63.0 20.1

6215 1.3 1565 1.3 [28 763] [54.0] (9169) (33.2)

14 1 [5784] (5068)

1750 500 [3753] (16 671)

21.0 74.0

Source: Kannihonkai Keizai Kenkyûjo, Hokutô Ajia: Nijû Isseki no Furontia, Tôkyô: Mainichi Shimbunsha, 1996. [ ] represents total for Northeast Asia countries. ( ) represents total for Northeast Asia subregion (Japan, ROK, DPRK, Northeast China, Russian Far East, Mongolia).

now find themselves falling behind provinces such as Guangdong and other Special Economic Zones (SEZ). Moreover, following the end of the Cold War, the Russian Far East has partially lost its privileged position as the strategic outpost of Moscow in Northeast Asia, which means that, with the onset of market liberalization and an end to price and transport subsidies, the competitiveness of its products has been undermined. Low levels of economic interdependence The divergent nature of the political economies of Northeast Asia has inevitably produced low levels of economic interdependence. As Table 6.2 illustrates, in 1996 only the national economies of the DPRK and Mongolia have a high level of interdependency with the Northeast Asia subregion, with the other states of the region typically accounting for between 65 and 85 per cent of these two states’ exports and imports. For the ROK these levels were only around 25 to 28 per cent, for the PRC around 20 to 34 per cent, for Japan around 14 to 17 per cent, and for Russia ranging from 5 and 14 per cent. Hence, the impression is of a subregion which still looks predominantly outwards and away from itself in terms of trade orientation and

124 Microregionalism and World Order

interdependency, especially with regard to the larger and more dynamic economies in the region. Although the data are more fragmented in Table 6.2 and Figures 6.1 and 6.2, the picture for the microregion centred on Japan, the ROK, the DPRK, Northeast PRC, and the Russian Far East is not much more impressive. The DPRK, Northeast PRC, and Russian Far East all direct between 40 and close to 50 per cent of their exports to within the microregion, and draw between 22 and 34 per cent of their imports from the same area. Furthermore, for states such as Japan, trade with other states in the region is so low as to be almost negligible in terms of its total world trade – the DPRK, for instance, accounting for only 0.1 per cent of Japan’s total exports and 0.08 per cent of its total imports. Japan itself is the major source of the exports and imports of a number of states in the subregion, but still over 90 per cent of its total trade is conducted with other regions of the world. Therefore, even though Japan is the major economic power located geographically within Northeast Asia, its external links with other areas mean that its prime economic interests are located outside the region and that it does not form an integral part of it. Japan’s only trading relationship in Northeast Asia which approximates to one of interdependence is that with South Korea, but even this relationship is highly asymmetrical as South Korea accounts for only around 7 per cent of Japan’s exports and 5 per cent of its imports, whilst Japan occupies 14 per cent of South Korea’s exports and 21 per cent of its imports. In addition to low levels of trade interdependence, Japan’s investment in Northeast Asia is also comparatively low. Table 6.3 demonstrates that Northeast Asia accounts for 4.5 per cent of Japan’s total Foreign Direct Investment (FDI), and that the majority of this is concentrated in the PRC and ROK. Thus, in contrast to Southeast Asia, where Japanese FDI has worked to bind the region together economically, Japanese FDI does not yet appear to be performing this function in the Northeast Asia subregion. Finally, in comparison with the more dynamic regions of each of the national economies of the region, and due to the legacy of relative neglect during the Cold War period, the rail, road, port and airport infrastructure is underdeveloped and a hindrance to effective economic interchange. Re-emergent complementarities? The overall picture of the Northeast Asia sub and microregions after the Cold War is, then, one of significant divergence within and amongst the political economies of each state, and initially not the

Figure 6.1:

Export interdependency in Tumen microregion in 1996

100%

% total world exports

80%

Rest of the world Mongolia Russian Far East Northeast China DPRK ROK Japan

60%

40%

20%

0% Japan

ROK

DPRK

Russian Far East

Mongolia 125

Northeast China Country/region

814 [1.0] (13.7) n.a.

160 [0.04] (7.9) 307 [0.3] (15.1) n.a.

66 [0.01] (15.0) 18 [0.02] (4.1) n.a.

33,286

7.4

61,846

13.8

447,961

16,891

14.6

29,024

25.0

115,975

532

48.1

889

80.3

1,107

219 [0.1] (10.8)

80 [0.03] (18.2)

n.a.

n.a.

50,511

19.8

254,773

2

5,462

46.9

n.a

n.a

11,655

n.a

n.a

11,615

13.6

85,294

1,366

40.8

n.a

n.a

3,345

n.a.

[0.02] (0.5) 211 [0.2] (48.1) n.a.

Total world exports

5,150 [6.0] (3.7) 707 [21.1] (0.5)

Share of subregional exports (%)

968 [0.2] (1.5) 472 [0.4] (0.8) 347 [31.3] (0.6) 996 [0.4] (1.6) 808 (6.9) (1.3)

Total subregional exports

1,438 [0.3] (24.2) 516 [0.4] (8.7) 59 [5.3] (1.0)

Share of microregional exports ( %)

15,980 [13.8] (4.6) 291 DPRK [26.3] (0.08) 40,405 PRC [15.9] (11.6) Northeast 4,027 [34.6] PRC (1.2) 3,922 Russia [4.6] (1.1) 1,037 Russian [31.0] Far East (0.3) ROK

31,396 226 [7.0] [0.1] (20.9) (11.7) 70 [0.06] (3.6) 182 [16.4] (0.1) 8,533 497 [3.3] [0.2] (5.7) (25.7) 1,133 300 [9.7] [2.6] (0.8) (15.5) 1,807 525 [2.1] [0.6] (1.2) (27.2) 329 n.a. [9.8] (0.2)

Total microregional exports

Russia

Japan

Mongolia

Northeast PRC

29,190 [6.5] (21.0) 12,484 [10.8] (9.0) 69 [6.2] (0.05)

Exporting country

Russian Far East

PRC

DPRK

ROK

Japan

Importing country

TRADP subregional and microregional trade matrix, 1996 (US$ million)

126

Table 6.2

Table 6.2

86

27.2

n.a

33.9

n.a

23.0

19.6

1,318

47,019

n.a

2,867

n.a

375

68.3

33.8

n.a

4.6

n.a

85.4

1,931 138,949 5,949 62,678 2,031

439

72.5

415

127

Figures in [ ] are percentage of exporting country/region’s total world exports. Figures in ( ) are percentage of importing country/region’s total world imports. Source: KanNihonkai Keizai Kenkyûjo, p. 6.

301

Total world exports

467

22.4

Share of subregional exports (%)

n.a.

Total subregional exports

93

84 [20.2] (0.1) n.a

Share of microregional exports ( %)

Total microregional imports Share of 6.1 22.0 microregional imports (%) 60,687 41,920 Total sub-regional imports 17.4 Share of 27.9 subregional imports (%) Total world 349,508 150,370 imports

126 2 [30.4] [0.5] (0.09) (0.03) n.a 2,015

Total microregional exports

2 0 [0.5] (0.001) 33,042 526.06

Mongolia

89 [21.4] (0.03) 21,424

Russian Far East

Mongolia

Russia

Exporting country

Northeast PRC

PRC

DPRK

ROK

Japan

Importing country

TRADP subregional and microregional trade matrix, 1996 (US$ million)

128

Figure 6.2:

import interdependency in Tumen microregion in 1996

100% 90% 80%

% total world imports

70% Rest of the world Mongolia Russian Far East Northeast China DPRK ROK Japan

60% 50% 40% 30% 20% 10% 0% Japan

ROK

DPRK

Northeast China

Country/region

Russian Far East

Mongolia

Table 6.3

Northeast Asia subregional FDI matrix, 1997 (US$million)

9 [0.01] (0.1) n.a

0.85 [0.001] (0.3) 2.9 [0.1] (1.2) 0 18.2

2,439

4.5

53,972

699

23.2

3,010

0 50

0.0 15.3

0 325

0

0 0

0.0 0.0

2,617 0

69 [2.3] (1.2) 0 5 [1.5] (0.1) 0 0 74

0 23 [7.1] (0.7) 0 0 465

3.5 [1.1] (33.7) 0 0 4

0 0 2,614

0 9

21.95

1.3

15.1

33.7

5.8

0.1

8.7

5,527

3,086

10

45,257

6,241

252

129

Figures in [ ] are percentage of investing country/region’s total world FDI. Figures in ( ) are percentage of receiving country/region’s total world FDI. Source: Jettro Bôeki Hakusho 1999nenhan.

0 0 [5.6] (7.2)

Total world FDI

1,987 [3.7] (4.4) 627 [20.8] (1.4) 0

Share of country’s/ region’s total world FDI

0 [0.0] (0.0) n.a

Total subregional FDI

Mongolia

Russia

Russia Mongolia Total subregional FDI Share of investing country’s/region’s total world FDI Total world FDI

PRC

DPRK PRC

442 [0.8] (14.3)

DPRK

ROK

ROK

Japan

Japan

130 Microregionalism and World Order

most promising basis for cooperation. The outcome of this has been to limit economic and political interdependence and to restrain the forces of both regionalization and regionalism, giving rise to only limited efforts at region-building. However, as already noted above, despite these severe limitations upon the growth of a Northeast Asia subregion in the past, the hopes in the 1990s onwards has been that the release of the centrifugal pressures of the Cold War could foster the conditions for the reintegration of the Northeast Asia sub and microregions. In particular, sections of the Northeast Asian central and local government policy-making and business community, spurred on by the progress of larger region-building projects such as the EU and APEC and hopes for greater local autonomy brought about by decentralization, have begun to conceptualize new economic subregions in the Yellow Sea and Sea of Japan (Postel-Vinay 1996). This re-emergence of regionalist projects and the discourse of regionalism has also been matched by the potential stirring of regionalization forces. As noted in the introduction and Table 6.4, the expectation is that the complementary resources of the region, now unimpeded by Cold War barriers, could be mobilized and create something akin to Scalapino’s ‘natural economic territories’. Thus, it could be expected that the low factor endowments of the developed economies of the region could be compensated for by the correspondingly high factor endowment of other less developed states, and vice versa. The combination of these varied but rich complementarities could be the natural outgrowth of economic synergy and integration in the Northeast Asia microregion. For example, it is clear that despite certain political barriers, cross-border trade between the PRC and Russian Far East has begun to flourish in the post-Cold War period and reached US$2 billion in 1993, as private actors have sought to match together and exploit the relative factor endowment of each others’ states (Kerr 1996: 943). Even in the Sea of Japan, where Japan and Russia continue to be divided politically by the issue of the sovereignty of the Northern Territories, the early 1990s witnessed a small scale but nevertheless lively trade in products such as crab and fish and second-hand cars between the two states as private business actors begin to exploit the re-opened access to economic complementarities after the end of the Cold War (Rozman 1999: 16, 21).

TRADP’s evolution and frustrations The above discussion has indicated that in the post-Cold War world, and in particular during the early 1990s, the twin processes of regional-

Christopher W. Hughes 131 Table 6.4 Potential comparative and complementary factor endowments in Northeast Asia microregion

Arable crop land Pastoral crop land Mineral resources Energy resources Labour surplus Capital surplus Advanced technology Management expertise Developed heavy industry Vanguard industry Transport infrastructure

Japan

ROK

DPRK

Northeast China

Russian Far East

Mongolia

Low Low Low Low Low High High

Low Low Low Low Low Medium High

Low Low High Medium Medium Low Low

High Medium Medium High High Low Low

Low Low High High Low Low Low

Low High High Medium Low Low Low

High

High

Low

Low

Low

Low

High

High

Medium

Medium

Medium Low

High High

High Low Medium Medium

Low Medium

Low Low

Low Low

Sources: Adapted from Hwang 1993: 299.

ism and regionalization have begun to reappear, so leading to sub and microregional integration becoming envisaged as practical possibilities. The introduction has already described how TRADP emerged very much as the result of this perceived renaissance in regionalism in Northeast Asia in the 1990s. Table 6.5 summarizes the chronology of the project, and shows that it was initiated following the 1st Northeast Asian Development Conference held in the PRC at which it was suggested that the Tumen River’s geographical and economic complementarities would form the basis for a ‘Tumen River Golden Triangle’ development zone. The concept was subsequently taken up by the United Nations Development Programme (UNDP). An ambitious plan for TRADP was then produced in October 1991, consisting of US$30 billion over a twenty-year period; the creation of a UN ‘international city’ to link together Free Economic Zones (FEZ) located at Rajin in the DPRK, Hunchun in the PRC and Posyet in Russia to form a 1000-kilometre Tumen River Economic Zone (TREZ); and, to support the TREZ, a larger 10 000-kilometre Northeast Asia Regional Development Area (NEARDA) triangle centred on Chongjin in the DPRK, Yanji in China, and Vladivostock and Nakhodka in Russia. A Programme Management Committee (PMC) to study the feasibility

132 Microregionalism and World Order

and guide the preparation of the project was also established at this time. In the meantime, the USSR government, soon to become the Russian Federation, established the Nakhodka FEZ in July 1990, North Korea the Rajin Free Economic and Trade Zone (FETZ) in December 1991 (later extended to become the Rajin–Sonbong FETZ in September 1993); and China the Hunchun Border Economic Cooperation Zone in October 1992. A series of six PMC meetings was held between February 1992 and December 1995. At the 3rd PMC in May 1993 the riparian states agreed to lease land to be administered by a jointly owned Tumen River Development Corporation, but at the 4th PMC in July 1994 this plan, along with the UNDP master plan, had to be abandoned due to legal difficulties involved with leasing sovereign territory and the problems in raising the necessary finance. The 5th PMC focussed instead on harmonizing the separate FEZs, with the establishment of a Coordinating Committee to promote cooperation on investment, trade and infrastructure amongst the participating countries, and the signing of a memorandum on environmental principles. In April 1996 a Tumen River Secretariat was established in Beijing to manage the project. The UNDP has continued to attempt to coordinate economic activities in each of the FEZs, and some notable improvements have been made in the infrastructure of the TRADP microregion, such as an investment of US$1.3 billion by China for road improvements around Hunchun and to the DPRK border crossing at Quanhe/Wonjong, and the opening of a Hunchun/Krakino railway crossing at the PRC–Russia border. A number of new ferry routes have also been opened over the last few years, including one from Posyet in Russia to Akita in Japan. Thus, it can be seen that TRADP has been under discussion for more than a decade already and since 1995 has moved from the preparation to the enactment stage. Nevertheless, despite the UNDP’s and involved states’ ambitious hopes for TRADP, the project’s progress has been undermined primarily by defective or ‘flawed’ regionalism (Rozman 1998). The states involved in the TRADP, whilst undoubtedly aware of the potential economic attractions of the project, continue to lack the necessary degree of regionalist sentiment and conscious political commitment to, or at the very least political toleration of, the regionalist project to allow it to succeed fully. In particular, it is apparent in many cases that the aims and aspirations of central and local government regionalist projects in each of the states in the Northeast Asia sub and microregions are incompatible. One of the earliest and most notable examples of this is the decision taken to

Table 6.5

Chronology of TRADP and national FEZ (Free Economic Zones) TRADP

Date

FEZ

TRADP Stage 1: Preparation 1990

Jul.

1990

Nov.

1991

Jul.

1991

Oct.

1st Northeast Asian Economic Development Conference (Changchun, PRC) – PRC proposes development of ‘Tumen River Golden Triangle’ Russian Nakhodka Free Economic Zone (FEZ) established

133

United Nations Development Programme (UNDP) Northeast Asia Region Planning Meeting (Ulan Bator, Mongolia) – UNDP and delegates from PRC, ROK, DPRK, and Mongolia officially adopt Tumen River development concept UNDP Northeast Asia Region Co-ordination Meeting (Pyongyang, DPRK) – UNDP proposes master plan for Tumen River Area Development Programme (TRADP): • US$30 billion investment over 20 years • Creation of UN ‘international city’ to link Rajin (DPRK)–Hunchun (PRC) –Posyet (Russia) Tumen River Economic Zone (TREZ) 1,000km sq. small development triangle • Rajin–Hunchun–Posyet TREZ supported by Chongjin–Yanji–Vladivostock/ Nakhodtka North East Asia Regional Development Area (NEARDA) 10,000 km sq. large development triangle – Russian and Japanese delegates participate – Tumen River Area Development Programme Management Committee (PMC) established to study and implement the project

134

Table 6.5

Chronology of TRADP and national FEZ (Free Economic Zones) – Cont’d TRADP

Date

FEZ

TRADP Stage 1: Preparation Dec.

Russia becomes full member of TRADP, Japan remains an observer

1992

Feb.

1992

Oct.

1st PMC (Seoul, ROK) – feasibility studies of TRADP – Russia invited to join PMC as full member – Asian Development Bank (ADB) invited to join PMC as observer 2nd PMC (Beijing, PRC) – infrastructure pre-investment feasibility studies for TRADP – Russia joins PMC

1993 May.

Jul.

1995

May.

PRC Hunchun Border Economic Cooperation Zone established -attracts US$40 million foreign investment by early 1995 Russian Nakhodka FEZ tax privileges abolished

3rd PMC (Pyongyang, DPRK) – PRC, DPRK, Russia agree to lease land for TREZ to be administered by jointly-owned Tumen River Development Corporation

Sep. 1994

DPRK Rajin Free Economic and Trade Zone (FETZ) established

DPRK Rajin-Sonbong FETZ established 4th PMC (Moscow, Russia) – TREZ land lease plan and UNDP US$30 master plan abandoned due to legal, sovereignty, management and financial problems – agree less ambitious project focussed on harmonising separate FEZ projects 5th PMC (Beijing, PRC) 3 agreements reached:

Table 6.5

Chronology of TRADP and national FEZ (Free Economic Zones) – Cont’d TRADP

Date

FEZ

TRADP Stage 1: Preparation • • •

1995

Dec.

1996

Apr.

PRC, DPRK and Russia to establish Coordinating Committee for TREZ to replace PMC, revitalise project, and advise and coordinate investment PRC, DPRK, Russia, ROK, Mongolia to establish Consultative Commission for TREZ to promote communications, trade, finance, energy PRC, DPRK, Russia, ROK, Mongolia agree on Memorandum of Understanding on Environmental Principles

TRADP Stage 2: Enactment 6th PMC (New York, USA) – 3 agreements officially signed 1st Coordinating Committee (Beijing, PRC) – establishes Tumen River Trust Fund and Tumen Secretariat in Beijing

Sep. Oct. 1997

Nov.

1998

May.

DPRK Rajin-Sonbong FETZ international investment forum held 2nd Coordinating Committee (Beijing, PRC) – decision to invite formal membership of Japan 3rd Coordinating Committee (Beijing, PRC) – discuss promotion of investment and tourism – UNDP and ROK agree to provide US$4.4 million to technology support fund

Sep. 1999

Jun.

4th Coordinating Committee (Ulan Bator, Mongolia) – UNDP proposes establishment of Tumen Investment Corporation

135

Primorskly Territory and Nakhodka FEZ international investment forum held Hunchun FEZ international investment forum held

136 Microregionalism and World Order

scrap the UNDP’s US$30 billion master plan for an ‘international city’ and mutually reinforcing micro and subregional development triangles centred on the Tumen River. In large part, the plan was simply too grandiose and could never have attracted sufficient finance. But the failure of the plan was also due to the legal and political problems involved in each of the states relinquishing sovereignty, however temporarily, over their own territory, much of which was only recently acquired and still in dispute, as in the case of the Russian–PRC border at Tumen. The concern of central governments to preserve their territorial integrity in dealing with other central governments and the problems it generated for the UNDP regionalist plan, have also been reproduced in the dealings between central and local governments. The government of the Russian Federation has impeded the progress of TRADP and the economic freedom of local provinces, concerned as it is about the effects of an ‘open’ regionalist project in the Russian Far East and an influx of FDI (and especially Japanese FDI) which could pull this area away from Moscow’s economic control, capture its rich economic resources for another foreign power, and encourage political separatism (Kerr 1996: 946). The central government’s suspicion of TRADP was exemplified in the Duma’s decision in 1993 to rescind Nakhodsk Free Economic Zone’s tax privileges, and its continued delay in ratifying a Russian–ROK agreement in May 1999 to create a Russo-Korean Industrial Complex in the Nakhodka FEZ (Tumen River Area Programme 2000c). Likewise, although the Hunchun Border Economic Cooperation Zone is undoubtedly the most successful of the FEZs located close to the Tumen River (the population quadrupling from 50 000 to 200 000 between 1992 and 1998 and foreign investment reaching US$100 million [Tumen River Area Development Programme 2000b]), the central government of the PRC has made it clear that its national priorities still lie in the economic development of South China, Shanghai and the Three Gorges project, and has shown suspicion of any attempts by Heilongjiang, Jilin, and Liaoning provinces to increase their economic autonomy. Moreover, the PRC government is more committed to the existing infrastructure in place in Dalian as the optimum route to the Sea of Japan, and only appears to support TRDAP on the grounds that it will provide Jilin province with access to the Sea of Japan and break China’s dependence on Russian ports, rather than being a project which will promote interdependence between the two states (Cotton 1996).

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The DPRK has been the most enthusiastic advocate of the TRADP, desperate as it is to secure the foreign investment it may attract. But in the same way as the PRC and Russia, the limits to its regionalist perspective have undermined the project. The DPRK also opposes regionalism based on relatively unrestricted private sector exchange due to its implications for the Pyongyang regime’s totalitarian political and economic control, and has attempted to confine free economic interchange to its Rajin–Sonbong Free Economic and Trade Zone (FETZ). The DPRK’s wary approach towards economic engagement and interdependence with neighbouring states, compounded by periodic security crises, has also acted to deter investment in the FETZ and slow the progress of this third element of the TRADP. The DPRK has further been reluctant until recently to accept large-scale FDI from its rival the ROK. For instance, in limiting the number of ROK companies able to attend its investment forum in September 1996 and thus forcing a general boycott of ROK investment at this time. The ROK government and private corporations for their part have shown some interest in the Rajin–Sonbong FETZ, but their greatest political and business interests really lie in investing outside the zone, such as Hyundai’s plan for an industrial complex at Haeju close to the Demilitarized Zone (DMZ) and the North–South border and Daewoo’s small textile factory at Nampo. The outcome has been that, even though North Korea claimed that its September 1996 investment forum at Rajin–Sonbong attracted pledges of US$307 million, cumulative enacted FDI in the zone was estimated by outside sources at only US$58 million in 1997 (JETRO 1999: 231). However, the greatest impediment to the development plans of the TRADP is the lack of Japanese central government interest in the project, which then feeds through into a lack of Japanese private business interest. Japan’s poor relations with Russia, and the absence of a peace treaty, meaning that the two states are still technically at war, has meant that its central government has resisted serious economic cooperation with the Russian Far East until there is a resolution to the Northern Territories issue. Even more importantly, Japan and the DPRK’s lack of normalized relations, and the disastrous experience of failed Japanese investments in the 1970s and DPRK defaults on up US$900 million of loans from Japanese corporations (Hughes 1999: 134–7), acts to discourage private businesses from investing in the DPRK, because they are aware that they cannot count upon government support for their activities in this potentially risky region. Finally, it is clear that the Japanese government, despite conducting through the Japan International Cooperation Agency (JICA) a study on the

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transport corridor between Changchun and Tumen ports in June 1998, is more interested in providing Official Development Assistance for infrastructure development and loans to assist private business to exploit the economic opportunities of coastal southern China. The government has shown some interest in supporting potential Japanese production bases in northeast PRC and the exploitation of the rich natural resources of the Russian Far East, but the small markets of the DPRK come firmly at the bottom of the list of public sector investment priorities as long as the state of non-normalized relations persists. Within the Northeast Asia subregion and Tumen microregion Japanese private business itself has also largely focused on investment in the northeast PRC, attracted by advanced economic reforms, cheap labour (US$60 per month in Yanbian Korean Autonomous Prefecture in the PRC, compared with US$80 per month in the Rajin-Sonbong FEZ [Tumen River Area Development Programme 2000d]) and access to the larger Chinese market. In contrast to Japanese central government, many of the local authorities on the Sea of Japan coastline are certainly eager for increased interaction with neighbouring states, seeking ways to stimulate the prefectural economies of Ura Nippon. For instance, Niigata Prefecture and City were active in sponsoring local government links across the Sea of Japan in order to create a ‘Sea of Japan’ rim identity; Kanazawa City in Ishikawa prefecture has looked to form linkages with the Russian Far East; as has Hokkaidô Prefecture and Sapporo City. This enthusiasm amongst local actors for the revitalization of Sea of Japan interchanges was reinforced in part by non-state actors such as the community of DPRK citizens resident in Japan, who are eager to expand contacts between small and medium-sized enterprises in both states. Moreover, the efforts of local authorities and non-state actors have found some support amongst the more ‘liberal’ or ‘idealistic’ political constituencies of Japan, who hope to utilize enhanced regional cooperation as a means to generate ‘people-to-people diplomacy’, to transform the Sea of Japan into a ‘sea of peace and friendship’ (heiwa to yûjô no umi), and to create a supplement or alternative to Japan’s perceived dependency upon the US for the provision of security in this region. But the central government’s lack of active backing for the Sea of Japan regionalist project, coupled with the continued reliance of the localities in Japan upon the spoils of economic redistribution from the centre, thus militating against the need to truly breakaway from dependency upon the central state and look outward to the neighbouring states for new economic opportunities, puts a brake on

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local government efforts to enhance interdependent relations with Northeast Asia (Rozman 1999). Once again, therefore, it is possible to speak of Japan as an economic superpower located geographically within Northeast Asia, but which, due to its low level of economic and political interdependence with the surrounding states, is not a fully functioning component of the regionalist project. The overall outcome of the minimal or restricted commitment to the TRADP by the central governments of the involved states has been to frustrate hopes that the project could evolve into a ‘natural economic territory’ and drive forward economic growth. In fact, rather than leading to the harmonization and synergy of economic resources, the impression is that since the mid-1990s the FEZs of the respective states have been in competition with each other for the small amounts of FDI and trade available in the micro and subregions. The UNDP also seems largely ineffective in trying to remedy these problems, restricted as it is by the prerogatives of the sovereign states involved in TRADP, and unable to move the project forward by encouraging more external investment. Hence, the UNDP’s plan for the establishment of Northeast Asia/Tumen Investment Corporation to mobilize funds and compensate for the DPRK and Russia’s non-membership of the Asian Development Bank (ADB) – one potential but non-participating member of TRADP – has not yet been approved (Kan Nihonkai Kenkyûjo 1999: 160). The key variable which would seem to explain the disappointing progress of TRADP is not the lack of the potential regionalization forces and economic complementarities which are necessary to undergird the dynamism of the project, but rather a deficiency of shared regionalist sentiment on the part of the central governments which would allow then to step back from intervention in microregional interaction and allow regionalization forces to flow smoothly. Instead, it is apparent that regionalism in the case of the TRADP is usually subverted to national economic and political rivalries – central governments viewing the regionalist project as a means to gain economic advantage over the other involved states.

Conclusion: TRADP’s lessons and future prospects From the above analysis it is clear that TRADP is an example of microregionalism frustrated and sabotaged by a mismatch of regionalization and regionalism forces. As noted in the introduction, region-building is very much a process which relies on the two wheels

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of regionalism and regionalization moving forward in coordination with each other. In the case of TRADP it would appear that the wheel of regionalism is severely distorted and out of synch with that of regionalization, refusing at times to move forward altogether. The principal analytical, or even policy, lesson to be learned from TRADP is that microregion-building is likely to founder in Northeast Asia and in other contexts across the world unless regionalization and regionalism forces are combined and compatible with each other. TRADP’s planners, particularly at the central government level, and perhaps also in the UNDP, have failed to take on board or to act upon this policy lesson. TRADP started out embodying multifarious hopes for economic integration as a catalyst for political and security cooperation. However, the assumption on the part of many seems to have been that the apparently irresistible logic of the economic complementarities of the microregion would be sufficient on its own to ameliorate and skirt around the government-level political and security obstacles to the progress of TRADP. But whether due to a genuine lack of foresight or element of wishful thinking, the establishment of TRADP and rush to jump on the bandwagon of regionbuilding, whilst at the same time underestimating many of the political difficulties involved and the oft willingness of central government policy-makers to resist seeming economic logic in the name of national political interest, has meant that the project has lacked dynamism and not produced many of the hoped-for political and security benefits seen in other regional projects. At present, and despite ten years of work, TRADP remains an under-achieving microregional project and it will continue to be so as long as it is forced to serve as a crucible to test regional political rivalries. Nonetheless, this is not to say that the project is necessarily fundamentally flawed and the Northeast Asia sub and microregion doomed to underdevelopment over the long term. There are still many opportunities to correct the deficiencies of regionalism observed above. Japan and Russia have shown signs of diplomatic rapprochement since 1997, when then Prime Minister Hashimoto Ryûtarô announced a new ‘Euroasia’ policy emphasizing the development of the Russian Far East and beyond. Even though the Japanese objective of a Russo-Japanese peace treaty by 2000 was not achieved, the improvement of relations between the two states has created a more stable environment and the type of passive regionalism which can facilitate private sector business interaction across the subregion.

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In a similar fashion, hopes of rapprochement on the Korean Peninsula amongst the DPRK, ROK, US, and Japan brought about by the 1994 Agreed Framework, the four-way peace talks since late 1997, Kim Dae Jung’s ‘sunshine policy’, and the restart of Japan–DPRK normalization talks in early 2000 may all act to lower the political obstacles to enhanced economic interdependency in the region. The historic first talks between the DPRK and ROK leaders in June 2000 have also brought hopes of expanded inter-Korean economic cooperation. As noted above, if increased ROK investment in the DPRK is realized, much of this is likely to be concentrated on the border rather than in the TRADP microregion. But the overall effect of ROK–DPRK cooperation should be to foster improved investment and trading conditions in the Sea of Japan. Moreover, the normalization of Japan–DPRK relations, if ever achieved, should finally bring sufficient amounts of Japanese FDI into play in the microregion and power the project forward. Furthermore, just as the US plays a balancing role in security in Northeast Asia, so might it be able to play a balancing role in economic affairs, if it were to fully lift sanctions on the DPRK as an indication of its willingness to promote the DPRK’s entry into the regional community. Finally, regionalism may be given a boost with the greater participation of multilateral institutions in the project. If the Asian Development Bank (ADB) were to become a full partner in the TRADP along with the UNDP, this could serve to eliminate some of the bilateral suspicions hindering the project and widen the regionalist perspective of the central governments involved. Therefore, if deeper regionalism can be set alongside the already strong and latent forces of regionalization in Northeast Asia, an effective microregion driving further sub and macroregional integration amongst this diverse set of states could yet be built, the legacy of the fractured region of the past overcome, and significant steps taken towards realizing the hoped for framework of peace and security in the post-Cold War era.

References Breslin, Shaun (2000) ‘Decentralisation, Globalisation and China’s Partial Reengagement with the Global Economy’, New Political Economy, 5 (2): 205–26. Cotton, James (1996) ‘China and Tumen River Cooperation’, Asian Survey, 36 (11): 1086–101. Foot, Rosemary and Andrew Walter (1999) ‘Whatever Happened to the Pacific Century?’, Review of International Studies, 25 (Special Edition): 245–70.

142 Microregionalism and World Order Funabashi, Yoichi (1995) Asia Pacific Fusion: Japan’s Role in APEC, Washington DC: Institute for International Economics. Furumaya, Tadao (1998) Ura Nippon: Kindai Nihon o Toinaosu, Tokyo: Iwanami Shoten. Hamashita, Takeshi (1997) ‘The Intra-regional System in East Asia in Modern Times’, in Peter J. Katzenstein and Takashi Shiraishi (eds), Network Power: Japan and Asia, Ithaca, NY: Cornell University Press, pp. 113–35. Howell, Jude (1993) China Opens its Doors: the Politics of Economic Transition, Boulder, CO: Harvester Wheatsheaf. Hughes, Christopher W. (1999) Japan’s Economic Power and Security: Japan and North Korea, London: Routledge. Hwang, Eui-Gak (1993) The Korean Economies: a Comparison of North and South, Oxford: Oxford University Press. JETRO (1999) Jettro Bôeki Hakusho 1999nenhan, Tokyo: Ôkurashô Insatsukyoku. Jordan, Amos A. and Jane Khanna (1995) ‘Economic Interdependence and Challenges to the Nation State: the Emergence of Natural Economic Territories in the Asia-Pacific’, Journal of International Affairs, 48 (2): 433–62. Kakazu, Hiroshi (1995) ‘Northeast Asian Regional Economic Cooperation’, in Myo Thant, Min Tang and Hiroshi Kakazu (eds), Growth Triangles in Asia: a New Approach to Regional Economic Cooperation, Oxford: Oxford University Press. Kaneda, Ichirô (1997) Kannihonkai Keizaiken: Sono Kôsô to Jitsugen, Tokyo: Nihon Hôsô Kyôkai. Kan Nihonkai Keizai Kenkyûjo (1996) Hokutô Ajia: Nijû Isseki no Furontia, Tokyo: Mainichi Shimbunsha. Kan Nihonkai Kenkyûjo (1999) Hokutô Ajia Keizai Hakusho 2000 nenhan, Tokyo: Mainichi Shimbunsha. Katzenstein, Peter J. (1997) ‘Introduction: Asian Regionalism in Comparative Perspective’, in Peter J. Katzenstein and Takashi Shiraishi (eds), Network Power: Japan and Asia, Ithaca, NY: Cornell University Press, pp. 1–44. Kerr, David (1996) ‘Opening and Closing the Sino-Russian Border: Trade, Regional Development and Political Interest in North-East Asia’, Europe–Asia Studies, 48 (6): 931–57. Marton, Andrew, Timothy McGee and David G. Paterson (1995) ‘Northeast Asian Economic Cooperation and the Tumen River Development Project’, Pacific Affairs, 68 (1): 8–33. Payne, Anthony and Andrew Gamble (1996) ‘The Political Economy Of Regionalism and World Order’, in Andrew Gamble and Anthony Payne (eds), Regionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 1–20. Postel-Vinay, Karoline (1996) ‘Local Actors and International Regionalism: the Case of the Sea of Japan Zone’, The Pacific Review, 9 (4): 489–503. Rozman, Gilbert (1998) ‘Flawed Regionalism: Reconceptualizing Northeast Asia in the 1990s’, The Pacific Review, 11 (1): 1–27. Rozman, Gilbert (1999) ‘Backdoor Japan: the Search for a Way Out via Regionalism and Decentralization’, The Journal of Japanese Studies, 25 (1): 3–32. Scalapino, Robert (1991–92) ‘The United States and Asia: Future Prospects’, Foreign Affairs, 70 (4): 19–30.

Christopher W. Hughes 143 Taga, Hidetoshi (1994) ‘Kannihonkai, Kôkai keizaiken no kadai’, Gekkan Shakaitô, 462: 30–44. Tumen River Area Development Programme (2000a) ‘Greetings from Dr. Nay Hun, UN Assistant Secretary General’, http://www.tradp.org/textonly/greetings.htm. Site visited on 4 July 2000. Tumen River Area Development Programme (2000b) ‘Facilitating Investment in the Tumen Region’, http://www.tradp.org/textonly/ieprim.htm. Site visited on 4 July 2000. Tumen River Area Development Programme (2000c) ‘Investment Environment in Primorsky Territory, Russian Federation’, http://www.tradp.org/textonly/ ieprim.htm. Site visited on 4 July 2000. Tumen River Area Development Programme (2000d) ‘Tumen Region Overview’, http://www.tradp.org/textonly/overview.htm. Site visited on 4 July 2000. Tumen Secretariat (1996) Tumen River Economic Development Area Investment Guide, Beijing: Tumen Secretariat.

7 The Maputo Development Corridor: Whose Corridor? Whose Development?* Ian Taylor

According to one recent analysis, ‘globalisation … seem[s] to presage a reconfiguration of the South … and to pave the way for a reconstitution of a new international order in which some of the larger, more advanced states, the semi-periphery, those with an already established productive base, play a key role’ (Grugel and Hout 1999b: 6). It is suggested that such a reconfiguration in the developing world (however uneven this may be in practice) is spearheaded by elites in dominant states, who attempt to push for greater integration and stronger regional networks along clearly defined lines by which their position in the global political economy may be emboldened (in the southern African context, see Taylor 1999). In southern Africa, a number of microregions have been/are being constructed in an attempt to stimulate this process. These have become known as Spatial Development Initiatives (SDIs). The Maputo Development Corridor (MDC) running from Witbank in Mpumalanga (eastern South Africa), through Nelspruit, to Maputo, capital of Mozambique, is an example of such a SDI. These SDIs are high-profile attempts by the South African private sector, with the active support of the state, to ‘unlock inherent economic potential in specific spatial locations in southern Africa’ (‘Spatial Development Initiatives in Southern Africa’). The notion of constructing SDIs is based on the claim that certain areas within South Africa were

*

Fieldwork for this chapter was conducted in Gauteng and Mpumalanga provinces in South Africa and in Maputo province in Mozambique. This was supported financially by the Development Policy Research Unit of the University of Cape Town, South Africa. 144

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disadvantaged by the industrial policy pursued under the previous National Party dispensation. Import substitution, according to this view, promoted sites of investment devoted to servicing domestic requirements, hence the massive concentration of industrial investment within Gauteng, the main focal point of the (White) domestic market. At the same time, the import substitution policies of the old regime contributed to disadvantaging other parts of the country more suited to supporting export-oriented production. Thus the eastern part of South Africa, with its ready access to the port of Maputo in Mozambique, is seen as a prime candidate for the construction of an SDI (Lewis and Bloch 1998: 729). Almost entirely driven by private capital (though in partnership with state administration), these SDIs are currently reconfiguring whole areas of South Africa and neighbouring states, constructing effective microregions of economic activity. Though part of a wider macroregionalism/regionalization, SDIs may be seen as concerted attempts by the South African elite, alongside capital, to reconstitute the region along lines favoured by private enterprise, and with South African financial interests firmly driving the process, now that the embarrassment of political apartheid has subsided and South African capital may pursue ‘business as usual’. This attempt to (re)construct a microregion is explicitly connected to perceptions held at the elite level that in an era marked by globalization, regionalization is a crucial means by which states may come together and tap into this process in order to maximize their pulling power visà-vis international capital. As Swaziland’s Economic Planning Minister, Themba Masuku, remarked about the MDC, ‘there is no question the trade corridor must succeed. The world is globalising rapidly and regional co-operation is vital if [we] are to cope with increasing competition for trade and investment in the fast-improving world’ (quoted in Sunday Independent (Johannesburg) 6 November 1996). The microregions currently being constructed cannot be separated from the wider national and global context within which they find themselves. Launched in 1995, the SDI project(s) purport to be short-term and targeted attempts to stimulate ‘growth’ by creating globally competitive spatial entities via new investment, infrastructure development and job creation (see Altman et al. 2001). The South African government sees as its primary task the need to work with private capital in partnership in order to facilitate such SDIs. ‘The principal mechanism underpinning the SDI programme is private sector investment which will be “crowded in” through a number of public sector interventions’ (Lewis and Bloch 1998: 730). This approach to development and the importance attached

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to the private sector, is very much in line with the neoliberal Growth, Employment and Redistribution (GEAR) policies adopted by the ostensibly social democratic African National Congress in 1996 (see Williams and Taylor 2000). This shift in macroeconomic thinking, an ‘ideological quantum leap’ as it has been called, has had profound implications for developmental thinking within government circles. In essence, ‘growth’ has been privileged over development, with poverty upliftment largely pinned on familiar neoliberal ‘trickle-down’ prescriptions. The SDIs have been sold as ‘the practical implementation of the government’s economic strategy as set out in its Growth, Employment and Redistribution policy’ (‘Spatial Development Initiatives in Southern Africa’). Any reconfiguration of the region – or the construction of microregions – along the lines promoted by the SDI programmes then is a developmental agenda founded on neoliberalism. It is this actuality that at once enjoys the enthusiastic support of capital on the one hand, whilst posing severe problems for any truly empowering project on the other. This chapter aims firstly to explain the features of the MDC that seem most vital for any microregional construction, and then critically to interrogate this development in the light of how the MDC has been affecting the disempowered on the ground. The stance this chapter adopts is centred around answering two key questions: who benefits from the MDC, and who does not?

The genesis of the MDC The MDC was launched in May 1996 at an official ceremony in Maputo attended by the Presidents of Mozambique and South Africa. Although the process began in August 1995, when the Ministers of Transport of Mozambique and South Africa met to set in motion a plan to establish a developmental axis between the port of Maputo and the industrial centre of South Africa (Gauteng), this process was very much an attempt to (re)construct a cross-border relationship and microregion that had effectively existed since at least the industrialization of the area around present-day Johannesburg since the late 1900s. This constructed historical space had exhibited all the characteristics of a dominant and subordinate relationship, with White South African capital exploiting Black Mozambican labour (with the active connivance of the Portuguese colonial masters) through various agreements that made Mozambique a regional conduit and effective labour reserve for the minerals-based industries in South Africa. This

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process not only locked southern Mozambique and the Johannesburg environs together, it also served to crystallize an already nascent microregion. Indeed, the 1903 agreement between the Witwatersrand Native Labour Association (the representative grouping of the great South African mining houses) firmly established the migratory labour system that formed (and still forms) the basis of the historical space around which the MDC has been formulated (Katzenellenbogen 1982). Importantly, the agreement gave the WNLA exclusive rights to recruit Black labour in southern Mozambique in return for directing 47.5 per cent of the export traffic from the Witwatersrand through the port at Lourenço Marques (now Maputo) (Mondlane 1969: 93). This meant that a transport corridor linking Johannesburg and its environs to the Indian Ocean – and the world – via the seaport developed and became a major feature of southern Africa’s regional dynamics. Being the shortest link to an export harbour for South Africa’s industrial heartland, this corridor rapidly became a major intersection for southern Africa’s linkages with the world economy. By the 1970s, 40 per cent of exports from the Johannesburg/Reef area went through Maputo, whilst some 300 000 (White) tourists per year enjoyed ‘exotic’ Portuguese east Africa (‘Development Perspective’). Going in the opposite direction, hundreds of thousands of Mozambicans travelled to work as migrant labourers in the minerals industries along the Witwatersrand, as well as others finding work as agricultural contract workers. In 1994, over 150 000 of the more than 250 000 workers in the Reef’s gold mines came from outside of South Africa (Crush 1997: 20). Such arrangements were dislocated when in the mid-1970s the progressive Frenta de Libertação de Moçambique (Frelimo) assumed power in Maputo after Portuguese rule collapsed following a coup in the metropole. Frelimo’s socialist project and non-racialism – and the implications that this had for the racist regime in South Africa, quickly led to the fostering of a vicious covert war against progressive forces in Mozambique. Space does not allow for a detailed treatment of this, suffice to point out that active destabilization of Mozambique by the apartheid regime is calculated to have cost the young country two million lives and more than £11 billion in damage and lost production. In its attempt to wreck Mozambique’s economy, South Africa, and the Renamo proxy army it backed, destroyed sugarmills, tea-processing factories, sawmills, and mines.1 Half of all hospitals and schools were destroyed or closed. Faced with a sudden loss of income and the need to protect its people, Maputo had to arrange to borrow

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for projects including railways, electricity lines, and a major textile mill (many of these were subsequently destroyed in later attacks by Pretoria). Mozambique borrowed £4.5 billion because of apartheid, but strict conditionalities have meant that Mozambique has been forced to delay universal primary education until 2010 because it has to repay the apartheid-caused debt (Debt of Apartheid, 1998). The damage to Mozambique’s developmental potential was, and remains, incalculable, and ‘the primary cause of suffering in Mozambique [has been] destabilisation and foreign intervention’ (Hanlon 1991: 5). It is somewhat ironic, then, that South African capital is now spearheading the MDC initiative. Although White business refused to accept any responsibility for its role in bankrolling apartheid at the Truth and Reconciliation hearings, the importance White capital played in the regime is obvious. As one analysis (‘Harvesting Apartheid’ 1997: 41) noted, even during ‘the final two decades of apartheid rule, in the midst of a deepening economic crisis, a sometimes wavering business community in South Africa generally collaborated heavily and benefited enormously from a close relationship with the minority regime … The vast corporate empires that dominate South Africa’s skyline today were built upon systematic racial oppression’. This selfsame fraction of South African society is now busy trying to reconfigure the southern African region along solidly neoliberal lines and seek out profits in (re)constructing microregions such as the MDC. Yet, this microregion was wrecked in the first place as a result of the policies pursued by the South African regime during its ‘destructive engagement’ phase (Johnson and Martin 1986) actively sustained by those who now posture themselves as the answer – if not salvation – to Mozambique’s chronic socio-economic situation. It is a cruel irony that Maputo’s elites feel compelled to work out a modus vivendi with such forces – not that this is a recent phenomenon. Indeed, even prior to Nelson Mandela’s release, the voices of big business in South Africa were proclaiming the abandonment by Frelimo of any dirigiste convictions and that ‘Mozambique [was] Lay[ing] Out the Capitalist Red Carpet for SA’ (The Star (Johannesburg), 22 February 1989). In short, the MDC represents an intensification of tendencies that have been developing over a relatively lengthy period and should be seen as the formalization of regionalizing impulses at a micro-level. The closer integration between Maputo and eastern South Africa therefore reflects processes that have been developing ever since Frelimo began casting off its socialist clothes and engaging in dialogue with the then minority-ruled regime in Pretoria. That much of this

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serves to reinforce the consolidation of a microregion that has long been in existence, even during the height of provocations from South Africa, implies that the practical concept of a cross-border economic and social sphere between Mozambique’s southern and South Africa’s eastern territories is a reality that is simply being formalized (and, importantly, directed) by the newly-constituted MDC. The forces behind such a movement are well aware of the historical precedents they are re-connecting with, suggesting that the Corridor will ‘reestablish the strong flow of goods, services and peoples that characterized the [Reef–Maputo] axis in the 1970s’ (‘Visions, Goals, Objectives’). This being so, the MDC was launched officially at an investors’ conference in Maputo in May 1996. The proclaimed objectives of the Corridor were outlined as: • To rehabilitate the primary infrastructure along the Corridor using the private sector. • To encourage private investment in the ‘inherent potential’ of the Corridor and in the opportunities afforded by s rebuild infrastructure • To ensure that development provides employment via economic growth. (Interim Co-ordinating Committee 1996) This last point is worthy of note for, at the launch of the MDC, 180 proposed projects were offered to investors, with a total value of around US$7 billion. According to one account, ‘it was estimated that these proposals, covering Mozambique, Mpumalanga and the Northern Province, had the potential to create up to 35 000 jobs’ (Mitchell 1998: 762). This figure, if true, represents a colossal amount of financing in order to ‘create’ a relatively modest amount of employment. Whether such jobs are permanent is unrecorded, but many seem to be connected to construction work on rebuilding primary infrastructure in and around the Corridor. Working on this given figure (from an authoritative source – the author is Development Economist for Mpumalanga Province), the MDC appears incredibly capital-intensive: in return for allowing large parts of the Corridor to be effectively privatized, employment – its permanence uncertain – is being created costing around US$ 200 000 per job. Lest one think this is an overexaggeration, South Africa’s Trade and Industry minister announced in late 1997 that the MDC ‘was expected to attract investment of up to R25 billion creating 8000 jobs’, working out to around US$500 000 per new job created (Cape Times, 20 December 1997)! The appropriateness

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or otherwise of promoting such massively capital-intensive projects in a labour-surplus economy is obviously a moot point (see Taylor 2000). Privatization remains a sensitive issue in both countries (The ruling parties of both Mozambique and South Africa are ostensibly social-democratic in character), and tenders are issued on the so-called ‘BOT’ (Build, Operate and Transfer) principle where state assets are involved. This means that private investors will have the opportunity to build and operate the facilities in a joint venture company for a fixed period of time (usually twenty years) after which facilities (state assets) have to be transferred to the government. Indeed, early on in the project’s progress, the contradictions that such a public–private partnership engendered threatened to split Frelimo when, in mid-1997, socialist remnants within the party seemed to want shelve ongoing liberalization, demanding that the state should ‘safeguard its domination and decisive power in strategic companies, particularly the banking sector, in insurance, in air transport, in ports and railways, in energy, water and communications’ (Sunday Independent (Johannesburg), 4 June 1996). All these industries are rich pickings for ‘investors’, who, in tandem with the western donor community, immediately claimed that any more funding for the MDC would be ‘impossible’ if Frelimo implemented its new stance (ibid.). This reaction against the hegemonic orthodoxy however was short-lived, and Frelimo, under pressure from its donors and South African and international capital, soon began (re)talking the language of the accepted ‘common sense’ regarding economic matters. The specifics of the project are important, as they form the bedrock upon which a (re)constituted microregion between Maputo and Gauteng is to be built. Among the main projects integral to the process are the following (‘Progress on the Maputo Development Corridor’): • Single toll road – the N4 from Witbank to Maputo: the contract for this project was tendered in June 1996 following the BOT principle. The project will be the largest road project yet undertaken in subSaharan Africa, rehabilitating 380 km of existing road and building about 50 km of new road in Mozambique. The project’s value is in excess of US$180 million and is expected to create ‘at least 2,000 jobs’ (Cape Times (Cape Town) 3 April 1997). It was financed by a private consortium – Trans-African Concessions – and was inaugurated in June 1998. Straddling both South Africa and Mozambique, the road is treated as a single entity by the two countries ( as a joint project), and concretely will act as a cross-border link within the microregion. Financed and maintained by a private consortium for

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•

•

•

•

the period of the concession, the toll road ostensibly ‘is in keeping with the objective of optimising the scope for private sector involvement in the development of infrastructure and the creation of economic opportunities, in order to limit the long term burden on the fiscus for public expenditure and to free up much needed state resources’. Port of Maputo Since the microregion’s raison d’être is to link up with the global economy, the port of Maputo is a crucial infrastructural component. Its renewal and upgrading will enable it to play a vital role in reducing transport-related costs for (mostly South African) exporters, thereby improving their global competitiveness and increasing profitability. The private sector is planned to take a 67 per cent share in a joint venture with the Mozambican government, expected to total around US$ 170 million. Railway links to Maputo Three railway lines run to the port of Maputo and form the rail arteries of the microregion: the Goba line from Swaziland; the Limpopo line from Zimbabwe and the Ressano Garcia line from South Africa. In principle, a joint venture will be entered into between the four countries involved, with CFM (the Mozambican rail authorities) taking up 33 per cent, other countries’ rail operators 16 per cent and the private sector 51 per cent. Rehabilitation of the lines, signal equipment and rolling stock are required after two decades of sabotage by South Africa. The South African parastatal, Transnet, has entered into an agreement which will facilitate spot upgrading in the interim. Total cost of upgrading the 90 km rail link between Maputo and Ressano Garcia on the South African border is expected to be around US$20 million. Seventeen new locomotives and five hundred wagons costing around US$80 million are scheduled to be purchased as part of the line’s rehabilitation. One-stop border facility To facilitate easy access and the flow of goods and people between the two countries, a single border facility has been planned at Komatipoort/Ressano Garcia. This facility will, if all goes well, reduce cross-border bottlenecks by providing a one-stop border control procedure. Various departments in South Africa and Mozambique have been meeting to progress the financial approach and other technical details and the border complex is costed at US$20 million. Sectoral investments There are a number of very large investments planned and/or under construction. Notable among these are the Mozal aluminium smelter near Maputo worth US$1.3 billion; the

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Pende gas extraction project costing US$700 million north east of Maputo, which will pipe gas to Maputo and to South Africa for gasconsuming industries; the US$1 billion aluminium plant in Maputo; the US$300 million heavy minerals project adjoining Red River near Tzaneen in the Northern Province; and the US$300 million ilmenite/magnetite and vanadium project (also near Tzaneen).2

Managing the microregion The management of the MDC microregion is predicated upon strong state and provincial support for the private sector and for the overall wider project. Within the MDC a number of incentives for the private sector were created to stimulate industrial location within the spatial area. These included low-interest loans for exports, establishment grants, relocations grants, venture capital and the encouragement of additional production shifts (interview with Gordon Griffiths, Chief Executive Officer, Mpumalanga Investment Initiative, Nelspruit, 4 April 2000). This is important in that cross-border initiatives have traditionally met with suspicion and resistance throughout the continent, where state sovereignty is often jealously protected. Indeed, the Zimbabwean transport minister explicitly warned – with reference to his country’s own experience with the Beira Corridor – that the regional corridors ‘must not develop into mini-states’ (Sunday Independent (Johannesburg), 5 June 1996). In the MDC case, the hegemonic nature of Pretoria’s relationship with Mozambique also means that firm support for the Corridor from the elites in Maputo is virtually a prerequisite for the success or otherwise of the project, granting as it does a modicum of legitimacy upon the enterprise. With the end of apartheid and an administration elected on a popular mandate, difficulties with South Africa have supposedly vanished. Certainly, Pretoria’s admission into the regional multilateral body, the Southern African Development Community (SADC), has enabled the regional elites to move away from an avowedly hostile posture towards Pretoria, towards one of accommodation and cooperation. However, SADC’s actual involvement in the MDC has been rather muted and has not impacted to any degree. Suspicion arises that the MDC’s management has been deliberately kept at a bilateral level because of the differences in opinion vis-à-vis the notion of private–public ‘partnerships’ that are at the cornerstone of the Corridor’s plans. As has been mentioned, privatization remains a

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sensitive, indeed controversial issue in both South Africa and Mozambique: the ruling ANC in South Africa have only relatively recently been converted to the orthodox prescriptions, though now with some enthusiasm (see Bond 2000; and Taylor 2001). For their part, the Mozambican state has been pursuing a neoliberal project since it implemented its Economic Recovery Programme in 1987, largely at the behest of disciplinary agents such as the World Bank, the IMF and other ‘donors’, who supply some 60 per cent of Mozambique’s income. Essentially, Maputo has concentrated on a programme of liberalization and privatization, with major aims also being to devalue the currency, to restrict the money supply through increasing interest rates and restricting credit supplies, and to cut back on government expenditure (primarily in the social fields) (for an account of how and why Frelimo moved towards capitalism, see Abrahamsson and Nilsson 1995). This has been controversial at a variety of levels, not least because it has ‘led to a severe drop in the purchasing power of Mozambicans, and to a worsening of the terms of trade especially for producers selling to the local market’ (Torp and Rekve 1998: 81). This in itself reflects the playing out of tendencies that ‘globalization’ visits upon the developing world, whereby the working class tends to lose from the retrenchment of subsidies and social programmes, and from the higher prices associated with deregulation and devaluation. The working class is also hurt by the loss of public-sector employment and face stagnant and declining real wages as foreign trade and investment depress local labour markets. (Adams et al. 1999: 6) Nonetheless, Maputo’s approach, very much in line with the norms demanded by international capital and appealing to the need to positively engage in the globalization process, effectively signals the tailing-off, if not the closure, of Frelimo’s progressive project embarked upon from the mid-1970s onwards, with ‘social regression … informing[ing] the new Mozambican polity at every turn’ (Saul 1993: 79). Indeed, according to Mozambican parliamentarians, after 12 years of economic reforms 70 per cent of the population live in absolute poverty (South African Press Agency (Maputo), 25 February 1999). Even though many administrations in the region have implemented structural adjustment programmes (or similar normative prescriptions), opening up debate over issues around privatization and liberalization

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to the larger SADC would pose serious problems. The acceptability of ‘rolling back the state’ in a region where the state has traditionally played a strong (if not always effective) role in providing basic services is highly controversial (see Hentz and Taylor 2000). As a result, the MDC’s management has been mostly restricted to bilateral arrangements – reinforcing the notion that the Corridor is very much a microregion within a concentrated spatial area. That this is so, however, does not mean that the MDC is a self-enclosed microregion. One of the striking things about this corridor under construction is its rapidly developing ‘spokes’ with other spaces within the broader southern African region. It seems apparent that the MDC is a precursor to a host of microregions connected via spokes or similar transport corridors. Thus far, the MDC is planned to link up with Walvis Bay on the west coast of Namibia via the planned Trans-Kalahari Highway running through Botswana. Southern Zimbabwe (despite Harare’s rhetorical reservations) will also be drawn into the MDC microregion through a link-up through the Tzaneen/Northern Province subcorridor route – a plan that (similar to the MDC itself) will continue the historical process of locking in southern Zimbabwe to the industrialized heartland of South Africa. Responsibility for the MDC is shared between the two Ministers of Transport of Mozambique and South Africa. Support from these quarters has been high, and has expanded to include other ministries as the project has broadened beyond simply transport matters. A number of bilateral agreements have been signed, ‘each of which could have been a cause of delay, had the MDC not enjoyed significant commitment at a senior political level’ (Mitchell 1998: 759). This support has been deemed vital by observers, as any attempt to reconfigure the microregion, even if primarily driven by capital, obviously needs the active involvement of the state affected. This being so, a number of state administrations who will be affected by the MDC (the states involved are Botswana, Mozambique, South Africa, Swaziland, and Zimbabwe) have formed the Maputo Corridor Company (MCC), in partnership with the private sector, to manage the overall project. The MCC is based in Maputo and its aim is to play a supporting role for the various projects (‘Maputo Corridor Company’). As one analysis remarked, ‘given the complex bilateral relationships existing in southern Africa, it is important to have an institution which can provides technical assistance and programme and policy support for the corridor, without being bound by international protocol’ (Mitchell 1998: 759).

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Yet such top-down involvement obscures the fact that state elites are going into partnership with large-scale capital to ‘develop’ a microregion, with very little input from the affected populations. Hence ‘whose’ corridor is the MDC, with questions going to the heart of which developmental vision is driving the project, become crucial in any competent analysis of the microregion – a theme which is returned to below. At the local, provincial level, cooperation regarding management matters has been somewhat retarded. Representatives from Mpumalanga and the Northern Province have met via a Corridor Provincial Technical Committee (PTC). However, cross-border cooperation has been quite late in developing, with regular meetings only really beginning in early 1998, when officials from Maputo province began attending the PTC. This is quite remarkable and reinforces the notion that the project is very much private-sectordriven, includes minimal state involvement and to a certain extent is not comprehensively mapped out. Since one of the supposed aims of the MDC was to contribute to regional integration, it seems strange that an attempt to stimulate an effective microregion should be so haphazard and, in particular, that it contains little input from local communities. As one analysis remarked, in Mpumalanga, there has been limited communication about the MDC between the provincial government and local government communities, the private sector and organized labour. It is a paradox that, although the Corridor is well known nationally and internationally, many local communities, which will be directly affected by the development, have very little information on the project. (ibid.) It is to this issue that the study now turns.

Problematizing the microregion The prospectus for the MDC does include admirable developmental commitments and environmental awareness. For instance, the MDC’s ‘Strategic Context’ and ‘Vision’ states that: The re-establishment of the [Witbank–Maputo] axis will significantly enhance the underlying conditions for development along its entire length …

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The development corridor will also present opportunities to address the important (corridor and wider regional area) issues of sustainability (natural resource use, refined industrial processes etc), poverty and access to basic needs and social services. (‘Key Goals and Strategic Objectives for the Maputo Development Corridor’) Indeed, the World Bank’s deputy chief resident in South Africa asserted that ‘the Corridor must be seen as a means to an end, and that end is poverty alleviation’ (Cape Times (Cape Town), 11 August 1997). However, such developmental impulses are profoundly compromised by the diverse and often contradictory manner in which the projects are being implemented on the ground. There are indications that there is a dislocation between many of the plans, and how they are being implemented. Such contradictions are provoking, or are likely to further exacerbate, marginalizing tendencies that bedevil the microregion. Such actions, if they continue unaddressed, will undermine the expressed developmental agenda behind the MDC’s genesis and raise important questions regarding exactly for whom the microregion is being constructed? Attempting to understand the negative trajectories that a number of the Corridor’s projects have stimulated casts some light on this fundamental issue. At the heart of any interrogation of the MDC lies the macroeconomic vision upon which the MDC is predicated. The neoliberal forces behind the Corridor’s inception can only push for further privatization and the rolling-back of state involvement. This discourse casts everything within a profit-seeking framework which allows very little space for social and ecological implications. In the context of an impoverished part of the world, the privatization of everyday life is extremely problematic. For example, the access of Maputo’s low-income neighbourhoods to potable water is very poor, with over 60 per cent of Maputo’s residents living in absolute poverty (Rodolfo 1998: 8). The situation regarding water is particularly desperate during the rainy season, when pit latrines overflow, thus sparking regular cholera outbreaks: 3749 were infected within six months in 1998, and 255 died (Sunday Independent (Johannesburg), 10 October 1999). Not only is the water available in the poor residential areas limited; much of it is also frequently contaminated. Access to this vital life source, however, is going to be further compromised by the Maputo Iron and Steel Project, an endeavour financed by large-scale South African capital, which requires 57 million litres of water per day. Together with another South African investment – the 250 000-ton Mozal aluminium smelter – nearly 40 per cent of the

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Maputo region’s total water resources are to be devoted to servicing foreign-owned industries. The amount of water left (120 million cubic metres) is simply ‘insufficient to supply the city [of Maputo] even at the present medium levels of consumption’ (National Directorate of Local Administration, Mozambique ‘The Structure Plan for Greater Maputo’, cited in Sunday Independent (Johannesburg), 10 October 1999). On the Mozambican side, there is a general perception that the projects associated with the MDC have caused shortages of water and electricity, and that the Maputo Corridor is simply a road in and out of Mozambique to be used by South Africans (interview with Dr Milissão Nvunga, lecturer at the Instituto Superior de Relações Internacionals, Maputo, 7 April 2000). Ecological security within the Mozambican sector of the microregion is further undermined by the discharge of effluents from the two South African projects into a bay already saturated with other pollutants derived from an inadequate system to treat and dispose of human waste. As if this wasn’t enough, the magnetite slurry and steel slag being transported to the Iron and Steel Project by locomotives is ecologically hazardous and requires specialist care and management. Unfortunately, this management capacity is not currently available in Mozambique. Indeed, this inability to treat such environmentally perilous material is symptomatic of the poor manner in which ecological concerns have been managed within the microregion, particularly on the Mozambican side. According to one report, ‘as part of the [Structure Plan for Greater Maputo] environmental analyses were conducted on domestic energy, sanitation and drainage, and water quality. All five reports revealed inadequate and ineffective management of environmental and natural resources for their long-term, sustainable uses’ (ibid.). If ecological security remains unprioritized and the welfare of the residents of Maputo a side-issue to the concerns of the investors – ‘cheap electricity and tax initiatives … by the Mozambican government’, according to Mozal’s chairman (Rob Barbour, quoted in Business Day (Johannesburg), 4 October 1999), fundamental questions need to be asked vis-à-vis the ownership of the microregion and whose ‘development’ is being privileged. Similarly, issues surrounding gender equity and accessibility to any developmental spin-offs that may accrue from the MDC remain unproblematized (see Commission for Gender Equality 2000). Perhaps the most contentious issue in this regard is the N4 toll road and the privatization of formerly publicly accessible transport routes. This has

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already provoked severe tensions between local communities and the investors involved in the project. Initially, rural local women were chased off the N4 for trying to sell fruit to travellers (something they have done for decades). With the increase in traffic flows along this route, the impoverished women felt that they had a right to try and make a living this way. However, the local council demanded that such activities be licensed and formalized and the women moved to a planned ‘mini-market’. Local women interviewed felt that this would deprive them of potential customers (Mail and Guardian (Johannesburg), 15 June 1998). Although legitimate safety concerns were raised over the activities of the traders, it does seem that consultation with local communities over such issues seems minimal. Such findings support one analysis of emerging regionalisms in southern Africa that refers to the SDI’s ‘democratic deficits’ (Shaw 1999). Indeed, women have lost out thus far in a number of projects related to the MDC. The majority of tenders to build the N4 toll route were awarded to male-managed businesses. The imbalance in female involvement in the microregion’s construction sparked the (South African) Commission on Gender Equality to gauge the empowerment of Black women along the Corridor, with one member remarking that ‘sadly, the only industry that appears to be working for women is sex work that has sprung up along the highway, which is unfortunately accompanied by the increase in HIV and AIDS’ (Colleen Lowe-Morna, quoted in African Eye News Service (Nelspruit), 14 February 1999). This failure to prioritize women’s development is exacerbated by the high tolls being enacted to use formerly public roads. Many local residents are outraged that placing tolls on the N4 will separate them from their schools, jobs and the main shopping centres in Nelspruit. According to the local Federated Long and Local Distance Taxi Association, the ‘organisation [was] not invited to any decision-making meetings about the toll gates’ (Mail and Guardian (Johannesburg), 15 June 1998). Meanwhile, ‘Mpumalanga’s economic affairs department agrees that the small man [sic] has not always featured significantly in the Maputo Corridor planning’ (ibid.). After a protracted dispute with the operators of the toll route, concessions were granted to local residents, who now pay reduced (although still disputed) rates for using the N4 (African Eye News Service (Nelspruit), 7 October 1999). This is remarkable in that the prices seem to have been imposed upon locals arbitrarily by private concerns, with little regard for the social implications of such financial impositions. In fact, it is reported that the concession agreement for the N4 toll road was withheld even from the

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provinces by the national government (interview with Jonathan Mitchell, Economist, Special Projects and Policy Unit, Mpumalanga Province, Nelspruit, 5 April 2000). A Mozambican source confirmed this, asserting that the concession was ‘secret’ and not publicly available (interview with Dr Alfredo Namitete, Chairman, Committee of Senior Officials, Southern African Transport and Communications Commission, Maputo, 6 April 2000). This has led to a scenario where the MDC was recently described as ‘a major election issue in the small towns it straddles, with thousands of commuters accusing the government of crippling their economies by instituting the highest road toll fees in South Africa’ (Mail and Guardian (Johannesburg), 1–7 December 2000).3 On the Mozambican side, a lack of participation by local communities in the toll road process leads to a loss of land with very little compensation and with no job creation, leading to opposition to the toll road (interview with Dr Alfredo Namitete, Chairman, Committee of Senior Officials, Southern African Transport and Communications Commission, Maputo, 6 April 2000). It seems peculiar that though the MDC is predicated upon ‘development’, its supposed beneficiaries are sidelined and, in this case, likely to be out of pocket. Furthermore, it appears as if the private contractors have been left in the lurch whilst the state washes its hand of any responsibility (Taylor 2000). Further compounding the negative spin-offs thus far visited upon the poorer fractions of the local populations around the N4 have been the low wages and shoddy treatment meted out to the workers by some companies contracted to construct the rehabilitated road. This exploded into an ‘illegal’ strike in June 1999 after management refused to increase their wages from R4.15 to R5.58 per hour. Complaints were also raised about the lack of safety equipment and clothing provided to the workforce and the failure to reward them for having worked hard enough to move construction ahead of schedule. The spokesman of the strikers remarked that ‘who can live on R4.15 per hour? That’s only about R336 for two weeks back-breaking work’ (African Eye News Service (Nelspruit), 20 June 1999). In reply, management cited the need to protect profits for those companies contracted on the project, arguing that they were paying the minimum wage and that ‘any increase [in pay] would impact on the entire construction industry and we just can’t do that’ (site manager Marius Nel, quoted in ibid.). Relations between the two sides deteriorated to such an extent that in June 1999 workers torched machinery (South African Press Agency (Malelane), 23 June 1999). Such labour disputes indicate tensions between the working class and management within the microregion. As we

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have mentioned, the MDC is purported to create new jobs (though the cost of these new jobs is highly problematic). Yet, the strike in mid1999 suggests that even those who have seemingly gained through employment on the project appear unsatisfied and question the developmental spin-offs and real benefits that have been ostensibly created.

Conclusion: ‘enforcing’ development within the microregion This study has been critical of the developmental impulses – or lack of them – that seem to characterize the MDC. It does not, however, simply dismiss private investment within the initiatives currently reconfiguring the region as wholly negative per se. Nor does it reject out of hand the efficacy of the SDIs in sponsoring development. For instance, the emphasis on rapid implementation and the streamlining of bureaucratic barriers to investment, as well as the notion of ‘onestop’ border formalities and integrated consulting centres all act to stimulate investment and lift the weight of often-capricious officialdom from the backs of citizens. This can only be a good thing. The rapidity that characterizes much of the MDC’s operations can also be a positive, in that it creates space for considerable innovation and experimentation in directing and then evaluating projects. The parsimonious nature of much of the top-level structures provides a flexibility that may well be constrained in other, more ‘traditional’ joint venture initiatives. Furthermore, the active involvement of the private sector in projects can stimulate local-level development. The emphasis on speed within the SDI methodology precludes serious engagement with stakeholders outside the financial sector. However, the over-emphasis on speed has been problematic. In particular, on the Mozambican side, legal and institutional mechanisms were not established, nor given sufficient time to begin working, before the project began (interview with Dr Alfredo Namitete, Chairman, Committee of Senior Officials, Southern African Transport and Communications Commission, Maputo, 6 April 2000). According to one source, ‘the Department of Trade and Industry (DTI), the government’s custodian of GEAR and its SDI-offshoots, has taken a hard line and non-negotiable stand on the planning of SDI projects, particularly when it comes to issues of grassroots participation, given the fast-track nature of the SDI processes’ (Moloi 1998: 16). Certainly, the implementation of a ‘fast-track’ approach in Mozambique has caused problems in an environment where the

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capacity to evaluate the implications of projects is currently limited at the best of times (interview with Francisca Henriqueta Soares, transport economist, Mozambican Ministry of Transport and Communications, Maputo, 10 April 2000). The wider MDC project was originally a programme set in motion within Mpumalanga to help stimulate development from an integrated approach, with concentration on small and medium-sized enterprises, policy research, capacity-building, pilot projects and so on. This original programme, reporting back to the Department of Transport, was subsumed by the SDI project. This new SDI programme was heavily centralized, obsessed with speed and ‘big bang’ anchor projects and eager to push industrial process issues. This situation was compounded by the process of engagement with the local community: in Mpumalanga, there has been limited communication about the MDC between the provincial government and local government communities, the private sector and organized labour. It is a paradox that, although the Corridor is well known nationally and internationally, many local communities, which will be directly affected by the development, have very little information on the project. (Mitchell 1998: 760) Furthermore, development projects of this nature need guidance from state bodies in order to promote small and medium-sized enterprize engagement (see Söderbaum and Taylor 2001). Specific contractual obligations to involve local partners on the ground, particularly those managed by and with a strong labour component comprised of disadvantaged persons, such as Black and female, would be vital to any such positive spin-offs from private sector involvement. All this having been said, a cautionary note is sounded: ‘the market’ cannot be left to its own devices if development and empowerment within the MDC (and indeed other SDIs) is to be realized, nor is it enough simply to have mega-projects based on infrastructure and minerals processing (interview with David Arkwright, project manager, Maputo Corridor, Nelspruit, 12 April 2000). The private sector as active implementers, with the state playing a facilitating role and regulatory oversight being provided by the public sector, particularly at the municipal level, is clearly required (interview with Greg White, head of Private Sector Investments, Development Bank of Southern Africa, Halfway House, 14 April 2000).

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In this regard it is imperative that both the South African and Mozambican states compel and monitor and enforce empowerment and developmental obligations undertaken by contracting capital ventures, as well as encouraging diversification. Obviously, the capacity to do so may well be lacking at certain junctures, but serious attempts to do so are vital and opportunities to enlist the support of civil society open up avenues for a serious role for democratic and progressive bodies, stimulating accountability in a process that has, as has been remarked previously, been marked somewhat by a ‘democratic deficit’. Indeed, the role of an activist civil society is vital for, as Fantu Cheru (1997: 219) remarked, ‘governments on their own are unlikely to act to promote the public good unless pressured by their constituencies. It is the people and the NGOs and the ecodevelopment movements, concerned about ecology and development, that [do this]’. (Re)capturing a truly development- and people-centred regional project within the MDC initiative can (and must) remain possible. This can only occur if the top-down tendencies thus exhibited by the MDC are married to bottom-up initiatives centred around accountability, democracy and social advancement. It is not enough to predicate the microregion simply around ‘growth’ and somehow hope that empowerment will occur.

Notes 1. Renamo – Resistência Nacional Moçambicana – was originally created by the White Rhodesian regime in its last days in an attempt to destabilize Mozambique and also harass and gather information on the Zimbabwean liberation forces based in the country. When Zimbabwe became independent, the South African regime rebuilt Renamo and, exploiting frustrations with Frelimo in some quarters within Mozambique, used it as a tool to sabotage the state and destabilize the region as a whole. Renamo’s activities greatly helped the apartheid regime in bringing Mozambique to its knees – symbolized by the Nkomati Accord in early 1984 whereby Maputo agreed to cease hosting the ANC in return for Pretoria stopping running Renamo. South Africa subsequently reneged on this agreement and destabilization of Mozambique was to continue, further wrecking the country. 2. Interestingly, when the US-based corporation Enron tendered to develop and market the gasfields at Pende, its terms were regarded by the Mozambican government as extremely low and Maputo demurred. The American Embassy quickly intervened and threatened to withdraw aid to Mozambique if the Mozambicans did not agree to the American terms. Maputo’s minerals

Ian Taylor 163 minister, John Kachamila is quoted as telling the Houston Chronicle that ‘there were outright threats to withhold developmental funds if we didn’t sign and sign soon. Their diplomats … pressured me to sign a deal which was not good for Mozambique’ (Griswold 1996). 3. In informal interviews with local business people (Nelspruit, 3 April 2000), it was clear that the siting of the toll plazas and the increase in costs was widely resented, particularly as no visible new investment (or perhaps business opportunities for the informants?) had apparently flowed into the area, as promised by the elaborate MDC prospectus.

References Abrahamsson, H. and A. Nilsson (1995) Mozambique: the Troubled Transition, London: Zed Books. Adams, F., S.D. Gupta and K. Mengisteab (1999) ‘Globalisation and the Developing World: an Introduction’, in F. Adams, S.D. Gupta and K. Mengisteab (eds), Globalisation and the Dilemmas of the State in the South, London: Macmillan, pp.1–16. Altman, M., I. Taylor, J. Liuz, C. Rogerson, J. Shapiro, D. Budlendar and G. de Beer (2001) Evaluation of the Spatial Development Initiatives, Halfway House: Development Bank of Southern Africa. Bond, P. (2000) Elite Transition: From Apartheid to Neoliberalism in South Africa, London: Pluto Press. Cheru, F. (1997) ‘Global Apartheid and the Challenge to Civil Society: Africa in the Transformation of World Order’, in R. Cox (ed.), The New Realism: Perspectives on Multilateralism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 205–22. Commission for Gender Equality (2000) Gender Analysis of the Maputo Development Corridor Projects, Johannesburg: CGE. Crush, J. (1997) ‘Contract Migration to South Africa: Past, Present and Future’, paper for the Green Paper Task Group in International Migration, Cape Town, 13–14 January. ‘Development Perspective’, www.dbsa.org/Corridors/maputo/MaputoDev Corridor.htm Debt of Apartheid (1998) London: Action for Southern Africa. Griswold, D. (1996) ‘What Imperialism Has Done to Mozambique’, Workers World (New York) 15 February. Grugel, J. and W. Hout (eds) (1999a) Regionalism Across the North–South Divide: State Strategies and Globalisation, London: Routledge. Grugel, J. and W. Hout (1999b) ‘Regions, Regionalism and the South’, in J. Grugel and W. Hout (eds), Regionalism Across the North–South Divide, pp. 3–13. Hanlon, J. (1991) Mozambique: Who Calls the Shots?, London: James Currey. ‘Harvesting Apartheid: the Complicity of Business in Racial Oppression’ (1997) African Communist, no. 148, Fourth Quarter. Held, D., A. McGrew, D. Goldblatt and J. Perraton (1999) Global Transformations: Politics, Economics and Culture, Cambridge: Polity Press. Hentz, J. and I. Taylor (2000) ‘Competing Capitalisms, Competing Regionalisms: Contested Notions of Governance in a Globalising Southern Africa’, paper presented at the International Political Science Association triennial conference, Quebec City, Canada, 1–5 August.

164 Microregionalism and World Order Hettne, B., A. Inotai and O. Sunkel (eds) (1999) Globalism and the New Regionalism, London: Macmillan. Hook, G. and I. Kearns (eds) (1999) Subregionalism and World Order, London: Macmillan. Interim Co-ordinating Committee (1996) A Development Perspective: Maputo Development Corridor, Pretoria: Government Printer. Johnson, P. and D. Martin (eds) (1986) Destructive Engagement: Southern Africa at War, Harare: Zimbabwe Publishing House. Katzenellenbogen, S. (1982) South Africa and Southern Mozambique: Labour, Railways and Trade in the Making of a Relationship, Manchester: Manchester University Press. ‘Key Goals and Strategic Objectives for the Maputo Development Corridor’, http://www.dbsa.org/Corridors/maputo/sectionc.htm Lewis, D. and R. Bloch (1998) ‘SDIs: Infrastructure, Agglomeration and the Region in Industrial Policy’, Development Southern Africa, 15 (5): 727–55. ‘Maputo Corridor Company’, www.dbsa.org/Corridors/Maputo/company.htm Mitchell, J. (1998) ‘The Maputo Development Corridor: a Case Study of the SDI Process in Mpumalanga’, Development Southern Africa, 15 (5): 757–70. Mittelman, J. (1999) ‘Rethinking the “New Regionalism” in the Context of Globalisation’ in B. Hettne, A. Inotai and O. Sunkel (eds), Globalism and the New Regionalism, London : Macmillan, pp. 25–53. Moloi, D. (1998) ‘There’s Logic in SDIs, But…’, Land and Rural Digest, 1(1) June/July, p. 16. Mondlane, E. (1969) The Struggle for Mozambique, Harmondsworth: Penguin. ‘Progress on the Maputo Development Corridor’, http://www.transport.gov.za/ docs/annual/section7.html Rodolfo, B. (1998) ‘Adjustment, Social Policy and Poverty in a War Torn Economy’, Southern African Political and Economic Monthly, 11 (8): 18–19. Saul, J. (1993) Recolonisation and Resistance in Southern African in the 1990s, Trenton: Africa World Press. Shaw, T. (1999) ‘New Regionalism in Africa in the New Millennium: Comparative Perspectives on Renaissance, Realism and/or Regressions’, paper presented at Centre for the Study of Globalisation and Regionalisation 3rd Annual Conference, University of Warwick, 16–18 September. Söderbaum, F. and I. Taylor (2001) ‘Transmission Belt for Transnational Capital or Facilitator for Development? Problematising the Role of the State in the Maputo Development Corridor’, Journal of Modern African Studies, 39 (4): 675–95. ‘Spatial Development Initiatives in Southern Africa’, http://www.sdi.org.za Taylor, I. (1999) ‘South Africa’s Promotion of “Democracy” and “Stability” in Southern Africa: Good Governance or Good for Business?’, paper presented at Centre for the Study of Globalisation and Regionalisation annual conference ‘After the Global Crises: What Next for Regionalism?’, University of Warwick, England, 16–18 September. Taylor, I. (2000) Public–Private Partnerships: Lessons from the Maputo Development Corridor Toll Road, Working Paper no. 00/44, Development Policy Research Unit, University of Cape Town, December. Taylor, I. (2001) Stuck in Middle GEAR: South Africa’s Post-Apartheid Foreign Relations, Westport, CT: Praeger.

Ian Taylor 165 Torp, J.E. and P. Rekve (1998) ‘Privatisation in Developing Countries: Lessons to Be Learnt From the Mozambican Case’, Transformation, 36: 26–38. ‘Visions, Goals, Objectives’, www.dbsa.org/Corridors/Maputo/sectionc.htm Williams, P. and I. Taylor (2000) ‘Neo-liberalism and the Political Economy of the “New” South Africa’, New Political Economy, 5 (1): 21–40.

8 Microregionalism in the Zambezi Basin Patrik Stålgren and Fredrik Söderbaum

Introduction There are no less than 15 major river basins in southern Africa. Many of these are shared, not least because major rivers were often somewhat arbitrarily designated as national boundaries during colonial rule. The Zambezi is one of the largest rivers in southern Africa, passing through eight countries – Angola, Botswana, Malawi, Mozambique, Namibia, Tanzania, Zambia and Zimbabwe – before running into the Indian Ocean. The basin itself is larger in size than any of its constituent countries. It is more than 14 times the size of Malawi, which is the smallest basin state. There are some 38.4 million people living in the basin and the river is a veritable artery of life and development for large parts of this population, particularly in the main basin countries: Zambia, Zimbabwe, Malawi and Mozambique. The Zambezi river is the nexus of a microregional dynamic built around the exploration and exploitation of natural resources in the basin area. The river is not only the basis for daily survival for millions of people, but is also the core of hydroelectric power production, mining industry, agriculture, fishery, urban-centred development and tourism. There is a rich plethora of stakeholders in the basin (at regional, national and local levels) with a variety of different interests that together create an intrinsically complex multilayered web of conflicts and cooperation. The purpose of this chapter is to analyse the origins, motives, dynamics and effects of this complex picture of region-building in the Zambezi River Basin. The analysis pays particular attention to the role of often-competing national elite interests and the fact that the river basin is characterized by sectoral segmentation. The multilayered political context where the process of national 166

Patrik Stålgren and Fredrik Söderbaum 167

identity is contested provides for a particular type of microregion in which genuine cross-border integration is frequently perceived as a threat to the centralist agenda of nationalist elites. The analysis is structured as follows. As a point of departure we assess what constitutes the Zambezi River Basin as a cross-border microregion in terms of ecology and geographical demarcation of boundaries. An attempt is also made at elucidating some facets of the underlying social fabric and divisions related to culture and identity. The three following sections concentrate on some of the most important sectors in the basin: energy, mining and agriculture.Then, as a synthesis, we assess the consequences of state-centrism and sectoral segmentation identified in the sectoral cases. Thereafter the ongoing steps towards an integrated and holistic integrated resource management approach and some of the ‘new’ region-building attempts in the Zambezi River Basin are attended to. Finally, in the conclusion to the chapter, broader issues of new regionalism, multilevel governance and the role of the nation-state more generally are also taken into consideration.

The Zambezi River Basin The Zambezi is the fourth largest river basin in Africa. From its source on the Central African Plateau it flows eastward nearly 3000 km before running into the Indian Ocean. The river passes through eight countries in southern Africa, and it is networked by a number of major tributaries, such as Shire, Luena, Chobe, Cuando, Kafue, and other surface and groundwater resources. Some analysts would argue that the basin is a ‘subregion’. However, in spite of its size the Zambezi Basin groups specific (subnational) geographical parts of a number of riparian states, i.e. what normally defines a cross-border ‘microregion’. Map 4 sketches the geographical location of the Zambezi river, the main tributaries, lakes and the riparian states. There is great variation in contribution of area and population from the riparian states to the basin. Table 8.1 shows the distribution of national area and population in the basin. As shown in Table 8.1, about one-quarter of the total area of the riparian states is located within the basin. Some countries make up the lion’s share. For instance, Zambia is the largest contributor to the Zambezi Basin area (almost 41 per cent), followed by Zimbabwe (19 per cent). From a different perspective, more than 90 per cent of Malawi and more than 70 per cent of Zambia is located within the basin. The eight riparian countries have a total population of more than one

The Zambesi Basin

NAMIBIA

Luena

ANGOLA

BOTSWANA

Kasane Victoria Hwange Falls

Kafue

Bulawayo

Lusaka

Kabwe

Kitwe

ZAMBIA

Livingstone

Solwezi

DEMOCRATIC REPUBLIC OF CONGO

Mirondera

Harare

ZIMBABWE

Gweru

Kwekwe

Kadoma

Lilongwe

MALAWI

Tete

MOZAMBIQUE

Chipeta

Blantyre

TANZANIA

168

Patrik Stålgren and Fredrik Söderbaum 169 Table 8.1 Basin Country

National area and population distribution in the Zambezi River

Total Area area in (1000 basin sq. km.)

Angola 1,247 Botswana 582 Malawi 118 Mozambique 799 Namibia 824 Tanzania 945 Zambia 753 Zimbabwe 391

145 84 110 140 24 27 540 251

Total

1,322

5,077

% of % of national basin area in area basin

Total Pop. pop. in (millions, basin 1998)

% of national pop. in basin

% of basin pop.

11.6 14.4 93.2 17.5 2.9 2.9 71.6 64.3

11.0 6.4 8.4 10.6 1.8 2.0 40.8 19.0

13.2 1.5 11.4 20.8 1.6 31.2 10.0 12.6

0.5 0.01 9.8 4.0 0.06 1.3 7.0 9.0

3.7 0.8 86.1 19.2 3.7 4.0 70.2 72.1

1.6 0.03 30.9 12.6 0.2 4.1 22.1 28.5

100

102.3

31.7

100

Source: Godwell Nhamo (1998) ‘Eight SADC Countries share Zambezi River Basin’, The Zambezi, 1 (1): 2.

hundred million people, of which more than 30 per cent live within the basin. Within these countries million of peoples and subgroups build much of their social and economic life around the resources in the river basin. Regardless of state boundaries the whole river basin needs to be regarded as one single (albeit heterogeneous) ecological, hydrological, social and economic unit. As an ecosystem it is among the richest in Africa, but it is also threatened by pollution, land degradation and deforestation, which increases the risk for social conflicts. Further, the hydroelectric power production along the river ties the basin together in a web of tensions between upstream/downstream users and political elites. Moreover, the social economy of the basin shares a picture of high population growth, unequal distribution of incomes, devastating infant mortality and HIV/AIDS rates. As a consequence, it is clear that efficient and sustainable development necessitates a broad and holistic approach integrated within a basin-wide perspective (Shela 2000). As Larry Swatuk (2000) correctly points out, water, power and natural resource management have become matters of ‘high politics’. This means that the dynamics of the Zambezi River Basin is heavily influenced by the national (elites’) security and development agenda. In many respects, competing national (elite) interests shape the dynamics of the Zambezi microregion. However, in order to understand the dynamics of the Zambezi River Basin we need to go beyond

170 Microregionalism and World Order

state-to-state relations. We should therefore consider the relationship between local forms of identities and the role of the state. Identity and state formation The river basin includes a plethora of distinguished subregions, several of which are cross-border in nature. It is worth emphasizing that since the beginning of mankind, river systems have been the nexus of civilization. Rivers have attracted nomads who have found water for themselves and their cattle, and rivers have provided the easiest, and in many areas the only, means of entry and circulation for traders and settlers. Whereas rivers traditionally constituted the focal point for social groups, the colonial powers conflated rivers with national borders. Consequently, many of the approximately 30 ethnic groups today found in the Zambezi Basin are divided between at least two nation-states. Most of the people living in the basin speak languages of the Bantu-lineage that, together with their common cultural and religious heritage, provides a strong driving force for cross-boundary integration in the basin. Besides their Bantu tongue, English is spoken by many people in the six basin countries that were British colonies, while Portuguese is widely spoken in Angola and Mozambique. Despite national borders, the migration of new groups, and increased economic developments, many of the traditions of early inhabitants in the basin continues to thrive. The case of the Lozi is a particularly interesting example. The western province of Zambia, formally known as Barotseland, is still a stronghold for the paramount Chief Lewanika of the Lozi people and the separatist sentiments continue to flourish among the Lozi. Today the Lozi people live in an area divided between Zambia, Namibia and Botswana. Zambia hosts the largest group of Lozi, that make up 15 per cent of Zambia’s total population. Prior to the 1884–5 Berlin Conference, when the colonial powers carved out Africa and established the political borders which still are in place, the Lozi lived in one nation under one king, and in accordance with the British tradition of indirect rule it retained considerable autonomy. As part of the effort to create a united front against the British in the run up to independence, Kenneth Kaunda entered into agreement with the then King of the Lozi, Sir Mwanawina Lewanika, incorporating the autonomous region into Zambia. In the process Kaunda shattered the dreams of a united Lozi nation. The post-independence governments in Lusaka have used a variety of strategies to build national unity. After independence the Lozi area was renamed ‘the Western province’, clearly alluding to the centrality of the nation-state.

Patrik Stålgren and Fredrik Söderbaum 171

Acknowledging the political importance of the Lozi, their leaders have continuously been ensured high-level representation in the government and parliament. Following slow economic development and growing distrust in the Lusaka government, the relationship between the central government and the Lozi has increasingly been put into question during recent years. The Barotse Patriotic Front has intensified its efforts for independence for the Lozi in Zambia in close cooperation with other Lozi separatist movements in neighbouring Botswana and Namibia. Chief Lewanika has declared that ‘We are one people, with the people of Caprivi, and we have been meeting since God created us. The Zambezi River has never been an iron curtain for us’ (Namibian 1998). The agreement between Malawi and Tanzania on the Songwe River Basin is an intriguing example whereby state strategies even change the nationality of people living along the Zambezi. The Songwe river drains into Lake Malawi and marks the border between the two countries. Every year the Songwe river experiences severe flooding and meandering in its 30 km fertile and densely populated food plain. These floods displace large groups of people and, according to a border agreement from 1901, whenever a piece of land is cut off to the other side of the river the residents change nationality. These cases are only a few illustrations of the rich cultural heritage in the Zambezi River Basin. This said, the local identities and microregionalization play no more than a marginal role in the formal construction of the microregion. It is rather the national elite interests which characterize the dynamics of the Zambezi Basin. Often this logic is confined to specific sectors. It is this logic that we consider in the next few sections.

Hydroelectricty The Zambezi river provides for extensive hydroelectric power production. Energy production is a prerequisite for mining, agricultural production and the formation of urban centres, which in turn generates increased demand for energy production. This means that hydroelectric power generation is at the core of the national security and development agenda (that is, ‘high politics’). As the subsequent part of this section shows, the huge interests vested in hydroelectric power production has catered for a dynamic of conflicts between competing elites in the riparian states. This in turn has even lead to the formation and disintegration of nation-states in the basin.

172 Microregionalism and World Order

The strategic role of hydroelectric power generation can be traced back to the 1920s. Rising demand for copper busted world market prices and spurred an intensification of mining activities in Northern Rhodesia (Zambia). Combined with a rapid expansion of the manufacturing sector in Southern Rhodesia (Zimbabwe), the microregion experienced a need for a cheap and stable supply of electric power. The ruling political and economic elites in Southern and Northern Rhodesia shared the need for a long-term supply of energy. Soon this need became a central driving force for regional integration introduced in the basin area during the later years of colonialism. As British colonies Southern and Northern Rhodesia were closely linked, which facilitated joint endeavours along the common border, the Zambezi river. Moreover, many members of the ruling elites in the two countries were part of the same community of white settlers which provided for a sense of shared history and common construction of the future. The first major step towards the establishment of a large hydroelectric power plant was made in 1946 when the two Rhodesias formed the Inter-territorial Hydroelectric Power Commission. In 1953, the shared interests of the countries led them to join with present-day Malawi in the formation of the Federation of Rhodesia and Nyasaland. Crowning this regional endeavour, the Kariba Dam was completed in 1958. The construction of the Kariba Dam, which at that time was the largest constructed reservoir in the world, resulted from the unique moulding of economic and political elite interests and identities in the Zambezi Basin. Since its construction the interests vested in the Dam and its power production plant has been one of the major driving forces for continued cooperation in the basin. This driving force has been strong enough to ensure continued transboundary cooperation in spite of growing political and ideological differences among the elites. The Federation was dismantled in 1963 following increased tensions between Ian Smith’s Southern Rhodesia and the drive for independence in Northern Rhodesia and Nyasaland. At the break-up of the Federation the Central African Power Co-operation was established in order to manage the Kariba Dam complex. Northern Rhodesia and Nyasaland gained their independence soon after the break-up of the Federation and subsequently took part in the liberation struggle in Southern Rhodesia. Notwithstanding this period of intense hostility and violence targeted at the white minority rule in Southern Rhodesia, the Kariba complex continued to be an island of cooperation in a basin

Patrik Stålgren and Fredrik Söderbaum 173

marked by conflict. In 1987 the present Zambezi River Authority (ZRA) replaced the Central African Power Co-operation. The mandate of the ZRA is still quite specific and limited in scope. As Swatuk (2000: 236) points out, it ‘is little more than a modern-day version of its colonial precursor’. However, as mentioned above, the basin needs to be a regarded as a single unit and there is a need for a basin-wide and holistic management approach. The problem is that the recent steps in this direction are sometimes hampered by the incumbent elites who try to maintain their power positions. Despite the need to extend the mandate to other riparian states, the ZRA only covers the section of the Zambezi river forming the common border between Zambia and Zimbabwe, and particularly the operation and maintenance of the Kariba hydroelectric power complex. ZRA only reports to the state-controlled power supply companies in the two member countries, Zambia Electricity Company and Zimbabwe Electricity Supply Authority. The narrow focus on electricity production and the demand for economic profits have created an organizational structure that will have to be addressed if a holistic approach is to develop. Besides the Kariba, major hydroelectric facilities are found at Victoria Falls, Kafue Gorge, and Cahora Bassa. These facilities produce 4620 megawatts which is less than 25 per cent of the estimated potential capacity of the Zambezi (Nhamo 1998: 3). Ongoing negotiations between Zimbabwe and Zambia on the construction of the Batoka Gorge Dam is one example of the complicated nature of inter-state agreements for future developments of the resource base. The protective and competitive rationality of each of the riparian states has lead to a situation characterised by lost opportunities and conflicts ready to burst. Moreover, increased utilization of the hydroelectric power potential is conditioned on massive interference with the natural flow of the river. Recent assessments of the social, environmental and economic impact of the Kariba Dam illustrate how problematic such schemes can be. The magnitude of the negative effects are only starting to be realized now, almost 50 years after the construction of the Kariba Dam. The development of the existing hydroelectric power potential in the basin risks multiplying the negative effects and also spilling over into the subnational and local levels where interests within a variety of sectors are affected, together creating an intrinsically complex conflict web (Chiuta 2000; World Commission on Dams 2000).

174 Microregionalism and World Order

Mining The mining industry in the Zambezi Basin is characterized by a production mechanism that is highly dependent on local conditions. At the same time the industry is truly global both in terms of ownership and demand structures. Moreover, since mining has boosted the demand for energy and created urban centres in need of food supply the industry has increased interdependence between economic sectors. Industrial development in the Zambezi Basin started at the turn of the twentieth century with the drifting of white settlers from South Africa towards the North, settling in present-day Zimbabwe and Zambia. The settlers came to the basin looking for minerals, but their push into this hinterland of Africa was supported by the agenda of disseminating western civilization. Originally it was thought that the Zambezi river provided the infrastructure for this endeavour. According to the missionary and famous explorer, Dr Livingstone, the Zambezi river should become ‘God’s Highway’ in opening up the African interior for commerce and Christianity. But given its numerous natural barriers – sandbars at the mouth, shallowness, and rapids and cataracts – the Zambezi turned out to be of little significance for transportation. However, since the basin proved to be rich with ore, the economic rationale called for the extension of the railway from South Africa to the heart of the basin at Victoria Falls. The railway soon became an artery for development and has had a considerable impact on the industrial development and the establishment of administrative and commercial centres in the basin and beyond. The same settler elite that stood behind the development of the hydroelectric power sector analysed above carried the exploration and exploitation of the ore findings. The two sectors were interdependent as the development of the mining industry created a strong demand for energy. The white elite used its twin base in the economic and political spheres to meet this demand, which also was a key motive behind the formation of the Federation in 1953. Through the Federation the mining industry could benefit from a safe supply of energy from the Zambezi as well as steady supply of labour from Nyasaland. This functionally driven regionalism ended with the move for political independence during the 1960s and 1970s. The independence movement was built on a nationalistic rhetoric that did not travel well with regional cooperation. The nationalistic organization

Patrik Stålgren and Fredrik Söderbaum 175

of the mining industry prevented and still prevents cross-border coordination. Today’s mining companies are connected to the global market without any real microregional coordination. Many of the mining companies are part of international (and mostly foreign) mining conglomerates. The ore mining includes, inter alia, diamonds, goal, copper, nickel, and the principal mining countries in the basin are Angola, Namibia, Zambia and Zimbabwe. The mining industry contributes to about 10 per cent of GDP of the basin countries and in the Copperbelt Province of Zambia mining is the second largest employer. The lion’s share of the minerals is exported outside of the basin contributing to as much as 60 per cent of foreign exchange earnings for the basin countries (Chenje 2000; Mbendi 2000).1 It is clear that the mining industry would benefit from increased (micro)regional integration because this would lower transaction costs and risks in the acquisition of energy and labour. Past resistance by national political elites to facilitate this development has recently loosened up as a consequence of the strong connection between international metal markets and the national debt crisis. This development is accommodated by the Southern African Development Community (SADC). During 1998 and most of 1999 international metal prices dropped dramatically. One of the major causes was the decision by the IMF and major central banks in Europe and America to sell parts of their gold reserves as part of a debt relief scheme for the heavily indebted and poorest countries. This crisis provided the incentive for key stakeholders in the sector to coordinate themselves and negotiate a solution with the financial institutions in the West. SADC provided the forum for coordination of the mining industries in the region and subsequently mitigated the halt of additional sales by the European central banks in September 1999. Further efforts to coordinate the sector resulted in the SADC Protocol on Mining which came into force in February 2000 after having been ratified by eight SADC states including all of the basin states engaged in mining: Zambia, Zimbabwe, Botswana and Namibia. The Protocol provides a legal basis for the signatories to develop further cooperation in the global mining industry. The second SADC–EU Mining Investment Forum held in October 2000 provided a meeting place for the large actors in the sector. In an attempt to link up small-scale miners to the global market the United Nation Economic Commission for Africa is sponsoring a Small-Scale Mining Initiative that is designed to mitigate this linkage through access to the SADC–EU Investment

176 Microregionalism and World Order

Promotion Programme (SADC Review 2000). These events illustrate the intense and complex relationships between national, microregional, subregional, inter-regional and global processes.

Agriculture A large majority of the economically active population in the Zambezi Basin are engaged in the agricultural sector. This sector is therefore the key to political power and control throughout the basin. The prevailing mixture of tenure systems and agricultural traditions is a remnant of different historical elites and power struggles in the basin. As a consequence, the agricultural sector is characterized by a highly biased social distribution of resources. The much-needed reforms in the sector will go to the core of the political power base and the agricultural sector thus holds the potential to offset great civil unrest. Present-day cattle rearing in the basin results from the disintegration of the Zulu nation at the end of the nineteenth century leading to a great northern migration of this predominantly herding people. The integration with the local settled people created the mixed agricultural system which now dominate the highlands that forms the borders of Malawi and Zambia and the adjoining highlands of Mozambique. Commercial farming can be traced back to the influx of early Portuguese settlers and the land tenure system introduced by the British South Africa Company. With little or no consideration for traditional agricultural practices, these immigrants established European settlement patterns that were later adopted and continued under British and post-independence rule. The early development of the agricultural sector was closely linked to the expansion of other sectors in the basin, especially the mining sector in the Copperbelt and Kabwe. Increased demand for food crops was further triggered by the growth of urban centres in the basin. Through state-driven efforts such as the Master Farmer Scheme, the ruling elite in Zimbabwe spearheaded the transformation of the agricultural sector in a way that soon was adopted throughout the basin, especially in Zambia and Malawi. As illustrated in Table 8.2, Zimbabwe still accommodates the most advanced agricultural production in the basin. Fifty per cent of the total land under irrigation in the basin is found in Zimbabwe. Also in terms of cultivated area in the basin, Zimbabwe, together with Zambia and Malawi, holds a dominating position: Together, these three countries hold 86 per cent of the estimated 5.2 million ha. of the yearly cultivated area in the basin. The

Table 8.2

Agricultural development and distribution in the Zambezi Basin (1995) Angola

Namibia

Botswana

Zambia

Zimbabwe

Malawi

Tanzania

Mozambique Total

Cultivated area in the basin as percentage of basin land under cultivation

1.8

>0.5

>0.5

22.2

26.3

36.6

4.8

8.1

100 % is 5 205 000 ha

Land utilization by country, percentage of country potential

3

9

18

17

31

83

45

13

26

Irrigated land as 1 percentage of cultivated land per basin country

5.5

66.1

3.7

6.3

1.9

>0.5

1.1

100 %

Irrigated land per country as percentage of total irrigated land in basin

>0.5

>0.5

25

50

21.3

>0.5

2.7

100 % is 171 621 ha.

>0.5

Source: Calculated from Denconsult (1998).

177

178 Microregionalism and World Order

same three countries host almost 90 per cent of the cattle found in the basin. On an aggregate level land and water for irrigation are not scarce resources in the basin. The estimated degree of land utilization is only 26 per cent of the potential (Table 8.2). With 83 per cent of its land under cultivation, Malawi has the highest degree of land utilization in the basin. However, only 1.9 per cent of this land is irrigated. On an aggregate level only 1.5 per cent of the annual run-off in the basin is used for irrigation (Denconsult 1998: 41). As much as 60 per cent of the water abstracted for irrigation is wasted due to mismanagement and evaporation (Ohlsson 1995). This indicates enormous development potential in the agricultural sector. Since independence, all the basin states have strengthened their support to traditional farming through such measures as improved extension and research services, resettlement and settlement schemes, state-operated input supply and marketing outlets and irrigation schemes. In spite of these efforts the agricultural sector is still characterized by a low level of development and neglected potentials. The most pressing need in the agricultural sector is one of equitable distribution of resources. Malawi is the basin country with the largest share of cultivated area in the basin and the country with the highest degree of potential utilization. In Malawi 56 per cent of the smallholders cultivating in 1997/98 held less than one hectare of land and only 13 per cent held more than two hectares (Chenje 2000). In Zimbabwe 15 per cent of the population use 80 per cent of the country’s water for irrigation purposes while the majority of the population do not have access to water for commercial purposes. Several attempts have been made to intrude more effective structure in the agricultural sector. Few, if any, of these have effectively addressed issues of distribution and food security for the inhabitants of the microregion. During colonialism the agricultural markets (for the main crops) were more or less dominated by state monopolies. The aims of these bodies included price stabilization, food security for the mines, and subsidized consumption to maintain political stabilization. These marketing monopolies were taken over by the post-independence elites and became very powerful instruments of government policy. During much of the 1990s the IMF and World Bank executed a number of decentralization and market reforms within the framework of the Structural Adjustment Programme. Efforts to address the uneven distribution of resources have increasingly been turned into high politics with redistribution as the main approach and the commercial, predominantly white,

Patrik Stålgren and Fredrik Söderbaum 179

farmers as the main target. Since independence, in both Zambia and Zimbabwe (1964 and 1981 respectively) the number of white commercial farmers dropped significantly to around 400 in Zambia and 4500 in Zimbabwe. Government policies in Zimbabwe to redistribute land more equitably between the commercial and communal sectors by converting up to 2000 white-owned farms resulted in the creation of another category of farmers – ‘re-settlement farmers’. Less conflict-ridden reforms are also on the way in the basin. In Zambia there are now efforts to rehabilitate idle commercial farms and to bring them back to a productive state. In Mozambique and Angola the large landholdings of Portuguese settlers who left after independence were converted to cooperatives or communal farms whilst many others simply fell into disuse. In Mozambique these farms are now being offered to private and corporate entities for rehabilitation. In spite of these signs of controlled and incremental reforms, much still needs to be done. The slow and non-transparent implementation of land reforms, together with the high dependence on land of a large share of the population, makes redistribution one of the most explosive social and political issues in the basin. Moreover, the current trend of liberalization and market orientation in the sector encourages an adjustment of the production base to suit international market demands. Somewhat paradoxically, the liberalization of the agricultural markets works against microregional integration. The globalization implies a focus on cash crops that leads to an increased streamlining of the selection of crops being produced. This is detrimental for the food security in the microregion as security considerations calls for inter-basin diversity of the production to accommodate external shocks such as flooding and lack of rain. The economic gains from increased globalization of the agricultural sector must be seen against the lost of food security in the microregion.

Characterizing the political economy of the basin There is no doubt about the fact that the utilization of the resources in the Zambezi River Basin has contributed to the economic and social well-being of the peoples in the riparian states (and the national economies). As this chapter reveals, there are important instances of inter-state cooperation and effective use of the resources in the basin. However, there are also a wide range of real and potential conflicts connected to the use and exploration of resources in the basin. These problems and conflicts have been triggered by persistent droughts and

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floods, rising population pressure, urbanization, natural resource scarcities, poverty and weak institutional capacity and so forth. Moreover, it is here argued that many of the problems are directly related to the twin nexus of competitive state-centrism and the divisiveness of sectoral segmentation (within as well as between countries). These two characteristics are particularly negative in that they prevent both functioning microregionalism as well as basin-wide integrated resource management. State-centrism Natural resource utilization, power and water have become ‘high politics’ for the riparian states, and the logic of the Zambezi River Basin is heavily influenced by competing state elite interests. Although there is a history of mainly bilateral inter-state cooperation in the basin, there has been no genuine cooperative sharing of resources for mutual benefit. Also in cases where there have been an abundance of natural resources, nationalist inward-orientation has prevented (micro)regional cooperation even among friendly states. In other words, a centralist and nationalist mentality prevails amongst political leaders and many policy-makers. As a self-critical senior hydrologist at the Department of Water Development in Zimbabwe put it ‘the basin stops at the national border’.2 One observer describes the logic as follows: each riparian state monitors, assesses, plans, develops, conserves and protects the Zambezi River resources within its own territory. The utilization of the water resources is done at the country level with little consultation and co-operation among riparian states. This situation is not conducive to the effective management of shared waters since each of the countries uses different standards. … The Zambezi River basin, represents an arena of different national interest in which the various riparian states are developing diverging policies and plans that are usually not compatible. Upstream/downstream users are often not keen to consider the problems of each other. (Chiuta 2000: 153) In this context is should be emphasized that normally this type of state-centrism does not mean a concern for the whole population of a particular state. On the contrary, it targets specific groups in society, typically the ruling elite and its support groups (Jackson and Rosberg 1982). Furthermore, in many ways the prevailing state-centrism has been reinforced by the modus operandi of the international development community.3 For instance, within one of the major

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donor agencies in the Zambezi River Basin, the Swedish International Development Co-operation Agency, there is a separation and lack of communication between the desk for regional and national water affairs. Even according to one of its own officials, this artificial division prevents moves towards an integrated management approach.4 Having said this, in recent years important sections of the donor community, such as the Nordic countries, the Netherlands and a few others, have been trying to enhance integrated resource management (see more below). The main problem is that the donors lack a coherent strategy how to navigate between the ‘national’ and the ‘regional’. The core of the problem arises from the fact that the donors have to strike a balance between the highly politically sensitive issue of national sovereignty versus a basin-wide approach. Moreover, the basin-wide approach is often difficult to pursue since few stakeholders have the means and policy to operate outside their national contexts. As an official at a large Christian NGO put it ‘We try to manage our side and hope they manage theirs’.5 Sectoral segmentation There are strong arguments and evidence supporting a basin-wide and holistic approach. In the most general sense ‘sustainable development’ is by definition an integrated enterprise. However, although there are strong interdependencies between sectors as such, the management and bureaucratic policies of the sectors are characterized by strong sectoral segmentation: Many of the current efforts still focus on sectoral approaches towards strengthening development capacities and potentials (e.g. transport, water, tourism, power, and agricultural production) while integrated approaches to sustainable natural resource management remain weak. The shared water resources management problems faced in the basin are primarily the result of a sectoral focus, weak inter-sectoral coordination and the absence of transboundary coordination mechanisms. (Chiuta 2000: 153) This sectoral segmentation creates a number of adverse effects. The great dams in the basin hold great potentials for irrigation. However, irrigation is currently used on only 1.9 per cent of agricultural land in the basin. The recurrent floods in middle and lower Zambezi River Basin is another tragic example of the devastating effects of weak intersectoral coordination. The floods were caused by a combination of two

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years of exceptional rains and the heavy emphasis on the maximization of hydroelectric power generation at the Kariba and Kafue Dams, which implies significant interruptions of normal flood patterns. However, somewhat in contrast to public media coverage, which mainly emphasized downstream victims in Mozambique,6 the flooding also hit large areas of Zimbabwe. The severe negative effects of the flooding are mainly a result of heavy emphasis on energy production, an absence of inter-sectoral coordination and an integrated approach to the management of the Zambezi River Basin. As energy production is the major focus of the dams, they are controlled by the Ministry of Energy in the respective countries. However, the Ministry of Rural Resources and Water Development is responsible for the coordination of data on water levels and empowered to issue flood warnings. The problem is that, even within Zimbabwe, there is a lack of functional channels for communication between the two ministries.7

A microregional institutional landscape in the making We are witnessing important changes in the Zambezi River Basin (as well as southern Africa more generally), with several old institutions being transformed and the emergence of ‘new’ (but by no means always ‘good’) initiatives. This section focuses firstly on ongoing efforts towards integrated resource management approaches and secondly on a few of the new regional intitiatives in energy and political economy. These intitiatives might signal a transcendance of state-centrism and sectoral segmentation. The cases also illustrate that the Zambezi Basin is intimately intertwined into the broader regional dynamics of southern Africa, implying that different levels of regionalism must not be separated but integrated within the same framework. Trends towards an integrated resource management approach Since the mid-1980s there is a growing awareness of the need to transcend sectoral focuses and instead strive towards integrated resource management in the Zambezi River Basin. The new approach is based on a devastating critique of the old paradigm: [The first point of critique] is that they are elitist, high-political projects that exclude and/or ignore the needs of indigenous people – usually rural, small, subsistence farming communities – and the impacts on the natural environment. A second is that they are overly technocratic and single-issue-oriented … What is needed,

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quite simply, is an approach to River Basin Management that does not in every case privilege the arguments of science and business and the perceived needs of indebted governments. … To ignore the needs of the rural people in hope of generating power for export or to increase irrigation for cash crops is to sacrifice long-term ecological sustainability and human security for short-term, debt-driven gains. (Swatuk 2000: 238) The integrated resource management approach can be seen as a spillover from economic and environmental problems to reformulated institutional approaches and increased political cooperation. It is also further reinforced by the Rio Declaration and the Dublin Principles, and to a considerable extent by new donor practices. Taken together, these influences provide the integrated resource management approach with a great deal of strength, which explains why it has the potential to have a considerable impact and mitigate state-centrism and sectoral segmentation. There are some concrete steps towards an integrated resource management approach in the Zambezi. Given the limited mandate and membership of the ZRA, the basin states agreed on the Zambezi Action Plan in 1987, which aims to promote the development and implementation of integrated and environmentally sound water resources management throughout the Zambezi River Basin, including the establishment of the Zambezi River Basin Commission (SADC Review 1999: 979). Another step forward was the signing in 1995 of the SADC Protocol on Shared Water Courses. The Protocol establishes basic principles for the ‘equitable’ sharing of the region’s water resources. It also aims to promote the exchange of information, to maintain the balance between development and the protection of the environment, as well as the formation of river basin organizations such as the Zambezi River Basin Commission. The problems are basically the same with regard to the Water Protocol more generally and the case of the Zambezi river more specifically. In short, member states disagree on the basic meaning of the ‘equitable’ use of international waters, and there are numerous problems related to institution-building and the control of river basin organizations. The problems are basically caused by the prevailing state-centrism and lack of commitment to the principle of ‘sharing’ by state elites. Turton (1998) illustrates this problem by emphasizing the fact that Zimbabwe is not showing much interest in the Zambezi Action Plan and the Zambezi River Basin Commission because a

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strengthening of these projects may affect its predominant status within the existing ZRA. The implication for microregionalism is the prevailing dominance of state-centrism, lack of norms of cooperation and functioning institutions. Having said so, there is a process of two steps forward and one step backward. On of the steps forward was the ‘Regional Strategic Action Plan for Integrated Water Resources Development and Management 1999–2004’, approved by the SADC countries in 1998. The implementation of the plan is being performed under the auspices of the SADC Water Sector Coordinating Unit. Even though much more of course is needed in order to make a long-term impact, this provides an action plan which can make a small but concrete contribution to integrated resource management. Another step forward occurred in early 2001, when SADC member states finally agreed to establish the muchtalked-about Zambezi River Basin Commission. It still remains to see how the commission will function, but again it represents a concrete step in the right direction. As emphasized above, the donors play an important role in the management of the Zambezi River Basin. Conventionally, donors have supported and reinforced the nation-state project in Africa. Today there is a trend whereby many important donor agencies – such as those from the Nordic countries, the Netherlands, Canada, the Global Water Partnership and also USAID Regional Centre for Southern Africa – increasingly recognize the importance of the regional dimension in the management of the Zambezi river basin (Söderström 2000). To some extent they have even become ‘regionalizers’ rather than the conventional promoters of centralist and largely competitive nationstate projects. The donors have certainly not abandoned the national focus; rather, they seek to promote integrated resource management at both regional and national levels simultaneously. Although the underlying donor strategies are not (yet) very coherent and there are many ambiguities and unanswered questions even amongst their own staff, the general idea is that sustainable integrated resource management cannot simply be managed through a number of parallel national programmes. It is stressed that regional programmes should contribute, stimulate and ‘trickle-down’ to the national level, rather than undermine the national programmes. However, it is quite clear that the focus on regionalism challenges inward-oriented, centralist and competitive national interests. It is here argued that in many respects these new donor strategies are positive and contribute to increased and more functioning microregional cooperation in the Zambezi River

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Basin as well as subregionalism in southern Africa more broadly. Ultimately these efforts and policies might spur multilayered and pluralistic forms of governance which could gradually transform the political and institutional landscape of southern Africa. Summing up, there are important steps towards integrated resource management approaches in the Zambezi River Basin, which help to transcend competitive state-centrism and sectoral divisions. These efforts are contingent on further consolidation of regional resource management institutions. As elaborated by a wide range of scholars, there is a strong need to build regional (and national) resource management institutions (Shela 2000; Swain and Stålgren 2000). However, these new initiatives are not very strong or elaborated. The picture and future is made more complex by the fact that the whole institutional landscape is undergoing a deep transformation process. Not only new organizations and institutions are emerging, but the role of the state is fundamentally being transformed at the same time, with deep impacts on the dynamics of the future of the Zambezi river basin. New region-building attempts, globalization and the transformation of the state There are several interesting examples of the transformation of the institutional landscape in the Zambezi River Basin, with the potential to create new forms of regionalisms. The cases highlighted here include the Southern African Power Pool (SAPP), the Zambezi–Mozambique Spatial Development Initiative (ZM–SDI) and the Zambia–Malawi– Mozambique Growth Triangle (ZMM–GT). These new initiatives also indicate the pluralism of regionalism occurring at various levels, creating a dynamic multilevel/multilayered regionalism. With regard to SAPP, energy is one of the sectors with the greatest potential benefits of regional cooperation in southern Africa. Interconnected power systems are more reliable, require lower investments in creating new capacities and provide better efficiency. The establishment of the SAPP in 1995 by 12 SADC member states is perhaps the most important development in the energy sector during the last decade. SAPP seeks to create a regional power grid, balance out generation inequities in the region and thereby reduce inefficiencies. The grid allows countries to source electricity in bulk and then redistribute it nationally at cheaper prices (BusinessMap SA 2000: 70). Although SAPP only allows one operator from each country as member, it should be emphasized that all countries are deregulating, restructuring and privatizing their national energy sectors. SAPP is

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seeking to uphold national energy markets and national regulatory agencies at the same time as it is leading the way forward towards innovative regional cooperation. In this regard SAPP can be seen as a compromise between the old state-controlled and heavily regulated system and the new market-oriented, commercial and more or less privatized system. Although it still remains unclear how SAPP itself will be regulated, the changes are creating numerous opportunities for private sector involvement. The new situation has also opened up space for the influence of South Africa’s mighty electricity commission, Eskom (one of the world’s largest electricity companies). The SAPP and its Coordination Centre in Harare is meant to operate on the basis of consensus, but in reality Eskom has a considerable role in decision-making due to its size, dominance, and expertise. The role of Eskom is a heated issue, but it is clear that if members manage to cooperate there is an enormous potential for mutually beneficial developments. Two other most recent (and overlapping) attempts at region-building in the Zambezi River Basin are the Zambezi–Mozambique Spatial Development Initiative (ZM–SDI) and the Zambia– Malawi–Mozambique Growth Triangle (ZMM–GT). In accordance with the Maputo Development Corridor (see Ian Taylor’s chapter in this volume), the ZM–SDI forms part of the Mozambican Spatial Development Initiative/Development Corridor programme. The aim of these spatial development initiatives is to promote a closer integration into the global economy, sustain the role of market forces and ‘crowd-in’ private investments into the microregion. The role of the promoting agency of the ZM–SDI, the Unit for the Development Planning of the Zambezi Region, is to work closely with other government departments to attract investments into the region.8 There is a risk that such ‘retreat of the state’ implies that the state becomes a transmission belt and investment promotion agency for transnational capital rather than an its traditional role as an active facilitator for development (cf. Söderbaum and Taylor 2001; Taylor in this volume). The ZMM–GT is a much looser arrangement. The idea was originally developed in 1999 by the United Nations Development Programme representative in Zambia, together with representatives from the private sector and the three governments included in the arrangement. The ZMM–GT is a key focus area of and basically represents the private sector dimension of the Programme for Innovative Co-operation among the South. The concept also ties into or is assumed to be compatible with most other ongoing regional initiatives, including regional economic communities (such as the SADC and the Common Market

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for Eastern and Southern Africa) as well as other forms of regional economic cooperation (for example, spatial development initiatives, crossborder initiatives, transport/development corridors). The concept is even claimed to contribute to the ‘building blocks’ approach and the objectives of the African Economic Community, as contained in the Abuja Treaty.9 The official assumption is that the various projects are compatible and mutually reinforcing. They are also assumed to enhance the beneficial integration into the world economy and the crowding-in of private investments. As such, the various projects are compatible with the neoliberal paradigm and the notion of so-called ‘open regionalism’ (Cable and Henderson 1994). As pointed out in the case of the Maputo Development Corridor, there is a large risk that these neoliberal initiatives create growing inequalities, social conflicts and even maldevelopment unless they are coupled with strengthened governance mechanisms and institutional frameworks instead of the current retreat by the state, whereby it has turned into a investment promotion agency. Only time will show the balance between social forces as well as consequences of the new developments. These new efforts also signal that the inward-oriented state projects may gradually become more outward-oriented. As noted in our introduction, nation-state boundaries in Africa were imposed by the imperial powers during colonialism. The heavy emphasis on national security and development during the post-independence period reinforced state-centrism and the importance of these boundaries. The new forms of regionalisms in general, and perhaps microregionalism in particular, are slowly peeling away the layers of the colonial heritage and the current demarcations of national boundaries. What is emerging instead is a more multilayered, more complex and possibly more turbulent political landscape.

Conclusion Southern Africa is ‘packed’ with a number of microregions, most of which are cross-border in nature, inter alia due to the artificial nature of existing political boundaries. In this chapter we have argued that the Zambezi River Basin should also be understood as a (very comprehensive) microregion with its own distinctive international political economy of development, ecology and security concerns. It is at the same time important to recognize that the Zambezi microregion is integrated within a broader southern African context, and the two (or

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more) levels of regionalism tend to reinforce one another (positively or negatively). As a microregion the Zambezi River Basin has a number of interesting characteristics. One important trait is the fact that it is constituted by parts of eight nation-states with inefficient administrative systems and which are not particularly committed to inter-state coordination – at least not as far as natural resource management is concerned. The inward-oriented nature and exclusiveness of individual nation-state projects and national elites have in many ways worked against effective microregionalism. Another facet is that a number of different sectors, each with its specific sectoral logic, can be identified in the basin. Although there are strong linkages between sectors, they have been artificially separated by bureaucratic logic and inefficiences and lack of sectoral coordination. In essence, to a considerable extent the dynamics of the Zambezi River Basin has been shaped by the twin nexus of state-centrism and sectoral segmentation – that is, state selfinterest with a lack of efficient international cooperation together with weak inter-sectoral coordination between as well as within countries. The Zambezi River Basin is clearly a multidimensional and heterogeneous unit. There is a great pluralism of motives for region-building and region-destruction in the basin. As a consequence, the policies of relevant actors both reflect and shape microregional space. On the one hand, ecology and the natural resource base set the limits what actors cooperate and compete around. On the other hand, national elites, policy-makers and developmentalists seek to shape the microregion in accordance with their own particular interests (which can be either egalitarian or myopic). Historically, primarily during the colonial period, the Zambezi River Basin took shape through economic complementarity and functionalism. The complementarity of resources in the Zambezi in present-day Malawi, Zambia and Zimbabwe was instrumental in the formation of the Federation of Rhodesia and Nyasaland. The colonial heritage and structures have continued to influence the dynamics of the Zambezi River Basin. The Zambezi Basin is clearly also a microregion that emerges from the exploitation and utilization of natural resources. In this regard there is a sophisticated game of cooperation and conflict. As repeatedly emphasized in this chapter, states and national elites are the dominating actors and the resources in the basin are used to consolidate the national projects. Water, power and natural resource management have become ‘high politics’ and from there it follows that the logic of the Zambezi River Basin is heavily influenced by national security

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motives (that is, it is not only related to the political economy of development). In this sense the Zambezi River Basin can be seen as a hydropolitical security complex (Ohlsson 1995). But there are many other motives and there is a need to recognize the close relationship between security and development motives in the formation of the Zambezi River Basin. We may therefore rather speak of an international political economy of development and security. There is nevertheless a history of cooperation in order to exploit the natural resources of the basin. The important thing is that stronger and stronger interests are calling for the treatment of the Zambezi River Basin as one single socio-ecological and socio-economic system. In addition, there are important steps and increasingly stronger motives for collective action to deal with transboundary issues and for ensuring ecological sustainability and integrated resource management. With regard to non-state actors, there is a rather weak link between microregionalism and microregionalization in the Zambezi River Basin, which to a large extent is a consequence of the prevailing statecentrism and sectoral segmentation. It should be recognized that the basin hosts a network of peoples with intertwined cultural heritages and histories. For some of these groups, such as the Lozi, their history in the basin stretches back several hundred years. Other groups are remnants of later periods of migration, such as the settlers during the colonial period. Many of these groups still show patterns of common identifications and of in-group affections. Moreover, from a historical perspective it is clear that microregionalization in terms of in-group identity formation and economic sector dynamics predates the microregionalism of the Zambezi basin. Nevertheless, the rich social and cultural heritage of the basin has not led to the formulation of microregionalization. Non-state actors, such as rural subsistence farmers and ethnic groups, are very poorly organized and play only a marginal role in the formation of the Zambezi River Basin as a microregion. As emphasized in this chapter it is the national elite/state interests which have constructed and deconstructed the microregion. One positive thing is that today there is increased recognition that the formal state-driven microregional initiatives can only be sustainable if they accommodate the interests and identities of the non-state actors in the microregion. It is often emphasized that there is a need to integrate stakeholders and the needs of the people and rural farmers inhabiting the area more closely in the development process. In this sense there are ongoing attempts to reconcile microregionalism and microregionalization.

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Furthermore, this chapter draws attention to the point that during the last decade there have been several important initiatives towards more dynamic microregional cooperation as well as integrated resource management in the Zambezi River Basin. The new developments emerge for a number of various reasons, such as the recognition of the problems created by state-centrism and sectoral segmentation, increased awareness and the push for integrated resource management (both from within as well as outside the riparian countries). It should be underlined that the Zambezi microregion is affected by the fundamental changes occurring in the world political economy. Globalism, neoliberalism, regionalism and the ‘crisis’, restructuring and ‘unbundling’ of the nation-state, certainly have effects on the dynamics of the Zambezi River Basin. In fact, the ‘discovery of space’ and the ‘subnational’ in development thinking has led to aid agencies increasingly encouraging various forms of regionalisms in southern Africa. The importance of changed policies and practices of donor agencies should not be underestimated. Finally, it should be noted that a host of increasingly complex sets of actors (state and non-state; regional and external) are pushing for the construction of various forms of regionalisms, subregionalisms and microregionalisms in southern Africa. In this sense the new regionalism is a multilevel and multilayered regionalism, whereby microregionalism (Zambezi) seems to be reinforcing higher levels of regionalism (southern Africa). In fact, the new regionalism in southern Africa is to a large extent created by an increasing number of dynamic microregions. It also works vice versa, with the broader regionalism in southern Africa reinforcing microregionalism in the Zambezi River Basin. In fact, the intensified microregionalism in the Zambezi River Basin would not have been possible without the simultaneous consolidation of ‘higher levels’ of regionalism. Recognizing this is crucial and it implies that it is misleading to separate or dichotomize the various forms and levels of regionalisms.

Notes 1. No figures are available on how much of the value of the mining industry is directly related to mines within the basin as opposed to mines in other parts of the riparian countries. However, there are good reasons to believe that a major part can be attributed directly to the basin as some of the main mining areas, such as the Copperbelt in Zambia and the Great Dyke in Zimbabwe, are within the basin.

Patrik Stålgren and Fredrik Söderbaum 191 2. Anonymous interviewee at the Department of Water Development, Zimbabwe, April 2001. 3. Interview, Senior Environmentalist, World Bank, 13 November 2000. 4. Interviewees, Swedish Embassy, Harare, April 2001. 5. Interview, Christian Care, Harare, 24 April 2001 6. In this context it can also be mentioned that the Mozambican shrimp industry in the delta, which is highly significant to the economy, was also negatively effected by the floods. 7. Interviews, Harare, April 2001. 8. Personal communication with Jorge Maia, Senior Project Manager, SADC Department, Industrial Development Corporation (IDC), South Africa, 13 February 2001. 9. Personal communication with Jorge Maia, Senior Project Manager, SADC Department, Industrial Development Corporation (IDC), South Africa, 13 February 2001.

References BusinessMap SA (2000) SADC Investor Survey: Complex Terrain, Johannesburg: BusinessMap. Cable, Vincent and David Henderson (eds) (1994) Trade Blocs? The Future of Regional Integration, London: Royal Institute of International Affairs. Chenje, Munyaradzi (2000) The State of the Environment: Zambezi Basin 2000, Maseru: SADC–ELMS. Chiuta, Thabeth Matiza (2000) ‘Shared Water Resources and Conflicts: the Case of the Zambezi River Basin Institutions’, in Dan Tevera and Sam Moyo (eds), Environmental Security in Southern Africa, Harare: SAPES, pp. 139–56. Denconsult (1998) ZACPRO 6.1, Gabarone/Aalborg: SADC/Denconsult. Derman, Bill (1996) Changing Land-Use in the Eastern Zambezi Valley: Socio-Economic Considerations, Harare: Centre for Applied Social Sciences. Jackson, Robert H. and Carl G. Rosberg (1982) Personal Rule in Black Africa: Prince, Autocrat, Prophet, Tyrant, Berkeley and Los Angeles: University of California Press. Mbendi (2000) ‘Zimbabwe: Mining’, http://www.mbendi.co.za/indy/ming/ af/zi/p0005.htm. Namibian (Windhoek), 1 December 1998, http://www.namibian.com.na/ Netstories/December98/caprivi1a.html Nhamo, Godwell (1998) ‘Eight SADC Countries share Zambezi River Basin’, The Zambezi, 1 (1): 1–3. Ohlsson, Leif (1995) ‘Water and Security in Southern Africa’, Stockholm: Sida, Department for Natural Resources and the Environment. SADC Review 1999, http://www.sadcreview.com/Sectoral%20Reports%202000/ frsector2.htm SADC Review 2000, http://www.sadcreview.com/Sectoral%20Reports%202000/ frsector2.htm Shela, O.N. (2000) ‘Management of shared river basins: the case of the Zambezi River’, Water Policy, 2: 65–81. Söderbaum, Fredrik and Ian Taylor (2001) ‘Transmission Belt for Transnational Capital or Facilitator for Development? Problematising the Role of the State in

192 Microregionalism and World Order the Maputo Development Corridor’, Journal of Modern African Studies, 39 (4): 675–95. Söderström, Elizabeth (2000) ‘Donor involvement in the water sector in the SADC region’ (www.thewaterpage.com/donor_involvementSADC.htm). Swain, Ashok and Patrik Stålgren (2000) ‘Managing the Zambezi: the Need to Build Water Institutions’, in Dan Tevera and Sam Moyo (eds), Environmental Security in Southern Africa, Harare: SAPES, pp. 119–38. Swatuk, Larry (2000) ‘Power and Water: the Coming Order in Southern Africa’, in Björn Hettne, András Inotai and Osvaldo Sunkel (eds), The New Regionalism and the Future of Security and Development, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 210–47. Turton, Anthony R. (1998) ‘Water and State Sovereignty: The Hydropolitical Challenge for States in Arid Regions’, paper presented at Water Africa 99, Cairo, Egypt, 30 May–1 June. World Commission on Dams (2000) Kariba Dam Case Study: Zambia and Zimbabwe, http://www.dams.org/studies/2000.

9 Microregionalism around the Black Sea Panagiota Manoli

Cooperation at the regional level in the Black Sea region has been an understudied phenomenon, although it has been slowly developing since the early 1990s. Due to the primacy of political and security considerations, this cooperation has developed mainly at an intergovernmental level, with only a limited focus on non-state and cross-border cooperation and integration. Despite this official focus on national-level intergovernmental dialogue, other forms of regional integration are occurring around the Black Sea, and this chapter represents a first attempt to explore the origins and features of Black Sea microregionalism. An essential component of this analysis is to locate emerging microregional integration in the context of other ‘higher’ forms of integration, cooperation and organization. Thus, this chapter considers the impact of globalization – defined in terms of increased and speedier global flows of production, finance and ideas – on microregionalism. It also considers the broader European context attempting to highlight the external influences, especially of the EU. Furthermore, we attempt to relate microregionalism to the subregional scheme of cooperation that has been established in the area (BSEC – Black Sea Economic Cooperation) and also to cross-border networking.

Multilevel regionalism Europe has recently witnessed a wave of subregional groups that have a variety of institutional structures but share the common goal of integrating their member countries into the new European structures. Those subregional groups are usually geographically contiguent and/or historically coherent areas (Cottey 1999: 6); examples include the Council of Baltic Sea States (CBSS), the Barents Euro-Arctic Council 193

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(BEAC), and the Black Sea Economic Cooperation (BSEC). Outside the European framework, subregion as a term has been used in the past by scholars to refer to the security groups that emerged in the 1970s and 1980s as mechanisms of addressing local problems and as responses to the inefficiencies of ‘collective security’ plans of global or larger regional institutions, including the Central Treaty Organization (CENTO), the Southeast Asia Treaty (SEATO), the Organization of African Unity (OAU) and so on. Therefore, a subregion may be defined as a group of geographically contiguous states united by their mutual susceptibility to a specific threat, common interests in neutralising that threat in ways beneficial to their individual national securities, and a means of collaboration to reduce individual and collective vulnerabilities to future threats (Tow 1990: 4).1 Microregionalism, as defined in the introduction to this volume, refers to the sub-state and cross-border levels. Without wishing to replicate the discussion in the introduction by Breslin and Hook, it is worth emphasizing here that contrary to the assertions of writers such as Ohmae (1995) microregions do not just emerge from the bottom-up actions of non-state actors, but also from top-down processes. They thus may have political foundations, rather than just the economic foundations implicit in the hyperglobalists’ interpretations. This form of top-down state- and supra-state-sponsored institutionalized microregionalism has become particularly important in Europe, where formal microregionalism has emerged through the combination of local initiatives and supportive mechanisms implemented by both national and EU institutions. Scott (1999: 608) has referred to the interconnections between local, national and EU initiatives as ‘multilevel institutionalization’. This strategy aims at facilitating the coordination of policy amongst different government levels. Microregionalism has acquired formal structures such as the Association of European Regions (AER), the Association of European Border Regions (AEBR) and the Standing Conference of Local and Regional Authorities of Europe (CLRAE). Thus, while in East Asia globalization is the main driving force of an ‘open’ microregionalism having a global orientation, microregionalism in Europe is better understood as a ‘secluded’ one, in response to subregional schemes such as the EU (Hettne 1999: 15). Thus, analyses of regionalism (for example, the EU), subregionalism (for example, BSEC) and microregionalism need to be considered alongside each other. Debates indicate that those processes are, if not complementary, parallel to each other. For example, microregions may

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contribute to the emergence of a subregion and vice versa (Rosenau 1995: 26). As Hettne argues, regionalization reinforces the strengthening of microregions, ‘as the geopolitical environment becomes transformed and creates new possible aliments and a direct approach to the world economy for the subnational regions’ (Hettne 1999: 15).

The Black Sea as a region Microregionalism in the Black Sea2 is a rather new phenomenon whose origins – at least as far as its formal, institutionalized expression is concerned – are to be found in the beginning of the 1990s. During the Cold War period, the area was divided by political and ideological borders that did not allow for extensive interaction amongst the peoples in the region. The East–West division that characterized all Europe for almost half a century was reformulated here to a North–South division with the Soviet Union dominant in the North and the capitalist powers through Turkey, dominant in the South. Economically, let alone politically and socially, the Black Sea symbolized a border rather than a frontier. Thus, interaction at the local level as evidenced by the existing infrastructure (telephone lines, roads, rail) has been modest. Still today, transportation networks link the various parts of the subregion to their respective capitals rather than to each other. From a historical point of view, the Black Sea has rarely been approached as an international region on its own merits – rather, it has been conceived as a ‘backyard’ of the Mediterranean. Cities, and particularly coastal regions, in the Black Sea have always played a considerable role, although the role has differed in various periods due to the changing in power politics both within and outside the region. The Black Sea, and especially its ports, had a vivid economic life, creating a network of economic activities linking the people around and beyond the sea throughout history.3 The establishment of law and order has been a prerequisite for the emergence of the Black Sea as an economic entity, the latter being formed not by ‘market’ forces but by a division of labour imposed by the dominant power in the region (eg. Byzantine, Ottoman rule). The area, however, has been more often perceived of not as a region but as a transit ‘corridor’ and road for East–West trade. With the end of the political division of the Black Sea world and the emergence of a polycentric system of power, interaction in the economic, political and cultural fields, is gaining ground. The collapse of central control in Eastern Europe on one hand and the EU’s emphasis

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on regionalism on the other, has encouraged subnational regions to seek closer cross-border ties with each other. The ground has not been a fertile one, however, as border areas in the Black Sea are among the most neglected ones, lying far from the main European trade routes and appearing unattractive to investors. Microregional endeavours in the area should be seen as a response to the crisis left in the wake of the collapse of communism. Due to the lack of effective national economic strategy and systematic regional policies, local policy-makers have had to innovate to be able to respond to the problems of economic restructuring, environmental degradation, and infrastructural decay. At the same time, developing transborder cooperation among local governments was a means for local policy-makers to increase their political legitimacy and to open links of communication with the other side of the border. The increased role of the local administration and regional authorities went hand in hand with the democratization process and the emergence of pluralistic democracy. The peculiarity of microregional schemes in the Black Sea results from the fact that those schemes have emerged in societies going through a transition process towards adopting a market economy and a pluralist democratic parliamentary system. Structural changes have, therefore, conditioned the features of microregionalism. Here, as in all regions in transition, microregionalism has been facilitated or underpinned by the fundamental changes taking place in the economic, social and political structures. Its features have been formulated by, on the one hand, the legacy of the past (a centralized economic and political life) and, on the other hand, the new forces of globalization and liberalization. Specifically, microregional schemes of cooperation have been boosted by: • the democratization process and related decentralization of decision-making which has given new roles to local authorities; • the entrance of the market economy which has liberated business forces which are considered to be the engines of cross-border cooperation; • societal changes leading to the strengthening of the role of civil society and of nongovernmental bodies and; • external factors such as the European Union. Of particular importance has been the establishment of subregional institutions which have provided a stable transnational environment

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for microregionalism to grow. All over Europe, ‘sub’ and ‘micro’ regional processes have been evolving in parallel, with the most important example being that of the Baltic Sea and the Barents Euro-Arctic regions. In the Black Sea case, since there was no tradition of strong local authorities (not elected as in the case of Norway, for example), their influence was less important than the one that local authorities had in the emergence of subregionalism (inter-state) cooperation in the Barents Euro-Arctic region. There, the first steps on the relaxation of East–West divide were taken at the local level between local administrative regions in Norway and Russia (Joenniemi in Cottey 1999: 24). In the Black Sea, though, this has not been the case. The approach that prevailed in the Black Sea was one of official microregional projects and of networking as a means of cross-border interaction rather than integration. Intensified dialogue at the state level and the establishment of regional institutions and bureaucracies such as BSEC – whose activities have a functional rationale dealing with infrastructure, environment and trade facilitation – have resulted in opening new opportunities for actors on both sides of the borders.

External factors: the European Union In all cases of regionalism, external factors condition the patterns and dynamics of regional endeavours. Here, special reference has to be made to the role of the EU in conditioning the direction and features of microregionalism in Europe’s boundary zones such as the Black Sea. The prospect of an EU enlargement and future membership of the EU has played a fundamental role in changing the attitudes of the local elites towards cooperative schemes. Emerging subnational interdependencies in the whole Europe are influenced by the developments within the EU and the progressive dismantling of boundaries as the EU processes act as a catalyst (Morata 1997: 293). With regard to cross-border cooperation, EU initatives appeared in the Association Agreements signed with Bulgaria, Romania and Turkey which contain specific provisions for regional cooperation for strengthening development. The interest of the EU in cross-border cooperation was recognized in the Agenda 2000 by the European Commission. The EU has facilitated cross-border cooperation through policies such as the INTERREG, TACIS and Phare, on the basis of considerations related to the maintenance of European security interests and general political stability, economic cohesion, the avoidance of negative social consequences of greater competition

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between regions and as a prelude to the accession of Central European states (European Commission 1994). In 1996 the Tacis Programme opened the way for cooperation at borders, with a special budget line of ECU 30 million per annum.4 Support has been provided to new road and rail crossings, on environmental protection projects, waste management, water supply, sewage treatment, and so on. The TRACECA program, which aims to develop a transport corridor on a west–east axis from Europe across the Black Sea and through the Caucasus to Central Asia, is changing transport and trade patterns in the region. It has resulted in closer dialogue between state and regional authorities and has led to agreements to keep transit fees at competitive levels and efforts to simplify border crossing formalitites boosting, therefore, cross-border economic flows.5 A particular type of micro-regionalism which is encouraged by the EU, is the concept of ‘Euroregions’ which entail cross-border cooperation and represent an institutionalized form of cooperation between units of territorial administration of two or more states with and without the European Union. In the Black Sea region, Moldova, Romania and Ukraine have established two Euroregions, the ‘Upper Prut’ (Bukovina) and the ‘Lower Danube’ (Bessarabia). Euroregions aim at enhancing both practical cooperation at the borders themselves, and at promoting economic links between the regions on either side of the border, tackling border-related crime, and addressing some of the environmental concerns existing at border areas. The basis of the border work is modernizing facilities, training border staff and improving customs operations. Its wider application is to border networks, including transport facilitation, and support for local telecommunications and energy links. In an echo of the problems facing the Tumen River project identified by Hughes in this volume, the two abovementioned Euroregions have been slow to develop due to the historical conflicts (often ethnic) of the regions.

Microregionalism as a formal process Microregionalism in the Black Sea developed around a body of water which provides a lifeline for the 87 million people living in the bordering areas. Despite the short history of open regionalism, a number of microregional institutions have already been established in the area. Here we will refer to the most important ones. Cross-border cooperation in the Black Sea is manifested primarily through formal and institutionalized cooperation among the capitals,

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cities and ports of the region and functions as a complementary process to BSEC. In parallel to what might be called ‘strategic alliances’ between cities and regions, recently, networks of nongovernmental organizations have also been manifested in the emergence of new actors – especially in the fields of the economy, infrastructure and environmental protection. The Association of the Black Sea Chambers of Commerce, and the Shipowners and Shipbuilders Association, are two recent examples. Cooperation schemes at a cross-border level emerged in parallel to the cooperation process developed at the governmental level. In the early 1990s, and after a Turkish initiative (which was soon to be followed by Russia) BSEC was established to secure peace and stability in the Black Sea region under the principles laid down by the Helsinki Final Act and the follow-up CSCE documents. It was in 1999 that the forum was transformed into a formal organization. The main vehicle to achieve regional security and prosperity was perceived to be economic cooperation. Eleven countries of wide economic, political and cultural diversity joined forces to stimulate regional economic cooperation primarily envisaging an increasing role for the business forces in the region with the aspiration of creating a Free Trade Zone.6 The long-term aim has been the establishment of a Europe-wide economic region and the integration of the region into the world economy.7 The establishment of the BSEC spurred the creation of a number of other Black Sea bodies: a Parliamentary Assembly, a Business Council and a Trade and Development Bank. Subregionalism was soon followed by formal microregionalism, exemplified primarily by the International Black Sea Club, the Black Sea Capitals’ Governors and Mayors Round Table and the Black and Azov Seas Association which represent the main efforts of the local authorities to enhance governance at the sub-state level. The Association of the Black Sea Area Regions (ABSAR) is another recent effort within the framework of the Conference of Peripheral Maritime Regions of Europe (CPMR) which aims to act as the political voice of the regions of the Black Sea Basin. It has its foundations in an initiative of the Constanta region and the CPMR. In their first Declaration, the Regional and Local Authorities of the Black Sea Basin (April 2000) wished to ‘integrate this cooperation in perfect complementarity with the work being carried out by the States within BSEC and will forward to them the results of this first Conference’ (Declaration, 2000, para. 4). Microregionalism was perceived as both the outcome and promoter of political and economic interdependence. However, from its initial

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stages it has been conditioned by the lack of genuine economic forces in the area and by the suspicion with which the national centres have responded to any active role undertaken by subnational authorities. As a result de jure microregionalism has come about, which bears the characteristics of any international institution (formal meetings, international secretariats, bureaucracy, and so on) and asks for the credentials of the national centre while very often being seen as the extension of national policies and interests. Cooperation among city-ports in the area has been the first to be established, motivated by the potential for economic activity involving shipping and sea trade. The Varna-based International Black Sea Club (IBSC) was founded on 5 December 1992 by representatives of 10 city-ports.8 Its aim is to create a basis for formal cooperation among city-ports for economic and social development through promoting collaboration among the private sectors of those cities. It is a non-profit organization and meets every six months. Another forum that brings together the heads of city administrations of the capitals of the BSEC countries is the Black Sea Capitals’ Governors and Mayors Round Table which was transformed into the Black Sea Capitals Association in 1998. Roundtable meetings focus on issues concerning urban facilities (transportation, housing, communal services, water supply, sewerage and so on) as well as on democratic municipal governance. The First Black Sea Capitals’ Governors and Mayors Round Table was held in Istanbul on 6–8 September 1994 and its Declaration acknowledged that ‘social, economic and environmental problems existing in our capitals are to a great degree of common nature and can be better resolved in joint action’.9 The following fields of cooperation were given priority (Declaration of the Black Sea Capitals’ Governors and Mayors Round Table, Istanbul, 7 September 1994): • safeguarding freedom and democratic values, social and human rights; • providing adequate infrastructure, affordable housing, social, health, educational and cultural facilities; • ensuring law and order, public safety and combating crime in the capital cities; • improving urban environmental situation and; • preservation of cultural heritage in the cities. Recognizing that the solution to the above problems are closely related to the overall political and economic progress of each country, the

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Round Tables have tried to put forward ideas and initiatives aimed at improving the living conditions of the citizens of the whole region. However, the real purpose of its existence is to assist in the fulfilment of the goals of the BSEC and this is clearly stated in its Resolution adopted in Kyiv on 14 September 1995, which says that the Round Table ‘serves towards attaining the overall objectives of the Black Sea Economic Co-operation’. In terms of the membership, 10 all participating cities are represented by their elected or appointed administrators while the actual involvement of actors from the private sector is non-existent. Being mainly a discussion forum, it has limited power either to mobilize the private sector or to influence decision-making at a national or regional level. Its products still remain declaratory documents. In fact, the initiation of the Round Table did not come from the cities themselves and it can not be seen as a ‘bottom-up’ demand. It has been set up by the Parliamentary Assembly of the Black Sea Economic Co-operation (PABSEC) under whose auspices it has been functioning. In launching the initiative of Black Sea Capitals Association, the PABSEC, ‘proceeded from the conviction that local authorities, rendering direct service to the public and addressing everyday problems encountered by citizens, could make a major valuable contribution to attaining the aims of the Black Sea Economic Cooperation’ (PABSEC, Rec.28/1998, para. 1). A third forum bringing together the ports of the area has been the Black and Azov Seas Ports Association (BASPA) which functions through the organization of Conferences of the Heads of the Black Sea Ports Authorities. Two such conferences have been organized to date, one in Poti (Georgia), on 24–5 March 1999 and the second in Istanbul on 26 November 1999 to carry out their activities under the auspices of the BSEC. Table 9.1 summarizes the main features of the four microregional schemes in the BSEC area. The actual outcomes of all the abovementioned endeavours is yet to be seen as their activities remain of a mainly declaratory nature. The International Black Sea Club, being concerned with customs difficulties which are seriously affecting economic life in the area, initiated a joint action undertaken by the cities to simplify and harmonize procedures in the region. However, its efforts were again channelled through the BSEC mechanism.11 At the same time, issues related to the decentralization process that is still going on in post-communist political systems, undermine the actual

202 Microregionalism and World Order Table 9.1 Participants

Microregional schemes in the framework of the BSEC area Objectives – features

International Black Sea Club (IBSC) Burgas (Bulgaria), Varna (Bulgaria), • Piraeus (Greece), Thessalokini (Greece), Constanta (Romania), Tagantog (Russia), Ilichevsk (Ukraine), Nikolaev (Ukraine), Odessa (Ukraine), Kherson (Ukraine) •

Exchange of information and development of partnerships between its city-members in the fields of ecology, tourism, transport, communications, sports and culture. Economic promotion of the Black Sea region. • Observer status in the BSEC.

The Black Sea Capitals’ Governors and Mayors Round Table – Association Capitals of the BSEC states • To develop cooperation and exchanges among the capital cities of the BSEC Participating States The Black and Azov Seas Ports Association (BASPA) Poti (Georgia), Burgas (Bulgaria), • To enhance interaction among the Constanta (Romania), Ilichevsk regions ports (Ukraine), • To support activities under the aus pices of the BSEC Association of Black Sea Area Regions (ABSAR) Regions of the states in the Black Sea • Created within the CPMR and acts which are also members of the CPMR as its geographical commission (Peripheral Maritime Regions of • To act as the political voice of the Europe) regions of the Black Sea Basin

potential of regional authorities. Some states worry that much crossborder autonomy could erode their own central authority or create alliances between regions from both sides of the border eventually bypassing them. Although the agendas of the abovementioned schemes are broad, their actual influence both in the realization of projects and the mobilization of the private sector and on the decision-making process is limited. Two main reasons can be identified: (i) the absence of a genuine economic regionalization and (ii) the security problems existing in the region which mainly involve border areas. Formal cooperation among sub-state actors in the Black Sea has developed as a response to the establishment of the BSEC and as a by-product of (sub)regional projects in Europe. The role of the formal microregional groups has been that of pressure groups and the extent to which they are able to influence policies of the states or of the BSEC depends primarily on the will of the other levels.

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Microregionalization around the Black Sea Many of the cities and areas involved in microregional projects (for example, Istanbul, Burgas and Constanta) constitute important economic areas in their own countries. However, border areas remain economically weak. Cities have embraced microregionalism as a strategy to enhance economic development. Cross-border trade flows, though, do not appear to justify the existence of intensified crossborder economic interactions. In this section, we examine the significance of certain cities and regions around the Black Sea basin and we try to identify the direction of cross-border economic activities. Cities and regions A number of cities and regions of significant economic potential are situated around a ‘water border’ formed by the Black Sea. Among all Black Sea cities, Istanbul holds a unique position serving as a junction between the land and sea trade routes. Istanbul has always played a leading role in the industrial production sector, which has developed rapidly: 45 per cent of the total production and of industrial workers of Turkey are located here, while 36 per cent of total exports and 40 per cent of the total imports of the country are via Istanbul. Half of the nation’s leading 500 industrial enterprises have factories and business centres located in Istanbul.12 As in the Japanese and southern China cases illustrated in this volume, Free Trade Zones have proved an important element in linking coastal cities and transforming seas into bridges. Apart from the Istanbul Free Zones, a number of regions of the Turkish Black Sea coast are Free Trade Zones (for example, the Trabzon Free Zone established in 1992, the Rize and Samsun established in 1998). In the western part of the Black Sea, the Romanian government has established a Free Trade Zone next to the Constanta port. Varna and Burgas on the Bulgarian coast are recovering from years of neglect, especially to their shipyards, refineries and chemical plants which are now fuelling the export-led upturn in the area’s economy. Economic growth in the area is driven by the recovery of trade across the Black Sea to the Ukraine, southern Russia and the Georgian port of Poti. Foreign investors are starting to target the port cities.13 Varna, which has been active in all cooperation initiatives, is one of the biggest industrial, transport, commercial and cultural hubs in the Black Sea region. The port of Varna is directly connected with Russia (Novorossysk), Georgia (Poti) and the Ukraine (Odessa) by ferry and

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‘Ro-Ro’ lines. About 35 per cent of the imports and 50 per cent of the exports of Bulgaria pass via the city of Varna. The region of Burgas, situated in Eastern Bulgaria on the Black Sea seaside, has the biggest seaport in Bulgaria and has the region’s best developed industry (oil refinery, machine-building, cables production, shipyards, food industry). One of the largest industrial plants in the Balkans, Neftochim-EAD, is located in the vicinity of the city. A Duty Free Zone was established in 1989 with the aim of creating more attractive conditions for foreign investments.14 On the Ukrainian Black Sea coast, Odessa had a significant economic presence in the past, being connected to all major international markets. However, due to the particular political conditions that prevailed in the region during the Cold War, the city lost part of its economic position. Today, Odessa is the greatest port of the Ukraine, and an important industrial centre in the region generating 3 per cent of the nation’s industrial production.15 At the Odessa port, a Porto-Franco Free Economic Zone was established in January 2000 to give impetus for the development of external trade. The unique conglomerate of the city-ports of Odessa, Illichevsk and Yuzhny has been the basis of the intensive links of the South-western part of Ukraine with the Black Sea region. Ferry lines from Illichevsk to Varna (Bulgaria) and Illichevsk to Poti (Georgia) assist in the deepening of regional economic links. In the Northeast part of the Black Sea, bordering the Sea of Azov, the Rostov and Krasnodar regions are also of great significance for the national economy. The Rostov region in the Russian Black Sea coast, is the second largest Russian supplier of agricultural products. Approximately 40 per cent of all Russian maritime trade passes through Krasnodar ports, while 43 per cent of the Russian food industry is located in the region.16 Cross-border economic flows Although cities and ports around the Black Sea have the potential to become important centres of the regional economy, cross-border economic transactions remain restricted. Cross-border trade is constrained by the overall conditions of foreign trade in the region. The volume of intra-regional trade is low while investments originated from countries external to the region surpass intra-regional investment flows. Accumulated FDI flows into the 11 BSEC countries were estimated at around US$14.5 billion in 1995. Of that total, Turkey attracted about 40 per cent and Greece and Russia about 25 per cent each (OECD 1996).

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Economic cooperation on the ground has yet to develop due to, among others, the lack of a modern infrastructure, and the low degree of integration of the region as a whole within the global economy. The total GDP of the Black Sea countries is approximately 3.5 per cent of the world GDP and its share since the 1990s has been declining. The growth rates throughout the area vary considerably but, overall, the region’s economic growth underwent a more than 25 per cent decrease in the 1990s. The involvement of the private sector in transboundary cooperation activities in the Black Sea border regions is rather limited and difficult to stimulate. Spontaneous economic activity in the border regions is very limited because most of those areas are still in economic recession. Thus, economic activities of a regional dimension are mainly confined to the sphere of circulation rather than the production of goods. A common trend in the region during the last decade has been a decline in production while intra-regional trade has been dramatically restricted among the former Soviet Union republics of the Black Sea. On the export side, opportunities are limited because of the lack of economies of scale and the high cost of transport to major world markets. While geographical proximity has been an important factor in trade flows, the low demand in the area is a restraining factor that has been changing the direction of trade. Thus, trade flows are increasingly reoriented towards Western European and other international markets. The fastest growing export markets for the Romanian and Bulgarian regions have been the Western European ones. The principal trade partners of the city of Kyiv have been the US (accounting for 13.5 per cent of total exports and 22.7 per cent of total imports in 1997), while Russia comes second (with 15.9 per cent and 8.3 per cent) and Germany third. 17 On the other side of the Black Sea region, due to the economic blockades of its borders Armenia has reoriented its trade towards the US and Western Europe. This trend is manifested by a steady decline of Armenia’s exports to Russia from 73.3 per cent in 1994 to 36.1 per cent in 1998 (EIU 2000: 51–2). In Georgia, where Turkey rivals Russia as the largest trade market for Georgian products, the fastest-growing export markets in recent years were again Western Europe and the US (EIU 2000: 24). Sea routes have facilitated trade links with Bulgaria and Romania on the opposite edge of the Black Sea, but still the volume of trade remains very low (for example, total trade with Bulgaria in 1998 accounted for 4.7 per cent of Georgia’s foreign trade).18

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At the same time, the weight of the region in international business has been minimal as foreign investments remain low if measured against the needs of the region. Initiatives at the sub-state level seem unable to reverse this slow pace of economic activity. Foreign investments are spread unevenly throughout the region, not necessarily around the Black Sea coastline itself and in its main ports and cities. Within the Ukraine, for example, approximately 80 per cent of all foreign investment is concentrated in Kyiv, the Odessa region, the Donetsk region and Crimea. Of the total, 56 per cent is concentrated only in Kyiv, meaning that the national capital is the undisputed leader. The eastern region is the most industrialized one with extensive cross-border links with Russia, but the western area of the Ukraine looks upon Western and Central Europe as more promising economic partners. During 2000, export growth in Romania, originated from factories in the western part of the country, whose target is the markets in Italy and other EU states rather than the Black Sea markets (Wagstyl 2001). The energy potential of the Black Sea has played a dual role. Most of the substantial investments in the region have been directed toward energy projects (such as pipeline constructions and oil extraction) rather that other sectors of the economy (manufacturing, banking and so on). At the same time, the control of the energy resources and routes has triggered hostility and military confrontation among the countries in the region. Border areas and regions falling within energy routes have been in the middle of disputes and conflict. Therefore, although the region presents great challenges in terms of market potential, it has been almost exclusively seen as a transit area involving primarily oil and gas transportation. Multinationals, with the exception of oil companies, have refrained from investing here due to, among other factors, the high degree of corruption, legal uncertainty and the high political risk that still exists. An interesting case is the direction and contact of unregistered economic activities that take place in the region. Cross-border economic transactions tend to be outside the control of the local authorities and the registered economy. In general, informal economy in some cases represents even 50 per cent to 60 per cent of the official GDP. Trade is taking place, unrecorded in many parts of the region through the large volume of ‘luggage trade’ especially between Istanbul and the CIS countries, with Russia, the Ukraine and Romania listed at the top. Istanbul accounts for 70 per cent of the trade. The ‘luggage

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trade’, which is largely unrecorded and untaxed, is estimated to range from US$5 to 20 billion, depending on the source.19 The suitcase trade began in the second half of 1980s mostly because of poor distribution and transportation networks in the CIS and the lack of certain products in those countries. Suitcase trade was in the beginning generally contacted between individuals, however, it gradually came to engage companies. In 1995 Turkish–Russian unofficial trade amounted to US$6 billion while official trade was approximately US$3 billion. Turkey’s other partners include the Ukraine at about US$1 billion, Romania at US$1 billion and Bulgaria, Azerbaijan, Georgia (and even Armenia) which account for US$2 billion. Suitcase trade has stimulated cross-border economic relations and it has been followed by the increase of communication among the countries. Businesspeople in certain economic zones of Istanbul that trade goods produced employing low-cost labour maintain that economic and political events in Turkey have little impact on their activities while developments in Russia and the CIS region have more direct effects. The 1998 economic crisis in Russia had as a result a number of smallscale producers and tradesmen in Turkey to become bankrupt. In the Caucasus, where the frontier areas are particularly known for smuggling, ongoing political instability and military conflict have inhibited cross-border trade and production. The case of Sukhumi in Georgia is illustrative. Sukhumi, once the Côte d’Azur of the Soviet Union, is now an isolated city with no international connections. The administrative and economic life of the area is in the hands of the local mafia. Corruption and the mafia have generated a number of crossborder networks which render state authority irrelevant in the region. In other words, the monopoly of violence and taxes is not on the hands of the governments and this has led to a particular informal cross-border ‘integration’ of the local illegal activities and the overall economy that surmounts national borders and control. Borders here often divide rather than unite. That is the case with Armenia and Azerbaijan, the two countries being technically still at war, with Turkey blockading Armenia while Russia is keeping a tight hold on its border with Azerbaijan. Turkey closed its borders with Armenia in 1993 because of the Nagorno-Karabakh conflict and this has resulted in the absence of direct Turkish–Armenian trade. Small-scale exchanges are carried put only through third countries – mainly Georgia – thus, increasing the cost of trading goods. An interesting case is the city of Sadakhlo that sits on the Georgian–Armenian border where the three Caucasus states meet. The city which is a large regional market where

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goods from Azerbaijan, Armenia, Turkey and Russia (primarily textile and food) are traded is in fact the result of closed borders in the Caucasus. With the Armenian–Azerbaijani and Armenian–Turkish borders closed, Sadakhlo has benefited from its geography, serving as a meeting point for the traders of the area. As far as the Caucasus is concerned, tensions over autonomy in Adjaria, Abkhazia and South Ossetia, lying on the borders of Georgia, have reduced the state’s capacity to function. Often the national currency is not used within certain areas of the respective nation-states (in Abkhazia, for example, the currency in circulation is the Russian rouble). That has generated particular cross-border economies tying border areas with neighbouring states whose foundations are, however, to be found in political considerations rather than in market forces. Economic flows bypass national borders, but do not always benefit the local economy as defined by local production and the local GDP per capita. In Ossetia, for example, local economy depends heavily on small-scale trading between Russian North Ossetia and the rest of Georgia. Customs duties are not paid as the two Ossetias (North and South) are in a Customs Union generating trade, but the general standard of living in South Ossetia remains low, since trading activities do not reap benefits for all.

Limitations and prospects It is hardly surprising, taking into consideration the turbulent conditions in the Black Sea, that microregionalism has been very limited and not successful in terms of grass-roots regional growth dynamics. From the overview presented above, it is interesting to note that the West Black Sea coast has been more active in developing microregional schemes of cooperation, due to, among other factors, its better security and political conditions and its relative proximity to the EU. Free Economic Zones have been established in order to attempt to stimulate growth while cities and ports participate in transboundary schemes, including schemes of ‘Euroregions’. However, even here the regional framework remains weak as financial means are scarce and the states have not yet fully conceived the benefits of such an approach (Clement 2000: 85). The difficulties raised by transborder cooperation between Bulgaria and Romania in their attempts to build a bridge over the Danube is indicative of the misperceptions that still prevail. A number of obstacles primarily related to political mistrust, security questions and economic recession have restricted cross-border

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integration. Summarising the obstacles (Cottey 1999) of microregionalism in the Black Sea and in regions in transition in general, we list the following: • National minority questions have made governments fear that transborder cooperation could undermine the central government and intervene in internal politics. It is interesting to note that in the case of Romania, for example, the governments that held power between 1990 and 1996 adopted restrictive legislation not allowing local authorities to participate in cross-border associations. • Weak communications and transportation infrastructure which is a common characteristic in all economies in transition has created practical problems. • Lack of indigenous economic activity and the limited presence of foreign economic interests. At the same time protectionist attitudes to the economic activity on the frontier zones which result, among others, from the desire to integrate those zones with the national rather than with neighbouring economies have been restrictive. • Lack of understanding of the basic principles of transborder cooperation. Microregionalism has been problematic because little economic basis for integration exists. On one hand, the forces of the market economy do not yet function freely and, on the other hand, internal political stability is still a prerequisite in many of the countries. The ‘regional question’ has been crucial in most of the nation-states of the region (for instance, in the case of Crimea in the Ukraine). Even in those cases where ground for integration exists, border disputes have hindered cooperation (for example, the failure of the Ukraine and Romania to conclude a bilateral border treaty). In an area where states are ‘weak’ and face problems of survival, the administration of border lands is often not under state control. Hence, a stable and reliable (legal) framework for international transactions is absent. With the borders being porous mainly for illegal activities (as is often the case in the Caucasus) and closed for registered economic activities, little room is left for healthy cross-border economic activity. Efforts, both at national and subregional levels, have been taken to improve investment and trade conditions however, and when they deliver, microregionalism will be boosted significantly. As relations among neighbouring countries advance, economic links will flourish. Steps have already been taken, such as the establishment of a Free

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Trade Agreement between Turkey and Bulgaria, following the resolution of their dispute over the demarcation of part of the border between the two countries. In terms of communications improvement, a number of projects that will link the region are reaching fruition (for example, a fibre-optic line between Poti (Georgia) and Sochi (Russia) is planned and a new recently opened rail ferry connecting Poti (Georgia) to Odessa (Ukraine)). Such plans mark the beginning of the revitalization of the Silk Route and highlight the possible establishment of an east–west corridor. Cross-border cooperation is also facilitated by universities, environmental groups, chambers of commerce, trade unions and other nongovernmental organizations which help in building civil society. Here, we should mention the great potential that the Black Sea Trade and Development Bank presents as a catalyst for integration and as a vehicle of reforming the civil society.20 The Bank concentrates on developing cross-border economic cooperation and facilitation of trade and investment flows in the Black Sea region targeting particularly SME activities. The BSEC, on the other hand, has put great emphasis on border crossing and the simplification of border formalities within the framework of its Working Group on Transport. The Black Sea Ring Corridor, which includes roads and railway networks around the Black Sea, is another initiative of the same Working Group. The geography of economic activities is expected to change as the Black Sea Pan-European Transport Area and other procedures of multimodal transport are realized. The Pan European Transport and Communi cations systems and the TRACECA will provide the necessary infrastructure facilitating trade and other economic activities. Microregionalism will further benefit from subregional intergovernmental cooperation as the latter is primarily concerned with the development of trade, investments and infrastructure in the area and allows for the voice of sub-state and non-state actors to be heard at the highest political levels. 21 The BSEC has adopted Strategic Action Plans for the development of Communications and Transportation and has agreed upon the establishment of Free Trade Zone as a longterm strategy. Historically, this is probably the first time that a regional organization in the Black Sea has been so advanced and has been so highly institutionalized (through the creation of the Council of Ministers, a Regional Parliamentary Assembly, and so on) setting up a multilateral framework conducive to the deepening of regional integration.

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Conclusions What type of microregionalism has been emerging in this region? A dimension that indicates the level of regionalism in any area is the transactions in terms of contacts or dealings among the local authorities (Puchala 1971: 129). Although steps for the institutionalization of transfrontier cooperation have taken place in the Black Sea region, grassroots integration as manifested by the level of economic transactions remains an open question. In the Black Sea ‘bottom-up’ microregionalization is in an embryonic stage. The aim of formal microregionalism schemes in this case study is to promote the common interests of the participating cities, regions and municipalities. Economic growth has been the goal rather than the driving force of microregionalism. Microregional cooperation, far from being a spontaneous phenomenon, is created as a consequence of policy choice. The officially sponsored type of microregionalism in the Black Sea, as it has evolved until today, is, however, not a surprise as it follows the same paradigm that appeared – more successfully – in other parts of Europe (such as in the Barents Area). What we witness in the Black Sea case is the emergence of a problem-solving-oriented transboundary regionalism which tries to create a sense of interdependence across national borders. Microregional projects in our case study are distinguished by the degree to which governments at a national or subnational administrative level are involved one way or the other. Unlike the ‘growth triangles’, where the driving forces are rooted in the business community, here, the initiatives come from political centres. In this post-Soviet space, microregionalism has been a policy tool of local elites to enhance communication with the other side and as a way of attracting more responsibility to the local level both at the political and economic spheres of activity. A legalistic approach had prevailed until recently in cooperation among the countries in the region for issues related to border areas. The new microregional schemes addressing functional issues such as trade, environment and cultural matters are an effort to change that dominant legalistic and ‘limited’ approach by involving not only public but also private actors and networks. As decentralization has yet to come in the post-communist states of the Black Sea, local authorities remain stripped of their administrative and economic potential. How could the institutionalization of microregional schemes be explained? Transnational flows of capital, goods, labour and

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information have been weak, hence, the need for microregional mechanisms – particularly institutionalized ones – that would stimulate such flows, was an urgent one. Notwithstanding the fact that any strong economic, social or cultural basis is lacking, institutionalization has been necessary to compensate for the economic and structural weaknesses that hinder cooperation. At the same time, it has been used as a means to increase the administrative role of subnational actors (rather than the non-state actors) who try to legitimize their institutional position within the new political system. Microregionalism, being a strategy based on the interests of the local elites and responding to local development priorities, reflects at the same time an opportunistic policy in attracting support from national or European sources. The local elites have reached a consensus around liberal economic policies aimed at attracting foreign investment, reforming the housing market, and so on. The EU, on the other hand, through its policies and paradigms has supported the institutionalization of transfrontier cooperation both politically and economically, providing necessary funds or expertise when needed. Finally, cross-border cooperation has to be placed within the broader subregional framework created by the only organization that embraces all states around the Black Sea. It would be difficult for microregional schemes to operate in the absence of such a subregional framework since the most significant part of their agendas focuses on how to lobby the BSEC on issues of a cross-border nature. Micro- and subregional processes in the Black Sea have been mutually reinforcing and complementary.

Notes 1. For further definitions and discussions of subregionalism and world order, see Hook and Kearns (1999). 2. The Black Sea region includes six coastal states: Bulgaria, Romania, Turkey, Georgia, Russia, Ukraine. 3. Back in the Roman period, Sinope in the South of the Black Sea served as a collecting point for products bound for export to the South coast and interior of Asia Minor, or the Mediterranean. 4. http://www.eurounion.org.ru/eurussia/eurussia.html 5. The Transport Corridor Europe Caucasus Asia (TRACECA) launched in Brussels in May 1993 has financed 25 Technical Assistance projects (35 million euro) and 11 investment projects for the rehabilitation of infrastructure (47 million euro), “What is TRACECA?”, European Commission, External Relations Directorate General.

Panagiota Manoli 213 6. The countries involved are Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, the Republic of Moldova, Romania, the Russian Federation, Turkey and Ukraine. 7. In the founding Summit Declaration on BSEC (Istanbul, 25 June 1992) the members ‘confirm the intention to develop economic cooperation as a contribution to the CSCE process, to the establishment of a Europe-wide economic area, as well as to the achievement of a higher degree of integration of the Participating States into the world economy’, para. 5. 8. Burgas (Bulgaria), Varna (Bulgaria), Thessaloniki (Greece), Piraeus (Greece), Constanta (Romania), Tagantog (Russia), Nikolaev (Ukraine), Odessa (Ukraine), Ilichevsk (Ukraine) and Kherson (Ukraine). 9. Although the forum involves Capitals’ Governors and Mayors, Istanbul participates as a full member. 10. It is interesting to note that in the Third Round Table, Athens and Yerevan were represented by the embassies of their countries in Bucharest. 11. See the ‘Appeal to the Parliaments and Governments of the Black Sea Economic Co-operation’, adopted by the 10th Assembly of the IBSC. 12. http://www.istanbulcityguide.com/info/html/economy.html 13. T. Troev, ‘Varna and Burgas’ in ‘Investing in Central and Eastern Europe: Bustle returns to two cities’, Survey, The Financial Times, 15 April 1996. 14. Burgas Municipality, 1999 (http://www.bourgas.net/municipality/characteristic.htm) 15. Odessa City Administration, 2000. 16. ‘Regional Overview: Krasnodar’, BISNIS, 1998. 17. State Administration for the City of Kyiv. 18. These figures are based on registered data. 19. Turkey’s Foreign Economic Relations Board (DEIK) estimates in 1995 that the suitcase trade was $10 billion. Data on suitcase trade are based on the Report ‘Turkey: Suitcase Trade Part-Trade is lucrative, but numbers are declining’, US Consulate General in Ankara, Business Information Service for the Newly Independent States (BISNIS). 20. The Black Sea Trade and Development Bank, established by the 11 members of the BSEC and located in Thessaloniki (Greece), commenced operations in June 1999. 21. NGOs may attend and participate in BSEC Working Groups and in other forums of discussion and decision-making bodies.

References Ankara Declaration of the First General Assembly of the Black Sea Capitals’ Association, Ankara, 5–6 September 2000. Black Sea NGOs Directory (2000), third edition, Istanbul: GEF-Black Sea Environmental Program. Clement, S. (2000) ‘Subregionalism in South Eastern Europe’, in S.T Calleya (ed.), Regionalism in the Post-Cold War World, Aldershot: Ashgate, pp. 71–98. Cottey, Andrew (ed.) (1999) Subregional Co-operation in the New Europe: Building Security, Prosperity and Solidarity from the Barents to the Black Sea, Basingstoke: Macmillan – now Palgrave Macmillan.

214 Microregionalism and World Order Declaration of the Regional and Local Authorities of the Black Sea Basin, CRPM, adopted in Constanta on 14/15 April 2000. EIU (2000) Country Profiles of Armenia, Georgia and Romania, London: Economist Intelligence Unit. European Commission (1994) Europe 2000+: Cooperation for European Territorial Development, Luxembourg: European Commission. Hettne, Björn (1999) ‘Globalisation and the New Regionalism’, in Björn Hettne, András Inotai and Osvaldo Sunkel (eds), Globalism and the New Regionalism, vol. 1, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 1–24. Hook, Glenn D. and Ian Kearns (1999) Subregionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan. Morata, Francesc (1997) ‘The Euro-Region and the C-6 Network: the New Politics of Sub-national Cooperation in the West Mediterranean Area’, in Michael Keating and John Loughlin (eds), The Political Economy of Regionalism, London: Frank Cass, pp. 292–305. OECD (1996) ‘Regional Integration and Transition Economies: Trade and Foreign Direct Investment Liberalisation in the BSEC’, unpublished paper. Ohmae, Kenichi (1995) The End of the Nation State, London: HarperCollins. PABSEC (1998) Recommendation 28/1998 on the Black Sea Capitals Association, Doc. GA4851/98 (adopted by the Assembly on 25 June 1998 in Bucharest). Puchala, D.J. (1971) ‘International Transactions and Regional Integration’, in Leon Lindberg and Stuart Scheingold (eds), Regional Integration Theory and Research, Cambridge, MA: Harvard University Press, pp. 732–63. Rosenau, James N. (1995) ‘Governance in the Twenty-first Century’, Global Governance, 1 (1): 13–43. Scott, James (1999) ‘European and North American Contexts for Cross-Border Regionalism’, Regional Studies, 33 (7): 605–17. Statute of the Black Sea Capitals’ Association, Bucharest, 15 May 1998. The Black Sea Capitals’ Governors and Mayors Round-Table (Istanbul, 6–8 September 1994), The Governor’s Office of Istanbul, PABSEC, 1994. The Second Black Sea Capitals’ Governors and Mayors Round-Table (Kyiv, 13–14 September 1995), Kyiv City State Administration, PABSEC, 1995. Tow, William T. (1990) Subregional Security Cooperation in the Third World, Boulder, Co: Lynne Rienner. ‘Turkey: Suitcase Trade Part-Trade is Lucrative, But Numbers are Declining’, US Consulate General in Ankara, Business Information Service for the Newly Independent States (BISNIS), http://www.bisnis.doc.gov/bisnis/country/ turkey.htm. Wagstyl, S. (2001) ‘Finances Boosted by Export Strength Needs to be Matched by Measures to Restructure an Ailing Public Sector’, Survey on Romania, Financial Times, 15 March.

10 Researching Microregional Integration: Towards New Frameworks of Analyses Shaun Breslin and Glenn D. Hook

The chapters in this volume provide a snapshot of various microregional processes and projects from across the globe. Clearly, the case studies do not cover every example from around the world and, in this sense, the volume is in no sense an attempt to provide a comprehensive account of microregionalism. Rather, it should be seen as a starting point for future comparative analysis. Indeed, by considering what is missing from the analyses in this volume, we hope to lay the foundations for future research agendas on microregionalism. Before considering what is missing, however, this Conclusion first provides an assessment of the ground that has been covered by highlighting some of the key findings of the preceding chapters. We begin by considering the implications of our case studies for analyses of international relations in the post-Cold War era, and then move on to reconsider how the case studies responded to the questions we raised in the Introduction: which dimensions are important, which actors predominate, who benefits, and what are the implications for world order?

Studying international relations The case studies clearly demonstrate the complex nature of microregionalist projects and microregionalization processes in different parts of the world. Whereas none of these cases is an ‘ideal type’ of microregionalism or microregionalization, the chapters in essence proceed from case studies representing microregionalization processes spurred by businesses, to those microregionalist projects promoted by national 215

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and subnational authorities. From this perspective, San Diego–Tijuana is closer to the ‘ideal type’ of microregionalization, where binational space is being forged into a microregion through business and civic interactions, which then feed up into changes in the structures of governance between the US and Mexico. In stark contrast, the Black Sea microregion lacks such economic and social dynamics, with representatives of national and subnational political authorities seeking to promote cross-border economic activity through the promotion of microregionalism. This very much represents a ‘top-down’ approach rooted in political intervention rather than a ‘bottom-up’ approach rooted in the market. The ending of the Cold War is of direct relevance in explaining the dynamics of microregionalism in some of our case studies more than others, suggesting how the structure of the international system provides opportunities as well as imposes constraints on both state and nonstate actors. Whether we take Europe, and the promotion of Black Sea microregion, or East Asia, and the promotion of the Pan-Yellow Sea Zone, the end of the Cold War offered opportunities for businesses to be ‘pulled’ across the border, whereas city and other subnational authorities served to ‘push’ them. In this way, the crisis the collapse of communism created for some states provided new opportunities for businesses and other actors. As cross-border interaction was between the North and the South rather than the East and the West in the Americas, the ending of the Cold War was not as important for stimulating microregionalization in Caribbean America and San Diego–Tijuana. In Africa, again, the Maputo Development Corridor and Zambesi Basin are clearly affected by the general dynamics of globalization spurred by the Cold War’s ending, but are not specifically a response to this as much as to local conditions. The implications for world order are most profound in terms of the possible creation of cross-border systems of governance. This is not governance in the narrow sense of what the government does, but rather a set of public, public/private, and private mechanisms for the region to chart and effect its global engagement. Central to governance is the process whereby public funds are raised and expended to enhance the competitive advantages of the region. In a cross-border region, governance must also include the ways in which federal, state, and local perspectives are brought to, and reconciled with, decisions that advance the position of the region in the global economy. In the case of the Black Sea, the institutionalization of microregional bodies can help to deal with infrastructure, environment and trade

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issues on a cross-border basis. In terms of ‘strong state’ versus ‘weak state’, the Black Sea region illustrates how the borders at the heart of a microregional fall outside the control of weak states, whereas strong states, as with the US, can ‘off load’ tasks. In the case of San Diego–Tijuana, new forms of governance are emerging out of the Border Liaison Mechanism, where coordination between the US and Mexico is conducted at the local, rather than the national, level. Simply put, competency to deal with cross-border issues lies at this level, and through these mechanisms, authority and legitimacy can be expected to develop – essential features of governance structures. Given that the transformation of the international system is frequently viewed from the ‘top-down’ perspective of the state, the quintessential actor in the realist view of international relations (IR) and international political economy (IPE), a study combining the role of subnational as well as national actors may at first sight appear somewhat eclectic. As stated at the outset, however, the aim has not been to jettison the state. An analysis of the behaviour of the state can and does still tell us much about the transformation of the international system. But, as the terrorist attacks of 11 September 2001 eloquently testify, even in the realm of traditionally conceived national security and defence studies, focusing on the state to the exclusion of non-state actors precludes from view a range of agents capable of affecting the ultimate nature and shape of the international system. And if this is the case for traditional understandings of what constitutes ‘international relations’, then the flaws of statist-only explanations are even clearer when we expand the subject of study to include developmental issues and international economic relations. Constrained by an orthodox theoretical approach, anchored to empirical findings from the Cold War era, and tainted by the ideological proclivities of our disciplines, many postCold War studies of globalization and regionalization nevertheless still pay too little attention to other dimensions of international relations, and actors other than nation states. The argument pursued throughout this book is that, by recognizing the continuing power of the state, as well as the differences between and amongst the states making up the international system, we are able to gain an important, but only partial, understanding, of the present dynamics of post-Cold War international relations. By at the same time providing an analysis of actors other than the state, as with subnational political authorities, multinational corporations, and other non-state actors, we are able to portray a much more nuanced picture

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of the way in which the forces of globalization and regionalization are transforming international relations. A specific focus on microregionalism brings to light the complex dynamics of transborder relations, primarily in the economic realm, but also considering political, security and social dimensions. It also highlights the different roles that state and non-state actors are playing in international relations at the local level. Fundamentally, the microregional level alerts us to a ‘bottom-up’ approach to IR and IPE, permitting the disaggregation of the international relations ordinarily subsumed under the all-embracing state. In the process of analyzing how both state and non-state actors play a role in promoting microregional projects and spurring microregionalization processes, our aim has been to provide both theoretical and empirical insights. True, the contributors to this volume do not share a single theoretical standpoint. Although we as editors established a framework and a number of research questions that we wanted each chapter to address, our intention was not to bolster a specific theoretical approach. Nevertheless, in seeking to uncover the complex and overlapping relationships among the local, national and global levels of interaction in different parts of the globe, the ‘new political economy’ (NPE) approach first introduced in the Gamble and Payne (1996) book appears most apropos. The NPE approach offers not so much a theory as a framework – a framework which not only allows for diversity, but indeed emphasizes the fact that there is no single answer; no single set of relationships; no single simple understanding. It draws the researcher into considering, particularly through comparative approaches, how different sets of relationships emerge with different balances of power between actors in different and specific historical, geographical, social and political contexts. Finally, in concentrating on the localized manifestations of regional integration, we need to take care not to ignore the wider extra-regional dimension of microregional projects. In some cases, a strictly microregional level of analysis does bear fruit. This is particularly the case where integration is driven by investment from core states to produce goods which are then re-exported back to the core state. The case of US–Caribbean textile production is a good example here, as is the San Diego–Tijuana microregion. Production is essentially being diverted from the US to cheaper sites for resale within the US. Indeed, the rapid growth of apparel imports into the US in the contemporary era is largely a result of US firms now locating production overseas – they are

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what Bruce Cumings (1987) referred to as ‘reverse imports’. The same is also true of many Japanese investments in China, as explored in the chapter on the Pan-Yellow Sea Zone. Production again is being diverted to an extra-national economic entity. But in other cases, microregional integration represents part of a wider global division of labour and production. This understanding of the importance of extra-regional areas for microregional integration is enhanced by an analysis of the nationally fragmented nature of production. As Gereffi et al. (1994: 1) argue, ‘capitalism today … entails the detailed disaggregation of stages of production and consumption across national boundaries, under the organizational structure of densely networked firms or enterprises’. For example, as Bernard and Ravenhill (1995), Hollerman (1998), Crone (1993) and, perhaps most forcefully, Hatch and Yamamura (1996), have all argued (primarily in relation to East Asia), many Taiwanese and other East Asian producers are tied into a position of ‘technological dependence’ on Japan. These producers are either dependent on key technology components in production, or trade using Japanese brand names, or both. Similarly, as discussed in the chapter on southern China, many Taiwanese computer manufacturers produce on OEM agreements with leading US companies. And since the late 1990s, much of the product assembly (using imported components) has moved from factories in Taiwan itself into southern China. A microregional approach might suggest an emphasis on relations among southern China, Hong Kong and Taiwan – and rightly so. But ultimately, any microregional integration is doubly dependent on the US – dependent on the inputs into the production process, and on consumers in the US where most of the computers are finally sold. What all this means is that, in considering the role of the local in globalization processes, we need to move beyond analyses of bilateral relationships. In particular, we need to move a considerable distance beyond bilateral trade and investment statistics for understanding differential ‘soft’ power in the global political economy. A glance at bilateral trade and investment figures gives the impression that countries like China are now major producers, and that Taiwan, and even the Virgin Islands, are major sources of investment. And indeed they are. But this production and investment is often predicated on investment from and markets in the developed world. As such, once we step back from bilateral figures (and look at brand names rather than ‘made in’ stamps), we find that many of the generators of globalized production remain major companies and multinationals in the advanced capitalist

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world. It also means that much of the microregional integration that is occurring that impacts on developing states is still subject to the health of the world’s major economies. The pain of a downturn in the developed economies of the world is compounded in the developing world. Where does this leave us in considering implications of the study of microregionalism for the wider study of international relations? We suggest three key hypotheses – for consideration in future research, the first two of which are built on the unpublished version of the Introduction to Grugel and Hout (1999). First, globalization leads to the recomposition of and renogotiation of relationships between state actors within the national sphere. There is a considerable literature which emphasizes the relationship between state and non-state actors – and as our second hypothesis will show, we acknowledge the importance and significance of this approach. But, in addition, and as Sassen (1999: 159) argues, the effects of economic globalization ‘materialize in national territories’ and that ‘the strategic spaces where global processes are embedded are often national; the mechanisms through which new legal forms, necessary for globalization, are implemented are often part of national state institutions’ (Sassen 1999: 167). Following Sassen, then, we need to investigate the impact of globalization on the institutional balance of power within national governmental structures. Sassen’s main emphasis is on the shifting balance of power between different ministries and agencies within government – the financial agencies may gain power and influence while others may lose. And clearly, economic agencies of states now play a considerable and influential role in the conduct of broadly defined international relations. But, as the study of microregionalism suggests, we also need to consider vertical sets of relationships within the nation-state – the relationship between state actors at national and local levels. Second, globalization adds more actors to the policy process in developing states, and, it could be argued, increases the power of ‘external’ actors over state policy. In terms of domestic actors, Sassen (1999: 159) points to the emergence of ‘intermediary strategic agents that contribute to the management and coordination of the global economy. They are largely, though not exclusively, private. And they have absorbed some of the international functions carried out by states in the recent past’. In terms of external actors, using Payne and Gamble’s words: ‘States now have to recognise the power not only of other states and international organisations … but also of international capital, the banks, and foreign exchange markets’ (1996: 15). In short, studying international relations under conditions of globalization means that

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we need to pay more attention to interactions between the state, domestic capitalists and foreign investors. Third, globalization and transnational economic integration can also result in national economic fragmentation. As new spatial patterns of economic activity emerge that are less national, and more international in character, these new internationalized economic spaces become dis-embedded from the old national economy. In effect, there is a disjuncture between national political space, and internationalized economic spaces where the local interacts with the global. Finally, perhaps the clearest implication for the study of international relations is that we need to embrace diversity and complexity in trying to understand the dynamics of the global political economy. Even if we take an over-simplified two-state view of international relations, and informed by the analyses of microregionalism in this volume, we are left with a very complex set of possible relations that combine to generate individual case-by-case outputs. In the spirit of Bhagwati’s ‘Spaghetti Bowl’ (Bhagwati and Panagariya 1996), understanding of how regional freetrade agreements create a messy maze of different channels of rules and regulations, the following diagram, though still highly simplified, offers some indication of the complexity of understanding the many and differFigure 10.1 interaction

Simplified complexity: Mapping the dynamics of microregional Multilateral agency (eg: UNDP) Regional organization (eg: EU, SADC, NAFTA)

National government A Trade Ministry

National government B Trade Ministry

Foreign Ministry

Local government

Local government Companies

Foreign Ministry

Companies

Third country companies

Third country consumers Domestic NGOs

Domestic NGOs International NGOs

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ent strands of any bilateral relationship. For the sake of ease (and further simplicity), NGOs in Figure 10.1 includes business associations such as chambers of commerce.

Determinants of microregional integration Dimensions of primary importance The increasing complexity of international relations is well illustrated by the analyses of the different dimensions of microregionalism and microregionalization in this book. The economic dimension is the key to cross-border, microregional interpenetration in the preceding chapters. What gives economics a central place is often the issue of local comparative advantage. This helps to explain microregional dynamics in many of our examples, especially in the case studies of San Diego–Tijuana, ‘Caribbean America’, the Pearl River Delta, the Yellow Sea Zone, and the Tumen River Delta projects. The different resources available across borders, as in the case of the Tumen River Project, where technology and natural resources are matched, can act as a spur to microregional cooperation. As seen below, however, the key actors can plainly differ. Similarly, as borders are quintessentially political in nature, crossborder economic activity draws in the political dimension of international relations. As we argued in the Introduction, in considering the economic dimensions of globalization and other forms of economic integration, we need to ensure that we do not fall into the trap of teleological explanations. This is why in the Introduction we rejected Scalapino’s (1991–2) concept of ‘natural economic territories’ as a basis of microregional integration. As the German Bundestag’s Commission on Globalization (2001: 5) put it: ‘The growing worldwide integration of economies came not by any law of nature – it has been the result of active and deliberate policies’. Across the world, transport and communication technology that has facilitated global economic and financial flows have been: ‘massively state-subsidised, and the overhead costs of transport and communication (e.g. policing, rules and regulations) are met not by the users but by the general public’ (German Bundestag’s Commission on Globalization 2001: 6). Furthermore, without government initiatives to reform fiscal regulations, to allow international financial flows, to remove barriers to trade, and so on, microregional integration could not occur. The political dimension is central to many of these microregional endeavours, as national and local political elites can serve as facilitators

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in promoting cooperation; or, in other cases, national priorities may mean these elites act as impediments to cross-border activities contributing to the forging of microregional spaces. Without political initiative, for instance, cross-border cooperation on water would not have been possible in San Diego–Tijuana. In other cases, political leaders can act on behalf of a wider community of interests, where cross-border ties help to forge microregional interests, rather than national interests. The political role of congressional representatives from Florida, for instance, is important in explaining the development of the Caribbean American apparel industry. In other cases, national political elites are central to the way a microregion emerges: for instance, the political decision at the national level to create Special Economic Zones (SEZs) near Hong Kong served to ‘pull’ business across the border to Guangdong. A further illustration is the Spatial Development Initiatives designed by the South African government which, rhetorically at least, seek to redress the uneven nature of national development, as embodied in the discussion of the Maputo Development Corridor. In the Tumen River case, in contrast, political rivalries have acted as an impediment to cross-border cooperation, where the microregion will only emerge as a result of political decisions leading to the exploitation of the potential for economic complementarity. Historical political rivalries are also obstructing the emergence of real and effective cooperation in the Black Sea, despite EU initiatives to develop a new ‘Euroregion’. Competition among national political elites over hydroelectric power hinders the development of the Zambesi Basin, too. In these and other cases, the political dimension is crucial for understanding why microregional endeavours are in some cases frustrated, whereas in others economic forces are unleashed as a result of actions in the political dimension of the emerging microregion. While microregional cross-border activity takes place overwhelmingly in the economic and political dimensions, none of the case studies can be understood purely in these terms. Security, albeit not a ‘guns-bombs-and-tanks’ definition of security, but a non-traditional, wider definition of ‘human security’, is another dimension. For instance, the ‘sea as a bridge’ can and does serve to promote economic exchange and trade, as in the case of the transportation of electronic and other manufacturing parts across the Yellow Sea. However, the sea may also serve as a bridge for illegal drug activities, the means to transport illegal migrants or the carrier of pollutants, all of which impinge on human security. This non-traditional security dimension is

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particularly important in the case of drugs and migrants from the Caribbean and Mexico to the US. Similarly, the transfer of production facilities can engender its own negative side-effects, as in the case of pollution from multinationals relocating to Tijuana, which impacts on San Diego beaches. These negative impacts on human security can lead to attempts at cross-border cooperation to tackle common problems. This is the case in the Yellow Sea Zone, where Japanese investments in Dalian have spurred technical exchange to combat pollution, which is seen as a threat to the human security of Kyushu residents. Again, while economics is a key dimension in the Zambesi Basin microregion, the link between agriculture and the global economy shows how liberalization is promoting the production of cash crops, which narrows diversity in agricultural output, making local inhabitants more vulnerable in terms of food security. In these and other ways, ‘human security’ is an important dimension of microregional interactions. Finally, in the social dimension, a range of links are being promoted through the activities of civil society, as in San Diego–Tijuana and Kyushu–Dalian. Elsewhere, however, links between cross-border communities are weak, as in the case of the Black Sea microregion, leaving little potential for cross-border identities to be forged. In this way, the creation of new identities, while moving forward in microregions with vibrant cross-border contacts, is more difficult to engender in cases lacking human interaction. In this way, ‘bottom-up’ microregionalization seems more likely to generate new, cross-border microregional identities, than ‘top-down’ microregionalist projects promoted by national and international actors. Who are the primary actors? Depending on whether we are focusing on the economic, political, security or social dimension a range of government and nongovernmental actors can be seen to be playing a role in facilitating or impeding the progress of microregionalism. At the international, regional or transnational level, the UN has played a crucial role in promoting the Tumen River Project, trying to draw together disparate actors in support of cross-border cooperation. Similarly, in the case of the Zambesi Basin, through the Small-Scale Mining Initiative the United Nation Economic Commission for Africa is facilitating links between small mining operations and the international market for precious ores and metals. At the regional level, NAFTA helped to foster an environment where Mexico could be vertically integrated into a microregional

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production network centred on electronic manufacturing linking together San Diego and Tijuana. Again, NAFTA and subregional projects in the Caribbean, as with the Association of Caribbean States, helped to foster the growth of Caribbean America. Finally, the EU has played a crucial role in shaping the way microregionalism has emerged in Europe, with the potential for the EU’s enlargement to the east a central determinant in stimulating interest in microregionalism among local elites in the Black Sea region. The role of these international, regional and transnational actors goes hand in hand with that of national and subnational actors. As far as states are concerned, although they are the same in a very basic sense of being sovereign and equal, they differ in terms of types of political system, power distributions, degrees of integration into the global political economy, and so on. ‘Strong states’, like the US and Japan, need not harbour fears of a breakdown in national integrity, so can ‘push’ power downwards, thereby promoting greater decentralization and allowing subnational political authorities the opportunity to respond to cross-border needs. In the case of the US, this process was spurred by demands generated from the ‘bottom up’ in San Diego and Florida, whereas in Japan, the central government has facilitated Fukuoka’s attempt to build cross-sea links in a move with key elements of ‘top-down’ pressure. Given the role of the Chinese central government in promoting the SEZs, the development of an international commodity chain linking the dynamic economies of Taiwan and Hong Kong to China’s SEZs means business activities are facilitated by the state. National policy-makers in South Africa are also playing a central role in pushing forward with the Maputo Corridor. In this case, a ‘democratic deficit’ clearly exists, with little opportunity for grassroots input into the direction of developments in the microregion. The situation is similar in the Zambesi Basin, where the dominant actors are overwhelmingly politicians and bureaucrats at the national level. At the subnational level, state (provinces) and local authorities are actively institutionalizing meetings bringing together mayors and other political leaders on a regular basis. This illustrates the role of ‘local’ political actors in international affairs, once regarded as the preserve of national-level political and bureaucratic actors. The international role these local actors are playing can be seen in the case of the Black Sea Capitals’ Governors and Mayors Round Table, and the Yellow Sea City Conference of Mayors. These meetings play a role in the institutionalization of the microregion. Beyond holding international meetings, local-level politicians and bureaucrats can be seen to be

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responding positively to the pressures of the global political economy. The part played by city officials in Dongguan has been pivotal in this regard. Alert to the dynamics of local and global patterns of economic interaction, city officials have pushed forward investments in both physical and social infrastructure, thereby attracting international capital away from other parts of the microregion. The role of city officials here has resonance in San Diego, where it is the city officials that are playing the key role in promoting the microregion. Business is clearly at the core in promoting cross-border trade and investment in all of these microregions, but most actively in the case of the projects closer to the ideal type of microregionalization outlined in the introduction. The role of business is most salient in San Diego–Tijuana, where the electronics majors have built a cross-national production network; in Caribbean America, where the apparel industry ties the US to the Caribbean; in Hong Kong and China, where the economic potential of Chinese business networks are being exploited; and in the Yellow Sea Zone, where electronics and other industries are building a production network across the sea. As in the case of the Taiwanese Business Association, moreover, business associations are playing an important role in nurturing the links giving shape to these microregions. The role of business is less pronounced in cases closer to our ideal type of microregionalism, as in the cases of the Tumen River Project, the Maputo Corridor, the Zambesi Basin, and especially the Black Sea. Apart from the above, a range of other actors, from nongovernmental organizations concerned with the protection of the environment, to culture groups concerned with the promotion of international understanding, to criminal gangs concerned with the making of money, are in their separate way helping to give concrete shape to microregions in different parts of the world, albeit mostly as part of microregionalization processes than as promoters of a microregionalist project. In particular, the San Diego–Tijuana binational microregion shows how civil society, not just the state, has helped to shape the nature of the region, particularly in terms of transborder cooperation regarding the flow of people, environmental protection, curtailing the flow of drugs, and so on. This may just be a function of time – the Maquiladoras (the name used in Mexico for factories that operate under a special law allowing the importation of foreign parts for assembly and re-export) were first established in 1965, and grew rapidly in the 1970s. The process of microregional integration might have had longer to ‘bed down’ and extend beyond simple commercial relationships as a result. In other

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cases, however, as with the Black Sea, the Maputo Corridor and the Zambesi Basin, the grassroots are hardly involved at all, with the role of political elites in promoting microregionalism remaining of primary importance. The example of cross-border transportation links illustrates the dynamic connection among international, state and non-state actors in promoting microregional cooperation. In the case of establishing cross-border transportation links in order to promote economic activity between former Cold War antagonists, for instance, local initiatives by businesses and other non-state actors to exploit economic opportunities on the other side of the sea have acted as the catalyst for increased microregional economic activity. In the case of the Pan-Yellow Sea Zone, transportation links across the sea are essential for Japanese businesses in Kyushu with manufacturing transplants in China. Here sister-city and other civic ties have nurtured an environment facilitating specific transportation links between and among subnational parts of countries at one time belonging to different sides of the Cold War divide. Moreover, we have seen how, in the case of the Black Sea microregion, the legacy of the Cold War was a lack of infrastructure across boundaries in terms of transportation and communication. In this case, it is an extra-microregional actor in the shape of the EU that has taken on a role in helping to promote transportation links between these different states. Whereas the state as a facilitator is illustrated in the example of infrastructure, the state can also act as an impediment to cross-border microregional activity. The boundaries of the state remain and continue to act as an important impediment to the process of microregionalization. This is particularly the case when this involves the cross-border mobility of people. State borders may be porous when it comes to economics, communications and indeed pollution, but far less so when it comes to human beings. Who benefits? As Dahl (1975) reminds us, politics is about who gets what, why and how, so the political economy of a microregion is intricately involved with the pursuit and realization of interests. A number of examples illustrate the diverse interests being realized through the promotion of microregionalist projects and microregionalization processes. The Border Liaison Mechanism set up between the US and Mexico, for instance, needed to be negotiated at the national level because borders are at the heart of the sovereign state. Certainly, as we have seen, this

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benefits the local level, as local officials can respond more effectively to local issues, drawing on the US and Mexican expertise on both sides of the border. But the national government can also be seen to be benefiting by the state’s ‘off-loading’ of tasks down to the local level. It serves national interests if cross-border ‘local’ issues are not fed up to the state level to become ‘international issues’. In other cases, traditional rivalries, as in the case of the Tumen River Project, can stand in the way of interests being realized, with microregionalization being blocked or distorted as a result of state-level antagonism and distrust. Rivalries between policy-makers in the Zambesi Basin are similarly a crucial variable in understanding the difficulties faced in developing this particular microregion, especially in terms of conflicting interests over hydroelectric power production. The national focus of politicians here acts as an impediment to cross-border cooperation leading to the realization of mutual interests. As these and other projects indicate, the lack of economic interaction pushed forward through the market makes it difficult to realize a microregion simply through ‘top-down’ initiatives. Local political leaders can benefit in other ways, too. In the case of the Black Sea, for instance, local politicians have gained legitimacy in the transition to more democratic forms of government as a result of the role they are playing in supporting microregionalism. This gives them direct benefits in their appeal for electoral support. In democratic America, in contrast, California state politicians have sought to benefit by garnering electoral support through playing on popular fears of the microregion’s Mexican culture ‘spilling over’ and diluting American culture and eroding the jobs of US nationals. In other cases, as with ‘Caribbean America’, Florida politicians are actually ‘feeding up’ the interests of the Caribbean as well as local interests, benefiting politicians, businesses and workers as a result. Given the importance of the economic dimension, businesses are clearly major beneficiaries of growing microregionalism in this and other ways. The benefits gained can be seen, for instance, in the role played by big business in reshaping the economic relations between San Diego and Tijuana in order for them to remain internationally competitive and profitable. In the case of Caribbean America, apparel makers have been able to benefit from tax and production sharing incentives, creating transborder interests not tied to a specific state. While this may be a means to ensure the continuing competitiveness of US firms, the Caribbean benefits, too. Mainland Chinese investors, as well as foreign investors from outside, especially overseas Chinese

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businesses, exploit tax breaks by funneling funds through Hong Kong, showing how they benefit in the process of building microregional links tying together Guangdong and Hong Kong. In developing the Maputo Corridor, state elites are working to ensure a central role for South African businesses and financial interests. White business interests continue to dominate, despite the end of apartheid rule. Indeed, it is not pushing a point too far to suggest that South African Spatial Development Initiatives benefit those same parts of South African society through economic (neoliberal) measures that previously benefited through the political and economic projects of the apartheid regime. As in the case of tax incentives in China, a range of benefits redound to businesses that locate in the Corridor, including grants and loans. In the Zambesi Basin, moreover, mining companies, which are mostly international conglomerates, are able to gain access to African resources, thereby benefiting international capital and stockholders in the industrially advanced economies. Elsewhere, as in the Caucasus, however, the sheer lack of basic legal norms means cross-border smuggling and ‘luggage trade’ between Istanbul and the CIS countries is facilitating the integration of a microregion, with the gains accruing to small operators and businesses, offering no particular benefit to the local authorities. In other cases, the law is plainly broken, as in the drugs trade, where the Caribbean is an essential link in a transnational drug chain tying together Colombia and the US. In both cases, criminal gangs, sometimes with the illicit support of subnational and national bureaucratic actors, are clearly the beneficiaries of emerging microregional interactions. Antiglobalization sentiments have become salient in recent years, especially after the popular protests starting at the Seattle meeting of the WTO, suggesting that those working in the factories set up by the giant multinationals are being exploited for the benefit of the North. As illustrated in the case of the Maputo Development Corridor, workers in the developing world can often lose out in the promotion of microregion zones. It is international capital, not the workers, that gain, giving credence to the forces of antiglobalization calling ‘unfair’. Yet it would be quite wrong to simply focus on the political and business elites as beneficiaries. Ordinary people benefit, too. The binational coalitions to promote sustainable development between the North (San Diego) and the South (Tijuana) have increased the opportunity for ordinary Mexican workers in Tijuana. Similarly, economic links tying together Florida and the Caribbean benefit the residents of both, albeit with Mexico and the Caribbean being in

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the weaker position in the relationships. In essence, the creation of cross-border ‘global standards’ serves to attract manufacturers and other businesses, which benefits the two localities in the competition to attract capital and work at the global level. Similarly, in the case of the microregionalization processes linking Hong Kong and Guangdong, the decade-long increase in the latter’s population suggests ordinary Chinese workers have been heading into the microregion to improve their life chances. The benefits at the mass level, even if unevenly spread, do seem to exist. Finally, the direction is not all one way, because workers in the developing world can benefit at the cost of those in the developed: the ‘hollowing out’ of Japanese manufacturing, for instance, with production moving offshore to China, obviously exerts a negative impact on Japanese workers, especially given the current downturn in the national economy. Assessing the benefit for employees in low-production-cost countries can be an uneasy process. It can be (and indeed is) argued in the recipient low-cost economies, that new jobs are better than no jobs. Not only do they benefit the individuals involved, but also have a multiplier impact on the domestic economy. If these jobs were worse than no jobs at all, why do so many people try to internally migrate to internationalized sectors of the economy to work in the new factories? Complaining about low wages and poor labour standards is a luxury that only the well off in the developed world can afford. But at the risk of raising these sorts of criticisms, some time should be spent considering the real benefits of the process. If, as the evidence seems to suggest, one of the dynamics of microregionalization is the transfer of jobs from the developed to the less-developed world – that is, to transfer jobs to where wages and labour standards and typically inferior – then this is an issue that should concern researchers. Drawing on the reference made to Cox (1986: 207) in the Gamble and Payne volume (1996: 6), theory or more broadly knowledge is ‘always for someone and for some purpose’. There is a danger that in the search for the same investment to produce the same goods for re-export to the same export markets, states may adopt what Palan and Abbott (1996: 140–64) call a ‘downwardly mobile state strategy’. If we take a straightforward national level of analysis, then it is somewhat easier to see how new jobs are better than no jobs. But if we take an internationalist view, and consider the replacement of better paid and better standard jobs with lower paid and lower standard jobs, then the overall gains to an international working class are much harder to identify. Thus, while a national perspective generates one set of conclusions, other

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perspectives that consider – in a non-national framework – the class basis of who benefits can generate a very different set of conclusions.

Future research agendas In concluding, we should acknowledge that this volume only paints a partial picture of the nature of microregional processes in the contemporary world – partial in terms of both geographical coverage and in terms of the type of microregion assessed. Many more examples could have been used if space had permitted – indeed, in producing this volume, we became increasingly aware of the range of other scholarship now taking place on different microregional projects. There is certainly ample room in the field for further studies of other processes that we have not considered. But it was also partly a consequence of the type of case studies that we chose. In putting together a list of case studies, we shied away from considering some cases – for example, the ASEAN growth triangles – that seemed to have already received considerable coverage in the literature. We also deliberately chose cases that had a developing state emphasis, and considered what we might term asymmetric levels of development between different microregional processes. As such, there is no assessment in this volume of microregional projects between two or more developed states of more or less equal levels of development. This is a task for future research. Whether the study is of developed–developing, developed– developed or developing–developing microregionalization processes or microregionalist projects, the NPE framework deployed in this volume should remain as a valid framework of analysis. Nevertheless, we would expect that such analyses would generate different conclusions to those produced by the case studies in this volume. While we have concentrated here on the importance of transnational modes of production and the search for lower production costs, Morata’s (1997) analysis of Franco-Spanish microregionalism noted in the Introduction places a greater emphasis on the search to find localized mechanisms for dealing with shared interests in an era where much political authority has been delegated upwards to the EU (as well as ‘downwards’ to non-state economic actors). Perhaps more so than in the cases of developing countries, microregional integration between developed states – particularly in the framework of regional – or, some would say, macroregional – projects such as NAFTA and the EU, might

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question the salience of the national level of government as the best way of dealing with transnational issues at the border level. The type of projects that we have considered have also created a rather economistic level of analysis – what we have been considering is primarily economic integration. Earlier, we pointed to other areas of integration – primarily in the political field – and we are certainly aware that ‘integration’ entails wider dimension than just economics. The major problem has been that, not for want of looking, we have struggled to find microregional integration between, for example, nonelite social groups and NGOs, that we would have liked to consider. Perhaps again this is a consequence of an emphasis on developing states and asymmetric dependency where business interests have dominated microregional interactions. Perhaps it is also a consequence of the ‘newness’ of most of our cases – as we noted above, where integration has gone furthest beyond simple economic relations, it is in the longest established microregion across the US–Mexico border. Nevertheless, the charge of economic-centricism in most of our analyses is one that we would have to accept – and without wishing to sound as if we are totally ducking the issue, a shortcoming that future studies might like to redress through the case studies analyzed. Another dimension to this omission is that we have concentrated on what we might call ‘formal integration’, while much real integration on the ground is ‘informal’ in nature. Even in cases of formal integration – for example, over the China–Hong Kong border – ‘informal’ relations based on corruption have been a considerable motor for change. In other cases, integration can be almost entirely informal. For example, the concept of a microregional ‘golden triangle’ in Southeast Asia is solely built on internationalized drug production and smuggling operations. While this ‘integration’ occurs through the collaboration of state officials (most notably customs officials, though the entire Burmese state system appears culpable through certain lenses), the primary drivers are transnational criminal groups. Like it or not, as Scholte (2001) has commented, ‘uncivil’ society is as much a force in contemporary international relations as civil society. As such, we need to widen our list of actors to include mafias, criminal groups, and so on. This is another important area for future research. We should also recognize that non- or semi-formal powerholders are often more important on the ground than the official holders of power. The porosity of the Afghan–Pakistan border, for example, owed much to the influence of local Afghani warlords – both in Afghanistan itself, and through their relations with supporters

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within Pakistan (at least before September 2001, if not so much afterwards). Similar forces are often at work where weak states border one another – ask any international aid worker who you need to talk to in order to get things done in large parts of Africa, and while they will not deny the significance of government officials, the role of local strongmen will be confirmed as of critical importance. Finally, we should consider the question of microregional identity. There are two elements worthy of further research here. The first is where national political borders do not correspond to discrete ethnic borders. Much in the international relations literature deals with ethnicity as a source of international conflict, and also as a source of potential national fragmentation. But we ask here (although offering no answers) the extent to which transnational ethnic groups might act as a spur to microregional integration built on a shared sense of ethnicity and nonstate and substate nationhood. Similarly, we need to consider the extent to which microregionalism is either built on, or can create, a shared sense of local regional identity. In some respects, we have answered this so far in this volume in the negative, by emphasizing how historical tensions have obstructed the emergence of functioning microregionalism in the Tumen River Delta and around the Black Sea. But we have also pointed to some of the ways in which regional identities have been constructed in an attempt to facilitate microregionalism. As already noted in this Conclusion, the sister-city relationship between Dalian and Kyushu is a deliberate attempt to create shared mutual understanding – if not yet a common microregional identity. The ‘Latinization’ of San Diego is another case in point. So too is the constructed concept of ‘Greater China’ which provides a supposed shared ethnic base to increased interaction among Taiwan, Hong Kong and mainland China. In a pioneering work, Emmanual Adler (1997) referred to the emergence of ‘cognitive regions’. This cognition can be based on a common culture, history or religion, as we might suggest is the basis of the concept of ‘Greater China’. It can also be based on facing a shared and common threat – be it a military threat, or a threat to perceived cultural norms. Whatever the basis, a key element is a shared belief by the members (often at the elite level rather than in the masses) of the region that there is something that binds them together, and marks them out as being in some way separate to the extra-region. As such, there has to be a recognition of both internal similarities and external differences. This shared cognition of being part of a region can be the basis for building a regional process in

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the first place. But, more often, it is a tool for regional cohesion that is created after the process begins. It is perhaps the lack of acceptance of such ‘cognitive regions’ that explains why integration beyond the economic sphere was difficult to identify. As yet, and with the exception of San Diego–Tijuana, there is insufficient cognition that the microregion represents an effective and ‘logical’ arena for action. In this respect, as in many others, much work remains to be carried out in order to understand the dynamics and implications of microregionalism in the future.

References Adler, Emanuel (1997) ‘Imagined (Security) Communities’, Millennium 26 (2): 249–77. Bernard, Mitchell and John Ravenhill (1995) ‘Beyond Product Cycles and Flying Geese: Regionalization, Hierarchy, and the Industrialization of East Asia’, World Politics, (47): 171–209. Bhagwati, J. and A. Panagariya (1996) ‘Preferential Trading Areas and Multilateralism – Strangers, Friends, or Foes?’, in Jagdish Bhagwati and Arvind Panagariya (eds), The Economics of Preferential Trade Agreements, Washington: AEI Press, pp. 1–55. Cox, Robert (1986) ‘Social Forces, States and World Orders’, in Robert O. Keohane (ed.), Neo-realism and its Critics, New York: Columbia University Press, pp. 204–54. Crone, Ronald (1993) ‘Does Hegemony Matter? The Reorganization of the Pacific Political Economy’ World Politics, (45): 501–25. Cumings, Bruce (1987) ‘The Origins and Development of the Northeast Asian Political Economy: Industrial Sectors, Product Cycles, and Political Consequences’, in F.C. Deyo (ed.), The Political Economy of the New East Asian Industrialism, New York: Cornell University Press, pp. 44–83. Dahl, Robert (1957) ‘The Concept of Power’, Behavioural Science, 2: 201–15. Gamble, Andrew and Anthony Payne (eds) (1996) Regionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan. Gereffi, Gary, Miguel Korzeniewicz and R.P. Korzeniewicz (1984) ‘Introduction: Global Commodity Chains’, in Gary Gereffi and Miguel Korzeniewicz (eds), Commodity Chains and Global Capitalism, London: Praeger, pp. 1–14. German Bundestag Study Commission (Select Committee) (2001) Globalisation of the World Economy – Challenges and Responses. Available at http://www.bundestag.de/gremien/welt/welt_zwischenbericht/zwb003_vorw_einl_engl.pdf Grugel, Jean and Wil Hout (1999) (eds) Regionalism Across the North–South Divide, London: Routledge. Hatch, Walter and Kozo Yamamura (1996) Asia in Japan’s Embrace: Building a Regional Production Alliance, Cambridge: Cambridge University Press. Hollerman, Leon (1998) Japan’s Economic Strategy in Brazil, Lanham, MD: Lexington.

Shaun Breslin and Glenn D. Hook 235 Morata, Francesc (1997) ‘The Euro-Region and the C-6 Network: the New Politics of Sub-National Cooperation in the West Mediterranean Area’, in Michael Keating and John Loughlin (eds), The Political Economy of Regionalism, London: Frank Cass, pp. 292–305. Palan, Ronen, and Jason Abbott (with Phil Deans) (1996) State Strategies in a Global World, London: Pinter. Payne, Anthony and Andrew Gamble (1996) ‘Introduction: the Political Economy of Regionalism and World Order’, in Andrew Gamble and Anthony Payne (eds), Regionalism and World Order, Basingstoke: Macmillan – now Palgrave Macmillan, pp. 1–20. Sassen, Saskia (1999) ‘Embedding the Global in the National’, in David Smith, Dorothy Solinger and Steven Topik (eds), States and Sovereignty in the Global Economy, London: Routledge, pp. 158–70. Scalapino, Robert (1991–2) ‘The United States and Asia: Future Prospects’, Foreign Affairs, Winter: 19–40. Scholte, Jan Aart (2001) Civil Society and Democracy in Global Governance, University of Warwick, Centre for the Study of Globalisation and Regionalisation Working Paper 65/01, January.

Index Abrahamsson, H. and Nilsson, A. (1995) 153 Abrams, Elliott (1996) 56–7 Abuja Treaty 187 Acer (computers and computer equipment) 79 Act of Havana (1940) 45 Adams, F. et al. (1999) 153 Adler, Emmanuel (1997) 233–4 Afghanistan 232–3 Africa 53, 233 African Economic Community 187 African Eye News Service (Nelspruit) (1999) 158–9 African National Congress, Growth, Employment and Redistribution (GEAR) 146, 160 aims of the book 16–20 Altman, M. et al. (2001) 145 America, revitalized 11 American Apparel Manufacturers Association (AAMA) 51, 53 American Textile Manufacturers Institute (ATMI) 51 Americasnet 2000 52–3 Andean subregion 61 Anderson, Kym and Blackhurst, Richard (1993) 13 Angola see Zambezi Basin; Zambezi Basin, mining Antigua, naval and air bases 45 apartheid 148 APEC see Asia-Pacific Economic Cooperation (APEC) Arima Computer Corporation 79 Arkwright, David 161 Armenia 207–8 Arrighi, Giovanni and Silver, Beverly J. (1999) 37 Asahi Shinbun (2000) and (2001) 80 ASEAN see Association of Southeast Asian Nations (ASEAN)

Ash, Robert F. (2000) 75 Asia ascendant 11 East 1, 8, 16, 69, 97, 102, 116, 216 apparel imports 51 Businessman’s Forum (1994) 107, 1104 Businessman’s Mechanism 17 Cities (Six), Economic Conference 106 city states 13 commodity chains 69 economic regionalization 8–9, 12 Greater East Asian Co-prosperity Sphere 120 Japan 102, 219 original equipment manufacturing (OEM) 69 trade and investment 5, 12 see also Newly Industrializing Economies (NIEs) financial crisis (1997) 115 Northeast Development Conference 131 economy 122–4, 123 imperialism 119 interior 116 microregion 117–19, 130, 131, 141 Regional Development Area (NEARDA) 131 regional projects 115 sub and microregions 119–24, 129, 138, 140 re-emergent complementarities 124–30, 125–9 TRADP 116 Tumen Investment Corporation 139 Asia-Pacific 7, 9–10, 12, 115 City Summit 107 237

238 Index Asia-Pacific continued Economic Cooperation (APEC) 7–8, 10, 115, 117, 130 Asian Development Bank (ADB) 139, 141 Association of the Black Sea, Area Regions (ABSAR) 199 Association of Caribbean States 225 Association of European Border Regions (AEBR) 194 Association of European Regions (AER) 194 Association of Southeast Asian Nations (ASEAN) 1, 69, 102, 115 Singapore summit (1992) 14 Axis Powers 45 Azerbaijan 207 Azov Sea 199, 201, 204 Bahamas 45, 54 Baht Economic Zone 25 Baja see California Balkwell, C. and Dickerson, K.G. (1994) 52 Ballassa, Bela (1961) 12–13 Baltic Sea 12, 193, 197 Barbados shiprider agreements 57 Barbour, Rob 157 Barent Euro-Arctic Council (BEAC) 193–4 regions 197, 211 Barotse Patriotic Front 171 Basel–Freiburg–Mulhouse economic zone 36 Batoka Gorge Dam 173 Beijing Weekly (2000) 80 Beira Corridor 152 Belize, marijuana 54 Berlin Conference (1884–5) 170 Bernard, Mitchell and Ravenhill, John (1995) 15, 102, 219 Bhagwati, J. and Panagariya, A. (1996) 221–2 binational regional collaboration 38 waste-water treatment 39 Black and Azov Seas Ports Association (BASPA) 199, 201

Black Sea 195–7, 208–10, 228 Business Council 199 Capitals Association 200–1 Capitals’ Governors and Mayors Round Table 199–201, 225 cities and regions 200, 203–4, 206, 225 Council of Ministers 210 cross-border cooperation 198–9, 204–8, 210, 212, 223 Economic Cooperation (BSEC) 193–4, 197, 199, 201–2, 204, 210, 212 energy projects 206 European Union 195–8 Euroregions 198, 208 Free Economic Zones 203, 208 Free Trade Agreements 209–10 luggage trade 206–7 microregionalism 8, 18, 193–214, 202, 209–12, 216–17, 224, 226–7, 233 multilevel regionalism 193–5 Pan-European Transport Area 210 Parliamentary Assembly 199 ports 200, 203–4, 206 regional associations 17 Regional Parliamentary Assembly 210 Ring Corridor 210 Rostov and Krasnodar regions 204 subregional institutions 196–7 trade 203 Trade and Development Bank 199, 210 transport corridor 198 Bond, P. (2000) 153 border microregion, administering 30–3 Botswana 154 see also Maputo Development Corridor (MDC); Zambezi Basin Bowles, Paul (1997) 3, 11 Brazilian–Argentinean axis 61 Breslin, Shaun (1999) 72 (2000) 22

Index 239 and Glenn D. Hook 1–20, 194, 215–35 British Guiana 45–6 British South Africa Company 176 Bulgaria 197, 203–4, 207–8, 210 Burma 232 Bush, President George, Enterprise for the Americas Initiative (EAI) 47 Business Day (Johannesburg) (1999) 157 Business Week (2000) 80 BusinessMap SA (2000) 185 Cable, Vincent and Henderson, David (1994) 187 Cabu, military intervention (1889–1902) 43 Cahora Bassa 173 California 29–30, 32, 228 Baja 23, 25–8, 30–1, 33, 38–9 Southern 29, 38–9 Trade and Commerce Agency (1998) 27 Camou, Hector Lutteroth 23 Camp Pendleton, US Marines base 29 Canada, North American region 61 Cape Times (Cape Town) (1997) 149–50, 156 Caribbean America 8, 15–16, 48–54, 222, 225, 228 apparel industry 226 governance of 59–61 microregionalization 42–65 trade and investment 48–54 Caribbean Basin 46, 61 apparel sector 50, 218, 223 banana producers 53–4 drugs 54–7, 224, 229 Economic Recovery Act (CBERA) 48–9, 52–3 English-speaking 45 EPZs 59 Initiative (CBI) 46–51, 53 microregionalization 216 migration 57–9 money laundering 56 North American region 61

political instability 47 production-sharing 50–1 proximity to US market 51 security agenda 54–9 Textile and Apparel Institute 51 trade with Florida 52, 229 Trade Partnership Act (CBTPA) (2000) 52–3 US 43, 46–7 Carter, President Jimmy 46 Catalan 36, 39 Caucasus 207–9, 229 see also TRACECA CBERA see Caribbean Basin, Economic Recovery Act (CBERA) CBI see also Caribbean Basin, Initiative (CBI) CEFTA 7 Central African Power Co-operation 172–3 Central America 46, 61, 80 Central Treaty Organization (CENTO) 194 Centre for the Revitalization of Kyushu Regional Industry 99 Chenje, Munyaradzi (2000) 175, 178 Cheru, Fantu (1997) 162 Chia Siow Yue and Lee Tsao Yuan (1993) 10, 14 Chile 7, 10 China see People’s Republic of China (PRC) Chinese World Order 121 Ching Dynasty 119 Chiuta, Thabeth Matiza (2000) 173, 180–1 Chung, Chin (1996) 78 CIS countries 229 city states 13 Clement, Andrew (2000) 208 Clinton, President Bill 35, 47, 51–3, 57–8 cognitive regions 233–4 Cold War 7, 12, 45–6, 61, 95, 99–100, 102–3, 120–1, 216–17, 227

240 Index Colombian Medellin and Cali cartels 55 Colosio, Luis Donaldo 29 Common Market for Eastern and Southern Africa 186–7 Conference of Peripheral Maritime Regions of Europe (CPMR) 199 Conference on Security and Cooperation in Europe (CSCE) 199 Cottey, Andrew (1999) 193, 197, 209 Cotton, James (1996) 136 Council of Baltic Sea States (CBSS) 193 Council for Mutual Economic Aid 121 Cox, Robert (1986) 230 Crimea 209 Crone, Ronald (1993) 219 cross-borders 12, 15, 36 cooperation 38, 223–4, 228 development, challenges 36–8 economic zones 36 environmental problems 15–16 global standards 230 initiatives 152 local issues 228 microregions 40, 226 mobility of people 227 regional integration 24–8 transportation links 227 Crush, J. (1997) 147 Cuba Cold War period 46 Democracy Act (1992) 58 Liberty and Democracy Act (1992) 58 Mariel exodus (1980) 57 migrants 57–8, 224 National Foundation 58 Cumings, Bruce (1987) 219 Dae Jung, Kim, ‘sunshine policy’ 141 Daewoo textile factory 137 Das, Dilip K. (1998) 69 Debt of Apartheid (1998) 148

Declaration (2000) 199 Denconsult (1998) 178 Dickerson, K.G. (1995) 51 Dominican Republic 43, 46, 49–50, 57, 59 Donnithorne, Audrey (1972) 83 DPRK see Korea, Democratic People’s Republic of (DPRK) Drugs Enforcement Administration 47 Dublin Principles 183 Duma, Nakhodsk Free Economic Zone 136 East–West divide 197 ECLAC (Economic Commission for Latin America and the Caribbean) (1999) 49–50 Economist Intelligence Unit (EIU) 49, 205 El Salvador 46 Enterprise for the Americas Initiative (EAI) 47 Enterprise Florida 52 Erie, Steven (1999) 31–2 Eskom (S. Africa electricity commission) 186 Europe 7–8, 10, 55, 197–8 European Commission (1994) 198 Agenda 2000 197 European Union (EU) 36, 117, 231 Association Agreements with Bulgaria, Romania and Turkey 197 banana regime 53–4 ‘Euroregions’ 8, 223 microregionalism 225 regional integration 115 regional projects 7, 130 regionalism 8 subregional schemes 194 transportation links 227 Export Processing Zones (EPZs) 14–15, 50 Ezcurra, Exequiel (1998) 28, 31 Federation of Rhodesia and Nyasaland 172, 174, 188

Index 241 Florida 52, 56, 223, 225, 228–9 NAFTA parity campaign 52 Partnership of the Americas 52 Fox, President Vicente 38 Franco-Spanish microregionalism 14, 231 Free Economic Zones (FEZs) 131, 139 Free Trade Area of the Americas (FTAA) 8, 42, 48, 52 Friedman, Thomas L. (1999) 37 Fukuoka Ken (1997) 98–9, 104 Funabashi, Yoichi (1995) 116 Furumaya, Tadao (1998) 122 Gamble, Andrew and Payne, Anthony (1996) 4–5, 9, 42, 218, 220, 230 Gayle, D.J. (1998) 51 GDTJNJ (1999) and (2000) 73–4 General System of Preferences (GSP) 49 Georgia 207–8 Poti port 203–4, 210 Gerber, James (1999) 26, 29 Gereffi, Gary (1992) 87 (1994) 49 et al. (1994) 219 and Korzeniewicz, M. 68 Germany 1 Bundestag’s Commission on Globalization (2001) 222 global apparel industry 51 city-regions 36 civilization 11–12 political economy 11 Global Water Partnership 184 globalization 11, 36–8, 60, 220–2 Gonzales, Elian 58 Greater China 66, 87, 233 Greater Hong Kong (Hong Kong–Guangdong nexus) 66, 87 Greater South China 66, 87 Greece, FDI 204 Grenada 46 Griffith, I.L. (1997) 55, 58

Griffiths, Gordon 152 Grimes, Scott 23–40 Grosfoguel, R. (1996) 58 Grugel, J. and Hout, W. (1999) 144, 220 Gu, Chaolin et al. (2001) 81 Guangzhou–Shenzhen–Zhuhai superhighway 82 Guarnizo, L.E. (1994) 59 Guoji Jingji Xinxi (2000) 82 Guoji Shangbao (2000) 81

3,

Haiti 43, 45, 57–8 Hamashita, Takeshi (1997) 119 Hanlon, J. (1991) 148 Harmonized Tariff Schedule 807/9802 49–50 ‘Harvesting Apartheid’ (1947) 148 Hashimoto Ryûtarô, Prime Minister 140 Hatch, Walter and Yamamura, Kozo (1996) 102, 219 Helsinki Final Act 199 Hentz, J. and Taylor, I (2000) 154 Heron, Tony and Payne, Tony 15, 42–65 Hettne, Björn (1999) 194–5 and Söderbaum, Frederik (2000) 3 Higgott, R. and Reich, S. (1998) 60 Hispanics 27 Hollerman, Leon (1998) 219 Hong Kong 13, 225 border controls 18–19 China Guangdong ‘front-shop, backfactory’ system 77–9, 86–7, 229–30 investment in 70, 226 Southern, inter-regional trade and national economic integration 18, 83–4, 84–6 expansion into Pearl River Delta 68, 73–8, 76, 87 international airport 82 microregionalization 66–94 NIEs 69–70, 87, 102 Hook, Glenn D. 15, 95–114

242 Index Hopkins, Terence K. and Wallerstein, Immanuel (1986) 68 Howell, Jude (1993) 120 Hughes, Christopher W. 18, 115–43, 198 Hunchun Border Economic Cooperation Zone 136 Hurrell, Andrew (1995) 3 hyper-globalization 4 Hyundai 137 illegal migration 15–16 IMF 36 and World Bank, Structural Adjustment Programme 178 Immigration and Naturalization Service (INS) report (1999) 57 Reform and Control Act (1986) 57 Indonesia 14, 36 see also Association of Southeast Asian Nations (ASEAN) INEGI (Instituto Nacional de Estadistica Geografia e Informatica) (1998) 25 Inter-American Treaty of Reciproal Assistance (Rio Pact) (1947) 45 inter-organizational linkages 71 international commodity chains 68, 88 drug production and smuggling operations 232 economic fragmentation 14–16 local economic futures 13 political economy (IPE) 217–18 relations 215–22 International Black Sea Club (IBSC) 199–201 International Centre for the Study of East Asian Development (ICSEAD) 104 (1994) 98, 108 International Multifibre Agreement 49 International Narcotics Control Strategy Report (INCSR) (1999) 55

international metal prices (1999) 175 INTERREG 197 Inventec Corporation 79 Istanbul 203, 206–7 Jackson, J.H. (1987) 47 Jackson, Robert H. and Rosberg, Carl G. (1982) 180 Jamaica 45–6, 54, 57–8 Japan Asian regionalist project 120 ‘Blueprint for Kitakyushu’s Rennaisance’ 104 capital and technology 9, 68–9, 108 economy 15, 124 exports 120 external developments, the pull 99–101, 103 Foreign Access Zones (FAZs) 108 Foreign Direct Investment (FDI) 116, 124, 136 Fukuoka city 98–9, 104, 107–8 sister relationships 105, 225, 233 Hokkaidô Prefecture 138 hostility with USSR 120 industrialization 120 internal developments, the push 101–3 International Cooperation Agency (JICA) 137–8 intra-regional imports 109 investment 13 investors in China 75–6, 110, 219 Ishikawa prefecture, Kanazawa City 138 Kitakyushu 104 sister-city relationship with Dalian 105, 224, 233 Kitakyushu city 98–9, 104, 106–8 Kyushu 108–11, 224 manufacturing transplants in China 227 land and labour costs 12 markets 120 metropoles (Tokyo and Osaka) 103

Index 243 microregional projects 15 military defeat (1945) 120 multinationals 10 Niigata Prefecture and City 138 Northeast Asia 122, 124 Northern Kyushu cities 12, 97, 102–3 Fukuoka prefecture 15, 97–9, 101, 103–7 Nagasaki prefecture 105–7 Saga prefecture 106–7 sister-city relations 104–6, 227 role in emerging microregionalism 54 Russia peace treaty 122, 137, 140 Sapporo City 138 Sea of 4, 116, 119–20, 122, 130, 138, 141 Sea Zone 14 Shimonoseki city 98–9, 106, 108 South Korea Coastal Straits, Mayors’ Conference 105–6 subnational political authorities 97, 102–7 TRADP 116, 137 Yamaguchi 107–8 Yamaguchi prefecture 99, 110–11 see also the Pan-Yellow Sea Economic Zone Japan–Taiwan Interchange Association (Chiao-lui Hsiehhui) 78 JETRO 75, 137 Jetro Sensa (2000) 75 Jin Bei (1997) 15 Johannesburg, transport corridor 147 Johnson, P. and Martin, D. (1986) 148 Johor–Singapore–Riau Growth Triangle 98 Kafue Gorge Dam 173, 182 Kakazu, Hiroshi (1995) 116 Min Tang and Myo Thant (1998) 1 Kaneda, Ichirô (1997) 122 Kan Nihonkai Kenkyûjo (1999) 120, 139

Kariba Dam 172–3, 182 Katsuhara, Takeshi (1997) 100 Katzenellenbogen, S. (1982) 147 Katzenstein, Peter J. (1997) 115 Kaunda, Kenneth 170 Kawamoto, Tadao (1995) 108 Kerr, David (1996) 130 Kitakyushu, sister-city relationship with Inchon 105 Kokusai Bôeki (May 2000) 72 Kokusaibu Kokusai Kikahu Chôsa ka (2000) 109 Korea Democratic People’s Republic of (DPRK) 116, 120–4, 137 North Demilitarized Zone (DMZ) 137 Rajin Free Economic and Trade Zone (FETZ) 132, 137–8 Republic of (ROK) 116, 120–4 South 9, 101, 108, 124 Inchon 105–6 Japanese investment 111 Pusan 105–6 Yellow Sea coastal region 105 see also the Pan-Yellow Sea Economic Zone Korean Peninsula 120, 141 Koryu 78–80 Kumar, Anjali (1994) 84 Kyûshû 119 Kyushu Chiiki Sangyô Kasseika Senta (1996) 99, 109–11 Kyushu Keidanren surveys 108 Langley, L. (1982) 43 Lardy, Nicholas (1995) 14–15 Latin America 37, 45, 48, 61 Lewanika, Sir Mwanawina 170–1 Lewis, D. and Bloch, R. (1998) 145 Li, Xiaolian (2000) 72 Lin, George C.S. (2000) 80 Livingstone, Dr 174 Lowe-Morna, Colleen, African Eye News Service (Nelspruit) (1999) 158 Lowenthal, Abraham and Burgess, Katrina (1993) 1

244 Index McCaffrey, General Barry 55 Mail and Guardian (Johannesburg) 158–9 Maingot, A.P. (1994) 55–6 Malawi see Zambezi Basin Malaysia 14–15, 36 see also Association of Southeast Asian Nations (ASEAN) Malaysia–Thailand Joint Development Area 9 Mandela, Nelson 148 Manoli, Panagiota 1, 193–214 Maputo aluminium plant 152 Corridor Company (MCC) 154 Development Corridor (MDC) 15, 18, 144–65, 187, 223, 225–7, 229 Corridor Provincial Technical Committee (PTC) 155 ‘enforcing’ development with the microregion 160–2 genesis of 146–52, 156 Interim Co-ordinating Committee (1996) 149 Iron and Steel Project 157 launch 149 microregion 152–60, 216 Mozambique 149, 157, 159–62, 179 Mpumalanga Province 149, 161 Northern Province 149, 152, 154 ‘Progress on the Maputo Development Corridor’ 150–2 sectoral investments 151–2 Frenta de Libertaçao de Moçambique (Frelimo) 147–8, 150, 153 and Gauteng, reconstituted microregion 150 ~es Instituto Superior de Relaço Internacionals 157 Iron and Steel Project 156 one-stop border facility 151 port of 146–7, 151 railway links 151 single toll road (N4) to Witbank 150–1, 155, 157–9

water availability 156–7 maquiladoras 25, 27–8, 48, 226 Marton, Andrew et al. (1995) 116 Maruya, Toyojiro (2000) 77 Masuku, Themba (Swaziland’s Economic Planning Minister) 145 Matsushita 78 Mbendi (2000) 175 MERCOSUR 36 metatrends 11–12 Mexicali 30 Mexico 25, 27, 29–30, 38–9, 48, 228 drugs and migrants 224 microregional production network 224–5 multinational plants 10 North America 51, 61 peso crisis (1994) 53 Secretariat of Foreign Relations 34 US border 30, 32–3, 38–9, 217, 227–8, 232 relations 10, 17, 32, 35, 48 Miami 52, 55, 58 Summit of the Americas (1994) 48 Miami Herald (May 2000) 53 Micklethwaith, John and Wooldridge, Adrian (2000) 37 microregionalism 1–22, 190 as a microcosm of political rivalries 115–43 microregionalization 69 across ‘Caribbean America’ 42–65 across Southern China, Hong Kong and Taiwan 66–94 microregions 7–12 collaboration 38 identity 38–9 integration 77, 215–35 interaction 17, 221–2, 221, 229 projects 1–2, 15, 17–18 relationships, new 28–30 see also San Diego–Tijuana; Zambezi Basin Mitchell, J. (1998) 149, 154, 161

Index 245 Mitchell, Jonathan 159 Mitrany, David 8–9 Mitsubishi 78 Mitsubishi Sôgô Kenkyûjo, 84, 105 MNCs see multinational corporations Moldova, Euroregions 198 Moloi, D. (1998) 160 Mondlane, E. (1969) 147 money laundering 55 Mongolia 116, 121, 123 Monroe Doctrine (1832) 45 Morata, Francesc (1997) 1, 8, 197, 231 Mortimore, M. (1999) 50 Mozal alumimium smelter 151, 156–7 Mozambique Economic Recovery Programme (1987) 153 Growth Triangle (ZMM–GT) 185–6 Komatipoort/Ressano Garcia border facility 151 president 146 privatization 150 socio-economic situation 148 and South Africa 147–8, 152 Spatial Development Initiative/Development Corridor programme 185–6 see also Maputo; Maputo Development Corridor (MDC); Zambezi Basin multinational corporations 10, 70, 81 maquiladora programmes 48 NAFTA see North American Free Trade Agreement (NAFTA) Nagase, Makoto (1999) 83 Nagorno-Karabakh conflict 207 Nakhodka FEZ 136 Namibia 154 see also Zambezi Basin Namibian (1998) 171 Namitete, Dr Alfredo 159–60 NEC 78

Neftochim-EAD 204 new political economy (NPE) 3–6, 218, 231 New York, Dominicans 58 Newly Industrializing Economies (NIEs) (South Korea, Taiwan, Hong Kong and Singapore) 69–70, 87, 102 Nhamo, Godwell (1998) 173 Nicaragua 46 NICs, land and labour costs 12 NIEs see Newly Industrializing Economies (NIEs) Nishi Nippon (1994) 104, 107 nongovernmental organizations (NGOs) 4, 221, 232 North American Free Trade Agreement (NAFTA) 10, 25–6, 28, 36, 42, 47, 51–3, 231–2 regional projects 7, 224–5 San Diego–Tijuana microregion 8, 218 North American region 61 North-West Mediterranean Euroregion 8 Norway and Russia, local administrative regions 197 Nvunga, Dr Milissão 157 Nyasaland 172, 174 Ochoa, General Arnaldo 56 Odessa, Ukraine 203–4, 210 OECD (Organization for Economic Cooperation and Development) (1996) 204 Ogawa, Yûhei 101, 112, 113 Ohlsson, Leif (1995) 178, 189 Ohmae, Kenichi, (1995) 4–5, 18, 36, 194 Okhotsk, Sea of 119 Okinawa, cross-border economic links 15 Oman, Charles (1999) 12 Onchon, South Korea 105 Ono, Kazunori (1997) 110 openness, new ethos of 11–12 Organization of American States (OAS) 45

246 Index Overseas Development Assistance (ODA) 105 Pacific War 120 Pakistan 233 Palan, Ronen and Abbott, Jason 230 Pan East China Sea regions 99 Pan European Transport and Communications systems 210 Pan-East Asia Sea Economic Zone 98 Pan-Japan Sea Economic Zone 98 Pan-Yellow Sea Economic Zone 95–114, 216 defining 97–103 economic links 107–9 institutionalization 105–7 microregional investment 110–11 microregional trade 109–10 transportation links 227 Parliamentary Assembly of the Black Sea Economic Co-operation (PABSEC) 201 Payne, A.J. (1996) 47 (1998) 5–6, 43, 57 (2000) 60 and Sutton, P.K. (1993) and (1994) 55, 59 Pearl River Delta 68, 77–83, 86–7, 222 Pende gas extraction project 152 People’s Republic of China (PRC) 121 cheap labour and land 75, 108 Chia, Shanghai and Three Gorges project 136 cities 88–9 Dalian 105–6, 110, 136, 224 Environmental Model Zone 105 Dongguan 80–3, 86, 88, 226 Eastern 119 Economic Area 66, 120 economic relations with Hong Kong and Taiwan 66, 68, 83–4, 84–5, 86, 233 economy 66, 68, 100 electrical goods industry 68–9 export-led growth 15

foreign investors 70–1 global economy 68–73 Guangdong province 66, 77–9, 84, 86–7, 100, 123 inward FDI and foreign trade 72–3, 74, 86–7 SEZs 18, 223 see also Pearl River Delta Heilongjiant, Jilin and Liaoning provinces 136 Hong Kong 10, 229, 232 Hunchun Border Economic Cooperation Zone 132 investors 228 inward FDI and foreign trade 70–2, 71, 73 Japanese investments 110, 224 market 120 suspicion of 122 microregionalization 16, 66–89 national policy-makers 19 natural resources 108 Northeast 9, 116, 120, 122–4 ‘open door’ policy (1978) 100 railway freight between provinces 85, 86 regional economic development 87 reintegration with Hong Kong 72 Russia border, Hunchun/Krakino railway crossing 132 Shenzhen 19, 75, 80–3 SEZ 75, 77 Sichuan and Hunan provinces 82 Southern 19, 136 Hong Kong and Taiwan 18, 66–94, 219 Special Economic Zones (SEZs) 18, 71, 75, 77, 88, 100, 123, 223, 225, 229 subnational political authorities 100–1, 103–7 trade statistics 72, 73 TRADP 116 Tsingtao 106 Yanbian Korean Autonomous Prefecture 138

Index 247 see also the Pan-Yellow Sea Economic Zone; Republic of China (ROC) Phare 197 Philippines see Association of Southeast Asian Nations (ASEAN) Philips 78 Platt Amendment 43, 45 Plaza Accord (1985) 5, 102 Porto-Franco Free Economic Zone 204 Postel-Vinay, Karoline (1996) 130 PRC see People’s Republic of China (PRC) Presidential Accord (1998) 35 Programme Management Committee (PMC) 131–2 Puchala, D.J. (1971) 211 Puerto Rico, migrants 57 Quant Computer Inc. 79 Quebec, internal autonomy

36

RCA 78 Reagan, President Ronald 46–8, 59 Reef, gold mines 147 Reef–Maputo axis 149 regional economic integration 13 projects 7 regionalism 42, 47 and globalization 36–8 new political economy 3–6 and regionalization 4 regionalization 4–5, 7, 12–13, 88 Republic of China (ROC) 121 resource management approach 182–5 Rhodesia Inter-territorial Hydroelectric Power Commission 172 Northern 172 see also Zambia Southern 172 see also Zimbabwe Rio Pact (1947) 45, 183 Rize and Samsun Free Trade Zone 203 RMB 75–7

Ro, Kwang-Uk (1997) 110 Rodolfo, B. (1998) 156 ROK see Republic of Korea (ROK) Romania 6, 198, 203, 207 Roosevelt, Franklin, good neighbour policy (1933) 45 Rorig, Fritz (1967) 1 Rosenau, J.N. (1995) 4, 195, 214 (1997) 60 Rosenberg, M.B. and Hiskey, J.T. (1994) 54 Rozman, Gilbert (1999) 130, 139 Russia 11, 19, 121–2, 204 and the CIS region 207 Far East 9, 116, 119–20, 122–4, 136, 138, 140 Foreign Direct Investment (FDI) 136, 204 Japanese peace treaty 122, 137, 140 Nakhodka FEZ 132, 136 Novorossysk 3 Sochi 209 TRADP 116 Ryûkyûs, Kingdom of 119 Sadakhlo city 207–8 SADC see Southern African Development Community (SADC) SADC Review 176, 183 Saga prefecture, cooperation with South Korean cities 105 St Lucia, naval and air bases 45 Samsung 25 San Diego 25–6, 29, 32–3, 38–9, 226, 233 Association of Governments (1998) 27 County 27–30 Dialogue study (1994) 27 Padres 39 The San Diego Union-Tribune 23 San Diego–Tijuana 8, 23–41, 218, 226, 228–9 Border Liaison Mechanism (BLM) 17, 34–5, 217, 227 corridor 10, 216, 222, 224–5, 234

248 Index San Diego–Tijuana continued cross-border cooperation on water 223 Economic Review (1998) 27 Sanyo 25–6 Sassen, Saskia (1999) 220 Sasuga, Katsuhiro 66–94 Saul, J. (1993) 153 Scalapino, Robert (1991) 17 (1991–2) 222 ‘natural economic territories’ 130 Scandinavia 7 Scholte, Jan Aart (2001) 232 Schwartz, Peter and Leyden, Peter (1997) 11–12 Scotland 36, 39 Scott, Allen J. et al. (1999) 37 Scott, James (1999) 194 Second World War 45 Shaw, Tim (1999) and (2000) 5, 158 Shela, O.N. (2000) 169, 185 Shen, Jianfa et al. (2000) 81 Shenzhen Tongji Xinxi Nianjian (1999) 81 Shipowners and Shipbuilders Association 199 Shirk, David (1999) 30, 38 Singapore 13–15, 36 ASEAN summit (1992) 14 Sino-Japanese Dalian Joint Industrial Park 110 Sino-Korean relations 101 Sino-Soviet conflict 100 Sinorama (2000) 83 sister relationships 105–6 Sit, Victor F.S. (1998) 75 Smith, Ian 172 Smouts, Marie-Claude (1998) 4 Soares, Francisca Henriqueta 161 Söderbaum, Fredrik and Taylor, Ian (2001) 161 Söderström, Elizabeth (2000) 184 Song River Basin, agreement between Malawi and Tanzania 171 Sony 25 South Africa 18, 146–7, 150, 229

Commission for Gender Equality (2000) 157–8 Gauteng 146, 150 Komatipoort/Ressano Garcia border facility 151 president 146 relationship with Mozambique 147–8, 152 Spatial Development Initiatives 15, 229 White business 148 see also Maputo Development Corridor (MDC) South African Press Agency 153, 159 South African Transport and Communications Commission 159–60 South America, cocaine-producing countries 54 Southeast Asia ‘golden triangle’ 232 regional projects 115 Treaty (SEATO) 194 Southern Africa 185, 187, 190 Spatial Development Initiatives (SDIs) 144–6, 158, 160, 223 Southern African Development Community (SADC) 8, 152–4, 175–6, 183–7 Southern African Power Pool (SAPP) 185–6 Soviet Comecon 121 Soviet Union 46 Special Access Programme (807A) 49–50 Stålgren and Söderbaum, Fredrik 166–92 Standing Conference of Local and Regional Authorities of Europe (CLRAE) 23–40 The Star (Johannesburg) (1989) 148 state actors 14 state elites, dialogues between 17 Steele, P. (1988) 49, 52 subnational politial authorities 9, 13, 97, 100–7 subregional, projects 7 Sueyoshi, Kôichi (1997) 104

Index 249 Summer Olympic Games 38–9 Summit of Americas (1994) 52 Sunday Independent (Johannesburg) 145, 150, 152, 156–7 supra-national organizations 36 Sutton, P.K. 45, 47, 53 Swain, Ashok and Stålgren, Patrik (2000) 185 Swatuk, Larry (2000) 169, 173, 183 Swaziland see Maputo Development Corridor (MDC) Swedish International Development Co-operation Agency 181 TACIS 197–8 Taga, Hidetoshi (1994) 116 Taiwan 7, 10, 119, 225 electrical goods industry 78, 80, 87 FDI in China 70 international division of labour 78–9, 86 OEM agreements with US companies 219 Pearl River Delta 68, 78–80 personal computer industry 78–9, 219 Straits 12 Taiwanese Business Association (TBA) 17, 83, 226 Tanzania see Zambezi Basin Taplin, I.M. (1994) 59 Taylor, Ian 15, 18, 144–65 (1999) 144 (2000) 150, 159 (2001) 153 technology 9, 11–12, 68–9, 108 Tennessee Valley Authority 8–9 terminology, clarifying 12–14 terrorist attacks (11 September 2001) 217 Thailand 9 see also Association of Southeast Asian Nations (ASEAN) Thambipillai, Pushpa (1998) 1 Tianjin 106 Tijuana Economic Development Corporation 23

pollution from multinationals 224 see also San Diego–Tijuana Tong, Goh Chok 14 Torp, J.E. and Rekve, P. (1998) 153 Tow, William T. (1990) 194 Trabzon Free Zone 203 TRACECA (Transport Corridor Europe Caucasus Asia) 198, 210 Trade and Industry, Department of (DTI) 160 TRADP see Tumen River Area Development Programme (TRADP) Trans-African Concessions 150 Trans-Kalahari Highway 154 transborder regional culture 27 regional ecology 28 solutions 33–4 Watershed Research Program 31 transnational firms 25–6 Trinidad, naval and air bases 45 Tumen River Area Development Programme (TRADP) 115–43 (2000) 116–17, 136, 138 ambitions and frustrations 115–17 chronology of project 131, 133–5 evolution and frustrations 130–9, 131, 133–5 export interdependency 124, 127 import interdependency 124, 128 lessons and future prospects 139–41 mismatched microregionalization and microregionalism 117–19 subregional and microregional trade matrix 124, 125–6 Delta project 9, 18, 198, 222–3, 226, 233 Economic Zone (TREZ) 131 Golden Triangle 131 microregion 138 Project, microregionalization 228

250 Index Tumen River continued Secretariat 116, 132 Turkey 197, 207, 210 Turkish–Armenian trade 207 Turkish–Russian trade 207 Turton, Anthony R. (1998) 183

USAID Regional Centre for Southern Africa 184 USINS (1999) 57 USITC (US International Trade Commission) (1999) 50 USSR 120–1

Ukraine 207, 209 Euroregions 198 foreign investment 206 Odessa 203–4, 210 UNDP see United Nations Development Programme (UNDP) United Nations Conference on Trade and Development (UNCTAD) (2000) 70 Development Programme (UNDP) 131–2, 136, 139, 141, 186 Economic Commissions for Africa, Small-Scale Mining Initiative 175–6, 224 Latin America and the Caribbean (ECLAC) (1999) 49–50 United States 121 anti-Castro legislation 58 Caribbean 52–5, 60 relations 42–54, 60–1 cocaine abuse 55 containment of communism 45 Department of State (1993) 55 Destroyers for Bases agreement (1940–1) 45 diaspora communities 58–9 foreign policy agenda 57–8 hegemonic power 45 hemispheric policy 47 Latin American relationship 61 Mexico border 30, 32–3, 38–9, 217, 227–8, 232 relations 10, 17, 32, 48 State Department 34 textile and apparel industries 49, 51–2, 218, 223 Trade Representative’s Office 53 war on drugs 54

Varas, Augusto (1992) 61 Victoria Falls 173–4 Virgin Islands 70, 219 Wagstyl, S. (2001) 206 Walvis Bay, Namibia 154 Warner, David (1999) 31 Watson, H.A. (1994) 52 Weihai 106 Weintraub, S. (1990) 48 West Indian Commission (1992) 56 West Japan–Asia Greater Regional International Exchange Zone 98–9, 103 Westphalian system 19, 119 White, Greg 161 Williams, P. and Taylor, I. (2000) 146 Willmore, L. (1994) 50 Wilson, S. and Zambrano, M. (1994) 55 Wilson, Woodrow 43 Witwatersrand Native Labour Association (WNLA) 147 World Bank 36 World Commission on Dams (2000) 173 World Trade Organization (WTO) 53, 229 Wu, Sihua (2001) 78 Yabuki, Susumu and Harner, Stephen M. (1999) 72 Yamaguchi, Shimonoseki, links with Pusan 105 Yellow Sea 12, 107, 119 City Conference 106–7, 225 Economic Zone 12, 15, 130, 222–4, 226 Liaoning province 108, 136 Shandong province 108

Index 251 see also the Pan-Yellow Sea Economic Zone Yeung, Godfrey (2000) 82 Yumaguchi, Shimonoseki sister-city relationship with Qingdao 105 Zambezi River Authority (ZRA) 173, 183–4 Zambezi River Basin 8–9, 167–71, 179–80, 223, 227 Action Plan (1987) 183 agriculture 166, 176, 177, 178–9 Angola 179 Commission 183–4 donors 184 dynamics 169–70 fishery 166 globalization and the transformation of the state 185–7 hydroelectricity 166, 171–3 Kabwe 176 Lozi people 170–1 Malawi 178 microregionalism 166–92, 216, 224–6 mining 166, 174–6, 229 national area and population distribution 167, 169 new region-building attempts 185–7

Nyasaland labour 174 railway from South Africa 174 rivalries between policy-makers 228 sectoral segmentation 181–2 social economy 169 state-centrism 180–1 urban-centred development and tourism 166 Zambia 170, 175, 179 Zambezi–Mozambique Spatial Development Initiative (ZM-SDI) 185–6 Zambia 172–3 Copperbelt Province 175–6 see also Zambezi River Basin Zambia–Malawi–Mozambique Growth Triangle (ZMM-GT) 185–6 Zedillo, President 35 Zenith 78 Zhang, Xiaohe (2000) 70 Zhongguo Tongji Nianjian 1999 and 2000 70–1 Zhou, Zhenhua (1996) 83 Zhu, Yan (2000) 79 Zhujiang Sanjiaozhou 73 Zimbabwe 173, 176, 177, 180 Southern 154 see also Maputo Development Corridor (MDC); Zambezi River Basin; Zambezi River Basin, mining