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I and Vol. Economic and Political Weekly , Vol. De, Prabir. Sage Publications, November Brooks and J.

Japan's security strategy beyond north-east Asia

Menon eds. Infrastructure and Trade in Asia. Edward Elgar: Cheltenham, Chakraborty and S. Nath eds. Asok Barman. New Delhi: Bookwell, Thomas eds.


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Bijoy Singh and C J Thomas eds. Ray and P. With the apparent exception of Malaysia and Singapore, this organizational fragmentation explains to a certain degree the wide income, infrastructure, and human-resources unevenness within domestic regional economies. As we know, technical formation and infrastructure are key elements of integration to production chains and networks; therefore, these capabilities should also be expanded to and developed in other minor cities, territories, or provinces within Southeast Asian States.

Notwithstanding the latter, this has yet to be accomplished. Therefore, the challenge of governments regarding public policies and institutional building is to improve the quality of education and the physical infrastructure, but to maintain a developmentalist view in order to reduce the gaps between the marginalized locations produced by global networks.

The role of industrial policy is to create and upgrade local producers by supporting startup programs, to nurture and protect infant industry, and to support local firms for building and upgrading their capacities so they can join global networks, learning how to manage and govern them in order to eventually build their own Lee et al. Korea, China, and Singapore are examples of such a stage-by-stage integration and turnaround propelled by market forces but guided by policy goals.

Institute of Developing Economies, Japan External Trade Organization(JETRO)

Production agglomerations have existed in Southeast Asia for quite a long time Nguyen, , although they were focused on local consumption, with few linkages to the rest of the national economy, and certainly none to international flows. Currently, the challenge has been to connect these poles of industrial wealth to a national scale and to join larger trade circuits.

There are several origins and forms of agglomeration, but the geographic component comprises a common base of the definition. In terms of forms, it is paradoxical that in the current global economy, the geographic factor in localization remains relevant despite the advance in transport and communication technologies Baldwin, Likewise, business concentrations in certain territories are growing and governments continue to promote special zones for their establishment Porter, , , especially in Southeast Asian countries such as Malaysia and, more recently, in Vietnam.

The characteristics of agglomerations and their links to global networks can vary according to development trajectories, the incentives set by policies, localization and territorial extension, foreign linkages and governmental cooperation, coordination mechanisms, and the dynamics of domestic competition UNCTAD, Famous agglomerations in Southeast Asia respond to and are shaped by these factors. The case of Singapore is special, because of its early focus on trade-related services.

A common thread in all these cases is the great involvement of government at several levels. As mentioned previously, Southeast Asian governments implemented policies that deliberately sought to generate industrial development centers.


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    7. However, implementing such policies did not guarantee their success Dixon, ; Ofreneo, Therefore, the relation between local or trans-border industrial clusters and the expansion of global-production networks is not clear in all cases. As Yeung suggests , p. This implies that each node would acquire some degree of specialization. The increasing fragmentation of value chains has led to an increase of trade flows in intermediate goods, especially in the manufacturing sector.

    Debate: trade and sustainable development

    In , trade in intermediate goods was the most dynamic sector of international trade, representing more than 50 percent of the non-fuel world merchandise trade. The challenge is that local producers need to be in the appropriate position to supply the goods and services according to the requirements of leading firms, for which institutional support, as well as financial, technical, and human capacities, are fundamental. Otherwise, if the leading TNC simply seeks to take advantage of the locational characteristics, physical infrastructure, or cheap labor, it tends to limit itself to bringing its own trusted supply network, which is often constituted by firms from same national origin, so that the contribution to local economic development might be minimal.

    The main implication of such a trend is specialization and, through that, to focus on national innovation and technological upgrade. Many governments in developing countries agree and are confident in this assumption, but not all of them have an absolute trust on markets to rule and drive industrialization and technological upgrade.

    Regulations and International Trade : New Sustainability Challenges for East Asia

    It is also clear that the institutional framework elaborated by a traditional notion of industrial policy would entail more than only subsidies, protectionism, and public spending. From a political-economy perspective, specialization in few or in a single stage of the process could bring about a potentially harmful outcome of anchoring the economic structure in primary or labor-intensive sectors, but displacing opportunities to appropriate high added-value activities.

    As we argued earlier, an industrial policy in East Asia not only sought to join a specific fragment of the process, but rather incorporated into segments with positive spillover effects, aiming to gradually learn how to manage the whole process from A to Z. Therefore, the first lesson from developmental policies in Asia is that it is all right to focus on higher value-added segments, as long as local firms are involved or industrial policy clearly targets such a goal.

    The second lesson of East Asian political economies is that industrial policies that cultivate technological and industrial clusters are effective in attracting international capital and become economic-growth engines, not only for jobs creation, but also as mechanisms to absorb industrial technology. This was accompanied by the development of domestic companies, which eventually could take over outsiders.

    Contact information of Institute of Developing Economies, Japan External Trade Organization(JETRO)

    The argument here is different from the dominant idea that globalization spreads out production and that pursuing comprehensive sectoral development is economically unreasonable. According to such a perspective, national governments should limit themselves to follow engagement strategies in niches where their countries present comparative advantages. The latter could translate into a very limited contribution to economic and territorial development prospects and disables capacities for adjusting to international economic developments, such as the surge of competitors in the same fields and economic structures.

    Nurturing capacities that allow knowledge accumulation to dominate other areas and stages of the production process, especially those with high technological content and added value, appear to be key policy goals for industrial catching-up. Certainly, local firms in Southeast Asia have become inserted into global chains and networks, but it is necessary to review the quality of such an integration and the effects of human capital and technological formation. Especially if the cluster is created solely to host foreign firms, it is unlikely that knowledge and technology would be shared with local firms or transferred to TNC affiliates.

    Special thanks to Edith Y. Montes Incin for her valuable research assistance. Amsden, A. Cambridge, MA. Working Paper. Boston: Harvard Business School. Ariff, M. New Perspectives on Industry Clusters in Malaysia. Ariff Ed. Atkinson, S. Balderrama, R. Licona Coords. Colima: Universidad de Colima. Baldwin, R.

    Regulations and International Trade | leondumoulin.nl

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