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Abstract: States have authored elements of globalization—deploying strategies to exert themselves extraterritorially. Such extraterritorial dimensions of state strategy are intimately connected to economic interests—although the economic interests in question and the geographic manifestations of extraterritoriality have varied historically for individual nation-states and continue to vary among different nation-states. This article examines one important example of this phenomenon. The rapid industrialization of Singapore at a time of rapid international economic integration has created a unique degree of urgency, depth, and breadth among contemporary state strategies of extraterritoriality. Drawing upon original research on joint-venture industry and technology parks in China, Vietnam, Indonesia, and India, the article examines the extent and nature of economic benefits to the Singapore economy leveraged through this particular strategy of extraterritorialization. The modest scale of these benefits confirms both the limits of state strategies that are aimed at, and elite discourses regarding, “gaining from globalization.” Key words: extraterritoriality, economic benefits, multinational enterprise, Singapore. Economic Geography 83(4): 371–393, 2007. © 2007 Clark University. http://www.clarku.edu/econgeography I thank the British Academy (SG-39277) for funding the research on which this article is based. I also thank Chen Wen, Li Yan, and Li Na at the Chinese Academy of Sciences, Nanjing Institute of Geography and Limnology, and Caroline Yeoh at the School of Management, Singapore Management University, for their assistance with research contacts, and Henry Yeung and two anonymous referees for their constructive comments on a previous draft of the article. 1 The term globalization is problematic in that it seemingly naturalizes a diverse set of ongoing processes (Dicken, Peck, and Tickell 1997). Its use in the title of this article is only rhetorical, since the article focuses on the orchestration of processes of international economic integration and whether such orchestration delivers the economic benefits that are hypothesized and sought by transnational elites. 372 ECONOMIC GEOGRAPHY OCTOBER 2007 ests in question have varied historically for individual nation-states and continue to today among different nation-states. The precise geographic manifestation of extraterritoriality is something that may also have varied historically. Although today, developed nation-states tend to exercise their power within the nonterritorial region represented by these new sites of rule making, geographically delimited enclaves—in the form of export processing zones, offshore financial centers, and the like—continue to embody some states’ attempts to gain a grip on processes of international economic integration. In the past, the embedded liberal states of the West were prominent in seeking to gain economic advantage for domestically oriented elite groups in society through extraterritorialization in the form of overseas enclaves. Today, the increasingly transnational elites of the developmental states of East Asia provide some of the prominent instances of this strategy. Perhaps the best, although somewhat unique, example of such a strategy is Singapore, where state involvement in extraterritoriality has been most overt and most closely articulated from the outset with the interests of multinational enterprises (MNEs). The article focuses on the extent and nature of the economic benefits of this strategy to the Singapore economy, rather than on a wider analysis of the social and economic costs and benefits of Singapore’s extraterritorialization, aspects of which are covered elsewhere (Bunnell, Muzaini, and Sidaway 2006; Lindquist 2002; Sparke, Sidaway, Bunnell, and Grundy-Warr 2004; Van Grunsven 1998). The Singapore case is instructive since this most explicit strategy of state extraterritoriality reveals important limits to elite discourses on the benefits of “globalization” even to those who are most likely to benefit from it. The article begins with a review of states’ strategies of extraterritoriality in pursuit of economic benefits: how they have been implemented historically, their potential economic impacts, and their particular geographic manifestations. Next, it recounts the political economy of the Singapore state’s strategy of extraterritoriality. Then, drawing on original research, it examines the economic impacts of several Singapore–hostcountry joint-venture industrial and technology parks in China, Vietnam, Indonesia, and India on the Singapore economy. The article concludes with a discussion of some of the limits on states and their associated elites in gaining from globalization through such overtly geographic manifestations of extraterritoriality. Nation-States and the Extraterritorial Leveraging of Economic Benefits There is no necessary territorial coincidence among nation, state, and processes of capital accumulation. This, in itself, alerts one to the historically and geographically differentiated nature of state extraterritoriality and the enduring way in which it has been coauthored by state and dominant domestic and international business interests. To begin with, the noncoincidence between the territorial coverage and functions of states and firms indicates a range of extraterritorial state-firm relations. As Glassman (1999, citing Murray 1975) indicated, individual states can expand to perform functions overseas (as in colonialism), can arrange for other states to perform these functions on their behalf (neocolonialism), may directly perform these roles abroad in some manner, may collaborate with other states to perform these functions, or may hand over the provision of such functions to MNEs overseas. Moreover, the interrelationship between national and international accumulation is not a recent phenomenon. Indeed, the development of “capitalism within the nations of Europe was contingent upon the accumulation process of international merchants’ capital” (Bryan 1987, 254). Seen in this light, the search for extraterritorial sources of economic benefit by nation-states has a long and differentiated history, and the VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 373 key question is “which forms of internationalisation and which fractions of capital particular state interventions can be seen to promote” (Bryan 1987, 274). Historically, imperial powers have prosecuted strategies of extraterritoriality on behalf of largely domestically oriented business interests. Domestic business interests have also figured prominently, although not exclusively, in the extraterritoriality pursued more recently by Japan, South Korea, and Taiwan. Elsewhere, the interests served by extraterritorialization have been, from the outset, in the case of Singapore (Ong 1999), or rapidly have become, in the case of Ireland (O’Riain 2005), those of a nascent transnational capitalist class (Sklair 2000). History and Extraterritoriality Historically, the success of states has been intimately related to strategies of extraterritoriality. As Hugill (1993, 63) explained in relation to Europe’s early industrialization, “what was original to northwestern Europe’s long-run success was the addition of ‘ghost acreage’ on which food and industrial raw materials was produced outside its geographic confines at little expense.” Indeed, “the regime of the colonial trades differed markedly from intra-European trade” in that it was orchestrated through state-linked companies (Cameron and Neal 2003, 126) and companies that effectively assumed functions of the state overseas (Bayly 2004, 254). The progenitors of the first major multinational companies of the modern world (Jones 2005)—the imperial trading companies of Britain and the Netherlands, for example—emerged from the monopolies conferred on them by state political and military action overseas in the late 1700s and early 1800s. The overseas interests of states and businesses coalesced around issues of resource security, and the types of economic benefits that wer
e leveraged at this time involved access to raw materials and labor that were in relatively short supply in the territorially constrained nations that led the Industrial Revolution. These state strategies of extraterritoriality, manifest in geographically delimited enclaves, created the initial conditions for the expansion of domestically oriented companies into MNEs. The territorialization of political power in the early modern world “was further enhanced by .|.|. an industrial capitalism that emphasized capturing contiguous externalities from exponential distance-decay declines in transportation costs and from clustering of external economies .|.|. within national-state boundaries” (Agnew 2005, 441). There has been some debate about the extent to which export markets underpinned the build-up of external economies that were confined to local and national scales at the outset of industrialization (Phelps and Ozawa 2003). However, there seems to be little doubt that overseas markets soon became important for sustaining the increasingly complex domestic organization of industry that was apparent in agglomerations of economic activity that had developed in leading industrial nations by the late 1800s, since most national-scale markets were rapidly exhausted as sources of pecuniary external economies. Nevertheless, until recently “the technologies for providing public goods have had a built-in territorial bias, not least relating to the capture of positive externalities. Increasingly, however, infrastructural power can be deployed across networks that, though located in discrete places, are not necessarily territorial in the externality fields that they produce” (Agnew 2005, 443). By the time of the Fordist-Keynesian regulatory “fix,” which characterized a period of sustained economic growth and a degree of convergence in the economic fortunes of most nation-states from the 1930s–1970s, “the needs of the state as power-seeking actor, intersected with needs of the state, as territorially based collectivity” (Gritsch 2005, 6). In the broader historical sweep of the modern world, this period may have been exceptional. Thus, although it incorporated a quantitative change in the number, geographic extent, and organizational complexity of multinational companies and their associated foreign direct investment 374 ECONOMIC GEOGRAPHY OCTOBER 2007 (FDI), such developments did little to undermine the coherence of national territories as an organizing framework for politics or economic processes. Instead, the “traditional MNE did not compromise sovereignty in any fundamental sense. It .|.|. may be said to have placed some limits on the implementation of internal sovereignty. However, the MNE reinforced the critical system defining construct of external sovereignty, mutually exclusive territoriality, borders, and geographically based political and economic governance” (Kobrin 2001, 185, emphasis in original). During the Fordist boom, MNE activity was manifest primarily in the form of multidomestic organizations and strategies that persisted well into the 1980s. The significance of military coercion to promote the international regulation of business (Braithwaite and Drahos 2000) and to exert state power in the interstate system has been in long-term decline (Nye 1990). In the post-Fordist era, however, the capacities and sovereignty of nation-states have been further undermined to a greater or lesser extent by a series of developments at the subnational and supranational scales. The nation-state “has become a fragmented policy-making arena, permeated by transnational networks (governmental and nongovernmental) as well as by domestic agencies and forces” (Held and McGrew 2002, 2). In this context, it is argued that the deployment of “soft-power” by states has become more apparent (Nye 1990). Such soft or co-optive power represents “the ability of a country to structure a situation so that other countries develop preferences or define their interests in ways [that are] consistent with its own. This power tends to arise from such resources as cultural and ideological attraction as well as rules and institutions of international regimes” (Nye 1990, 168). In this connection, discourses of globalization constitute part of the soft power exerted by states, since “states actively construct globalisation and use it as soft geopolitics” (Gritsch 2005, 2). In the postFordist era, with the creation and strengthening of regional integration agreements, the organizational complexity of MNEs has evolved significantly—with consequent implications for states to reap economic benefits within their domestic economies. Moreover, MNEs—as bearers of particular regulatory preferences and principles— have become the most important relays of such soft power (Braithwaite and Drahos 2000; Nye 1990). A host of new sites of international law and decision making (such as the United Nations, the International Monetary Fund, and the World Trade Organization) and political instruments (such as bilateral trade and investment agreements) have emerged to constitute what Ruggie (1993) referred to as a “nonterritorial region.” The proliferation of such political instruments and recourse to them in practice represent “states’ and capitalists’ project to use extranational differentially politically organised factors and markets to expand the infrastructure of accumulation beyond the territorial state” (Gritsch 2005, 8). Soft geopolitical benefits are inextricably bound up with the economic benefits that can be associated with extraterritorial extensions of state power and significantly augment the hard geopolitics that are more typically seen as the preserve of the international interstate system. These new sites of law and decision making—this nonterritorial region—are manifestly shot through with the economic interests of the nation-states. More particularly, they are the preserve of the extraterritorial strategies of developed nationstates that exercise power in an upper tier of state-firm bargaining relations, which, in turn, dilutes the bargaining power of developing nation-states in a lower tier of one-to-one relations with MNEs (Ramamurti 2001). The very design of, and privileged access to, this nonterritorial region by developed nation-states is doubtless partly a function of the heightened systemic properties of internationality, interstateness, and interterritoriality that “trap” developed nations compared to the nation-states of the “global south.” VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 375 Economy and Extraterritoriality Potentially, at least, a range of economic impacts (positive and negative) are subject to leverage through extraterritorial state strategies. The Anchoring of Corporate Networks. The continued growth of domestically based economic activities has necessitated the rapid development of market, resource, labor, and technological hinterlands. Broadly speaking, the need for such hinterlands corresponds to different motivations for both inward FDI and outward FDI which, following Dunning (1979, 1983), has been categorized as “resource-seeking,” “market-seeking,” “efficiency-seeking,” and “asset-seeking.” In this connection, the empires of the earliest industrial nations were initially concerned with the search for market and resource hinterlands for rapidly expanding enterprises with corresponding market and resource-seeking overseas investments. There are some parallels with the earliest industrial nations’ search for resource security and that of the earliest incarnations of developmental state strategies in light of their lack of resources, late industrialization, or, in the case of Singapore, recent postcolonial status (Dent 2002). Although market-seeking investments by MNEs from the first industrial nations were indeed important to the historic growth of FDI, it could be argued that, in comparison to contemporary strategies of extraterritorialization, the market hinterlands represented by overseas colonies were never fully realized by their associated enterprises. What is also
distinctive about rapidly evolving developmental state strategies of extraterritoriality is the concerted attempt to generate technological hinterlands and to promote asset-seeking overseas investments. Stimulation of a Domestic Commercial and Logistical Infrastructure. The growth supported via export markets is important for sustaining the competitiveness of domestic agglomerations of industry. Export markets and associated FDI have both direct effects on the domestic economy—supporting an array of higherorder functions—and indirect effects, with potential benefits for support industries within the head-office–producer service complexes of metropolitan areas (Goddard 1975; Marshall 1994). Yet it is also apparent that the types of externalities that underpin such clusters have become mobile, not the least owing to strategies of extraterritoriality themselves. It is well understood that negative externalities are rarely contained entirely within national territories but instead spill over into other national jurisdictions. It is these negative externalities that some believe will ultimately call into question the nation-state through the need for transnational, transstate, transterritorial processes (Taylor 1995). Yet, the literature has been slow to acknowledge and analyze the corresponding mobility of positive externalities and its significance for international economic integration. Jacobs (1969, 178) highlighted the mobility of the externalities that promote the clustering of economic activity in relation to the “three-cornered” trade among Britain, the Caribbean, and the United States in the 1800s. By the 1930s, Britain’s industrial districts described by Alfred Marshall (1932), were already subject to what Robinson (1953) described as the mobility of external economies. Thus, it now seems clear that the effects of market-based or pecuniary externalities and technological externalities—often still considered to be highly localized—are subject to international mobility (Ernst 2001; Phelps 2004a; Phelps and Ozawa 2003), so that they now contribute to the growth of new clusters of economic activity (Ernst 2001; Yeung, Liu, and Dicken 2006).2 These dynamics are one 2 A distinction is commonly made between pecuniary and technological externalities. The former, termed Jacobs externalities, are quantifiable benefits that are transmitted via market mechanisms and are chiefly related to the size and diversity of markets. The latter, termed Marshallian externalities, are the intangible benefits associated with knowledge transmitted via nonmarket mechanisms. 376 ECONOMIC GEOGRAPHY OCTOBER 2007 indication of the types of motivations that are likely to be driving contemporary state strategies of extraterritorialization. The Stimulation of Outward FDI. The economic benefits of extraterritoriality extend to effects on the outward FDI of domestic companies. It is clear that the motives and destinations of FDI flows have historically reflected both the distinctive home-country origins of MNEs and the specific strategies of state extraterritoriality (Dunning 1979, 1983). However, few studies have examined the extent to which outward FDI flows have been steered in this way, let alone the effects of outward FDI on home economies, and those that have been conducted have underlined the difficulty of assessing these effects quantitatively (Owens 1980; UNCTAD 1993). In the case of Singapore, the pattern of outward FDI reflects the various ways in which the state has managed extraterritorial links through overseas industrial and technology parks. The Reputation of the Domestic Economy. Strategies of state extraterritorialization may also have important implications for the types of “reputational capital,” or the credibility of states and their policies. Indeed, reputation has been central to the success of East Asian developmental states (Huff 1999) and the integrity and dynamism of their domestic economies and companies. These states have been successful in attracting FDI, even though their business environments are well removed from those in Western states. State-MNE relations rest crucially on the credibility of policy (Murtha and Lenway 1994), such that the reputation of a state and its regulatory bodies has an important bearing not only on the promotion of FDI, but on its longer-term development and territorial embeddedness. The reputation of states and their national economies can also stimulate flows of key workers and tourists. Here again, the political or soft geopolitical benefits for states are inextricably intertwined with the purely economic benefits sought by businesses (Gritsch 2005). Geography and Extraterritoriality Along with the long history of state extraterritoriality is the history of the different institutional and geographically defined forms that are associated with it. It has become commonplace to interpret international economic integration as a product of the mutual constitution of a space of flows (such as money, commodities, people, and technology) and a space of places (in which capital is to a greater or lesser degree spatially fixed to be valorized) (Ruggie 1993). In the geographic literature, this duality constitutes the essence of what has come to be termed a “relational” approach to understanding the social construction of space. There have been several incarnations of this relational approach within geography (Yeung 2005). In previous incarnations, both place and space appear to have been given equal weight in analyses. However, the latest incarnation—centering on the analysis of global production networks—appears to privilege space and the interpretation of political and economic processes in topological terms over geographers’ traditionally greater emphasis on place and placebound processes. There may well be a case for the increased analytical attention to topological interpretations of the international economy, given the rise of a nonterritorial region of economic and political processes (Ruggie 1993, 172). Much of the “competition for capital” that exists among states in the international economy does, indeed, center on an increasing patchwork of bilateral investment treaties (Elkins, Guzman, and Simmons 2006). However, to emphasize such nonterritorial dimensions of international economic and political integration to the exclusion of place-bound processes would be to deny the fundamental value of a relational approach itself. For the task at hand, it is clear, both historically and presently, that the extraterritoriality of states is often manifest in distinctly territorial VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 377 terms. Those developments—encapsulated in the notion of the “offshore” economy—that are frequently taken to be part of the “nonterritorial region” of the world economy “exist almost wholly within the physical and juridical boundaries of states” (Cameron and Palan 1999, 280). The spaces “governed” by the trading companies of the 1700s and 1800s were territorial monopolies. And although their like may be considered to have dated back hundreds and even thousands of years (Chen 1995), the terms of their administration have been variable. So, for example, in other instances—such as the bunds of treaty ports—not only was state extraterritoriality demarcated specifically as a littoral space, but the governance of such spaces precluded monopolies and inserted Western laissezfaire competitive processes into host-nation settings in which particular national economic interests were not necessarily privileged (Taylor 2002). Such demarcated spaces or enclaves, in which the sovereignty of host nations is compromised, are apparent today in the form of offshore financial centers (Hudson 2000) and port-Free Economic Zone (FEZ) complexes (Wang and Olivier 2006). Offshore financial centers represent a defense of sovereignty along constitutive lines but relinquish sovereignty along functional lines. Such places are rarely entirely outside onshore regulatory bodies and, as such, represent hybrid social orders (Hudson 2000). Port-FEZ complexes represent a deceptiv
ely sophisticated bundle of geographic attributes in terms of their location and spatial layout to effect a transition from regulated domestic space to an international space within host-country contexts. They represent points of articulation between the logics of circulation and production in the global economy (Wang and Olivier 2006). Adhering to a relational approach means analyzing both territorial manifestations and nonterritorial manifestations of states’ extraterritoriality and the territorially and nonterritorially constrained economic processes they attempt to harness. As such, “sovereignty—in the sense of socially constructed practices of political authority— may be exercised nonterritorially or in scattered pockets [that are] connected by flows across space-spanning networks” (Agnew 2005, 441), leading some to speak of the “archipelago economy” (Veltz 1988, cited in Graham and Marvin 2001). Thus, it may be appropriate to view today’s overtly territorial manifestations of extraterritoriality as instances of “differentiated regulation” (Cameron and Palan 1999) or “graduated sovereignty” (Ong 1999). Ong (1999) argued that globalization has induced such instances of graduated sovereignty (p. 218) in which “legal controls predominate in some places and some state functions are outsourced to private enterprises in others” (p. 217)—the example cited being the Indonesia-Malaysia-Singapore Growth Triangle (IMSGT) that formed an important plank to the state extraterritoriality considered in this article. Such differential regulation within and across states adds to the functionality of borders as much as it detracts from it (Cameron and Palan 1999, 280). The Political Economy of the Singapore State’s Extraterritorialization Weiss (1997) suggested that the “strong states” of Northeast Asia are prime examples of those actively authoring processes of the internationalization of capital. To these, Glassman (1999) also added some Southeast Asian states. Taken together, they represent some of the most pronounced contemporary instances of the “internationalization of the state” (Glassman 1999). Here, some of the contradictions of uneven development based on the attraction of FDI have been felt most acutely. As Glassman (1999, 681) noted, “since successful capital accumulation requires that all .|.|. fractions of capital be well-developed, third world states and their “domestic” capitalists frequently find it necessary to build alliances with the more advanced sectors represented by TNCs and 378 ECONOMIC GEOGRAPHY OCTOBER 2007 imperial states.” Because of the immediate pressures of development (such as the lack of natural resources) and after early attempts to assert political and economic interests by way of coercion, each of these developmental states sought to exert its interests through the use of soft power. However, as a group, they also present important variations in developmental state strategies, including that of extraterritorialization. The history of Singapore’s industrialization and the involvement of the state in managing this process have been amply dealt with elsewhere (Yeung 1999, 2000a). The point worth highlighting here is the central role of elites, which, almost from the outset, have been imbued with a sense of what Cameron and Palan (1999, 269) called the “absent promise” of the “global” economy. This strata of elites has been responsible for one of the prime examples of a contemporary “ideology that .|.|. [emphasizes] the state as supporting, sustaining and introducing international goals to the ‘domestic context’” and that “works within a changing perception of the nature of the national political economy” (Cameron and Palan 1999, 275–6). In Singapore, the ramifications of wider regional and global economic and political relations have been rapidly juxtaposed with local domestic governmental concerns— one may argue that they are uniquely condensed in such a global city-state setting (Olds and Yeung 2004). Therefore, a number of features of Singapore have foregrounded extraterritoriality as part of a developmental state strategy. First, Singapore’s pathway to the category of a global city-state is indicative of a unique political economy within which extraterritoriality is necessarily foregrounded owing to (1) a unique degree of political capacity and legitimacy to mobilize resources for national objectives; (2) the absence of the central-local, intranational territorial tensions that preoccupy many nation-states; and (3) a colonial legacy that has contributed to the openness of trade, investment, and foreign relations via cosmopolitan state cadres (Olds and Yeung 2004). Second, among developmental states, and in contrast to other global city-states, such as Hong Kong, Singapore is unique in the degree to which national economic development has, from the outset, been so closely articulated with the interests of overseas MNEs. Broadly speaking, the developmental states of Northeast Asia (Japan, South Korea, and Taiwan) have protected domestic business interests by various means as a precursor to, and have engaged only selectively with, overseas business interests in strategies of extraterritorialization (Amsden 1989; Ernst 2001; Johnson 1982; Wade 1990). The contrast with Singapore is marked, given the lack of such a domestic business community at the time of independence. At the time of independence, the Singapore state was left with little option but to attract FDI to create employment. As a consequence, it accumulated a wealth of expertise not only in promoting investment, but also in integrating the promotion of investment with broader strategies of national economic development through the close articulation of the state strategy with international business interests. The initial approach of indiscriminately attracting FDI has evolved so that efforts to attract FDI are now targeted to specific industry sectors and types of FDI and are more integrated with broader national economic development objectives and macroeconomic management (Low 1993). What distinguishes Singapore is the centrality of what Schein (1996) termed the “strategic pragmatism” of the Singapore Economic Development Board (EDB) to a unique degree of coherence and consistency of approach among various arms of government and government-linked companies (GLCs) and between these institutions and overseas MNEs. The Singapore EDB was one of the first investment-promotion agencies in the 1970s and early 1980s to target FDI in particular industry sectors with a view toward establishing major clusters of VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 379 economic activity. It shifted its emphasis in the late 1980s toward attracting particular types of FDI that are associated with particular parts of the value chain and that are associated with key sectors— attempting to concentrate head-office and research and development functions while allowing lower value-added manufacturing to leave Singapore. The wider businessservice complex that developed in Singapore has proved a major attraction to the location of MNE head offices (Yeung, Poon, and Perry 2001); it helped to augment a head office–business service complex that can continue to benefit, regardless of the relocation of routine manufacturing and service activities. The latter evolution in strategy partly reflected an overheated economy that had become apparent by the late 1980s (Yeung 1999, 2000a). Indeed, the severity of this overheating prompted the Singapore and Indonesian governments to industrialize Batam and Bintan islands to create a proximate low-cost location that was suitable for the activities that MNEs were relocating from Singapore. These two overseas industrial parks were the immediate solution to the Singapore state’s and international businesses’ joint concern to manage the process of relocation and were subsequently recast as elements within broader strategic formulations that stressed the wider external economy. The parks were planned, constructed, and managed by Singapore and Indonesian GLCs (Grundy-Warr,
Peachey, and Perry 1999; Kelly 2002; Phelps 2004b). They were initially cast as key ingredients in the Singapore–Johor–Riau Growth Triangle which was subsequently called the IMSGT—a concept that, in itself, has received much attention (see, e.g., Bunnell, Muzaini, and Sidaway 2006; Grundy-Warr, Peachey, and Perry 1999; Parsonage 1992; Phelps 2004c; Sparke, Sidaway, Bunnell, and Grundy-Warr 2004). It was the economic success of these two parks and the wider geopolitical success of imagining a hinterland to the Singapore economy that were the antecedents to a yet wider “regionalization strategy” (Yeung 1999). By the end of the 1980s, then, the physical limits of the Singapore economy had become apparent. As one commentator recounted: By the mid 1980s .|.|. there was growing recognition that Singapore’s partnership with the MNCs was no more a simple one-to-one kind of relationship. Not only did the MNCs have bigger corporate families within and outside the region, Singapore also needed to widen its horizons to reckon with its immediate neighbours. (Heng 1993, 160) The need to transcend the state’s “territorial trap” if the Singapore economy was to evolve had become apparent and was expressed in various ways. An extended relationship with the MNCs was considered to be a way to “enhance Singapore’s production possibility frontier” (Heng 1993, 157). It was a method of constructing a wider hinterland that was considered necessary for Singapore to play a major role in the disintermediation of economic activity within Southeast Asia (Mirza 1986). Explicit recognition of the need for a wider hinterland meshed with the different divisions of labor that were being constructed by the U.S., European Union (EU), and East Asian MNEs in Southeast Asia. Japanese, South Korean, and Taiwanese MNEs have established networks of business operations across East Asia. In each case, these investments have tended to be locationally selective (even at the scale of particular industrial estates), while Japanese MNEs have sought to transplant elements of the domestic model of industrial organization overseas (Hatch and Yamamura 1996). However, in contrast to the broader divisions of labor established by Western and other East Asian MNEs, Singapore’s government appears to have channeled outward FDI in particular directions (Ellingsen, Likumahuwa, and Nunnenkamp 2006, 33). The need to create an “external wing” or “external economy” was formally 380 ECONOMIC GEOGRAPHY OCTOBER 2007 enshrined in the Regionalisation 2000 strategy of 1990: The strategic interest of the regionalization programme is to build an external economy that is closely linked to and which enhances the domestic economy by participating in the growth of Asia. This programme seeks to form a network of strategic zones in key markets with emphasis on building good linkages between our regional projects and domestic clusters. (EDB 1995, quoted in Pereira 2003, 28) This strategy unified several intersecting policy elements and aspirations of the Singapore state—including a desire for the greater internationalization of Singaporean companies and the Singapore state’s ongoing attempts to create itself as a nexus of trade agreements within the region— but significantly was also rooted in one explicitly territorial manifestation of extraterritoriality—the creation of overseas industrial and technology parks. The initial parks on Batam and Bintan were followed by two parks in China, one in Vietnam, and one in India. Some measure of the significance of these parks is that they constituted about 20 percent of the industrial land in Singapore (Perry and Yeoh 2000, 204). These parks were followed by numerous other developments across Asia, with the EDB now reporting 35 centers in its external wing (Ministry of Information, Communications and the Arts 2006, 113). Research Methods This article is based on research conducted during 2005 that was designed to consider the efficacy of Singapore’s joint-venture overseas industry and technology parks. It also draws upon interviews from an earlier research project on stateMNE relations in Singapore, Malaysia, and Indonesia that were conducted in 2002 (Phelps 2004b, 2004c). Specifically, the research focused on five parks: four industrial parks and one technology park. Summary details of the parks are presented in Table 1. The geographic spread of the overseas joint ventures established by the Singapore state and its linked companies is germane to the discussion of the findings presented later and is thereTable 1 Summary Details of Overseas Industrial and Technology Parks Scale in Hectares (of which Number of Park Location Opened developed) Tenants Employment Wuxi-Singapore Wuxi, China 1994 800 (235) 075 15,000 —Industrial Park China- Suzhou, China 1994 7,000 (980) 395 44,000 —Singapore —Suzhou —Industrial Park Batamindo Batam, 1990 500 (320) 082 65,000 Indonesia Vietnam- Thu Dau Mot 1996 1,000 (300) 124 24,000 —Singapore Town, Vietnam —Industrial Park International Bangalore, 1998 700 (13) 100 08,500 —Technology Park India —Bangalore Source: Yeoh, Sin, and Jailing (2004, 19). VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 381 fore illustrated in Figure 1. By the time of this study, each park had experienced decreases in the number of tenants and the total employment reported in Table 1, owing to rationalizations and a downturn in FDI flows. The parks are managed by the Singaporean companies SembParks and Ascendas and involved other Singapore GLCs in their planning, construction, and ownership. They represent a major element of the Singapore state’s extraterritorialization through specific programs, such as the Regionalisation 2000 and Partner@ Singapore initiatives.3 Collectively and individually, the various parks have been the subject of extensive study—most notably of their positive and negative local economic and social impacts (see, e.g., Kelly 2002; Pereira 2003; Perry and Yeoh 2000; Phelps 2004b; Royle 1997; Yeoh, Lim, and Kwan 2004; Yeoh, Sin, and Jialing 2004; Yeung 2000b). This article focuses more narrowly on the efficacy of the economic case to the Singapore state’s extraterritorialization via such industrial and technology parks in terms of the parks’ potential benefits to the Singapore economy. For the purposes of this article, Figure 1. Location of overseas industrial and technology parks. 3 The “sister” industrial park to Batam on the neighboring island of Bintan was excluded from this study (see Bunnell, Muzaini, and Sidaway 2006). 382 ECONOMIC GEOGRAPHY OCTOBER 2007 it is important to note that each industrial park is unique as an enclave of socioeconomic order within its respective host-nation context. Four of the five parks were created from central governmentto-government agreements, and the other was created from a unique agreement between the Singapore state and a local tier of government in China. All the parks incorporate, or have incorporated, features or concessions that are unique in these host-country settings—most notably expedited administrative and regulatory procedures (related to investment licenses, work permits, customs procedures, and the like) and the provision of a superior infrastructure (related to telecommunications, electricity, the water supply, and waste treatment). In addition, the China-Singapore Suzhou Industrial Park (CSSIP) is part of a central government experiment to use elements of the Singapore social security system in a way that is unique within China (Interview 17),4 while Batamindo Industrial Park has, until recently, benefited from a fuel (for power generation) subsidy (Interview 19) and the selective relaxation of national restrictions on foreign ownership that is unique in Indonesia (Haley 1998). These concessions are part of the distinctiveness of the parks that is manifestly part of the marketing strategy (Interview 20). Another consequence of such distinctiveness is that economic linkages to the Singapore economy will be maximized ostensibly by minimizing integration with the wider business environment in each host-country location. No thorou
ghgoing comparative quantitative assessment of the economic contributions of the parks to the Singapore economy has been possible for a variety of reasons. First, access to the parks, whether to conduct interviews or to administer questionnaires, is controlled by the park management bodies and rigidly so in the cases of CSSIP and the International Technology Park (ITP) Bangalore. Even when official backing and administration were obtained for a questionnaire survey of companies operating in the Wuxi-Singapore Industrial Park (WSIP), the poor response rate, the biased nature of the sample, and the inability to repeat the survey on a comparative basis necessarily pushed me in the direction of a qualitative assessment of the economic impacts of these parks to the Singapore economy based upon interviews with corporate and governmental elites. Second, many of the economic benefits to the Singapore economy are, as the preceding review and the interviewees quoted later both highlight, difficult to quantify. Third, it is unclear whether such quantitative assessments have been made by the Singapore state bodies that are involved but, if they have, they were not disclosed to me. The research undertaken in 2005 consisted of 42 interviews that were conducted on location in Singapore, China, India, Vietnam, and Indonesia with Singaporean companies with land, real estate, and property-development and management interests related to the parks; planning and economic development staff of local and regional governments; local business representative bodies; businesses located in the parks; and representatives from private-sector consultants and governmental bodies with a stake in promoting investment. Fortysix interviews covering similar target respondents were conducted in an earlier study of the IMSGT in 2002. In what follows, I draw upon a subset of 20 of the most relevant interviews from the 2005 research and 3 interviews from the 2002 research. 5 Research focused on elite 4 For a list of interviewees, see Table 2. 5 The research conducted in 2005 focused on the economic benefits of the overseas parks to Singapore. The research conducted in 2002 addressed a broader set of research questions related to the competition for FDI within the IMSGT. VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 383 interviews raises a number of important methodological issues (see Cormode and Hughes 1999; Welch, Marschan-Piekkari, Penttinen, and Tahvanainen 2002). However, given the purpose of the article—to examine the economic impacts of a specific element of strategy as envisaged by particular strata of society in Singapore—such elite interviews were appropriate.6 Table 2 List of Interviewees Interview 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Interviewee Deputy director Operations manager Director of operations Deputy director Chief executive officer Senior vice president Chief executive officer and business development manager General manager Vice president Directors Manager International attorney at law Head of business promotion department Operations director Deputy director Officer Deputy chief Marketing representative General manager Senior marketing manager General manager Managing director Export sales manager Company WSIP, Wuxi Bradley Technology, WSIP, Wuxi Donaldson Filtration, WSIP, Wuxi Asia Pacific Operations, EDB, Singapore Ascendas, Singapore SG Software Asia Pvt. Ltd., ITPB, Bangalore Jurong Consultants (India) Pvt. Ltd., Bangalore Agile Software Enterprises Pvt. Ltd., Bangalore Corporate Services, Ascendas India, Bangalore RSP Architects, Planners and Engineers (Pte) Ltd., Singapore Department of Planning and Investment, Binh Duong Province Baker & McKenzie, Ho Chi Minh City Ministry of Planning and Investment, Southern Foreign Investment Centre, Ho Chi Minh City Siemens Hearing International, Batamindo, Batam Jurong Island Development Department, JTC Corporation, Singapore Economic Development Board, Singapore Investment Promotion Bureau, Suzhou Industrial Park Administrative Committee, Suzhou VSIP, Thu Dau Mot PT Batamindo Investment Cakrawala, Batam SembCorp Parks Management Pte Ltd., Singapore General Office Division, Epson, Singapore Kimberly-Clark Vietnam Ltd., Ho Chi Minh City Huhtamaki (Vietnam) Ltd., VSIP, Thu Dau Mot Date 7 July 2005 8 July 2005 7 July 2005 21 September 2005 5 October 2005 6 December 2005 6 December 2005 6 December 2005 6 December 2005 3 October 2005 15 September 2005 14 September 2005 12 September 2005 30 September 2005 23 September 2002 25 October 2002 4 July 2005 12 October 2005 30 September 2005 23 October 2002 6 October 2005 14 September 2005 12 September 2005 6 Difficulties were encountered in gaining access to 384 ECONOMIC GEOGRAPHY OCTOBER 2007 Gaining from Globalization? The Singapore State’s Extraterritorial Grip on Multinational Enterprise The various extraterritorial dimensions of the Singapore state’s strategies to develop the Singapore economy and foreign policy influence in East Asia represent acts of faith or geopolitical strategies, rather than accurately estimated economic policies per se. Thus, when questioned, almost all the interviewees, including key informants from strategic bodies such as the EDB and Ascendas, noted the difficulty of quantifying the economic benefits of Singapore’s overseas joint-venture parks (Interviews 4 and 5). As one of the interviewees said, “It’s a little hard to quantify.|.|.|. If you want to quantify the direct economic benefits, I think it is very small” (Interview 5). Table 3, which forms the backdrop to the discussion in this section, summarizes the research findings and gives only a broad indication of whether, on balance, the various economic impacts identified in the academic literature, newspaper articles, reports, and interviews have been very positive, positive, negative, very negative, or neutral. It indicates the uneven nature of the benefits associated with each of the parks, the notable finding being that only two parks appear to have had, on balance, what could be interpreted as a very positive economic impact on the Singapore economy. It is also intriguing that these two parks represent different cases in point. Batamindo’s impacts have been significant, despite the relatively low-value added goods that are manufactured there, because of the geographic proximity and underdevelopment of the host economy. ITP Bangalore has had a significant positive impact despite its distance from Singapore because of the high value-added nature of the products, services, and associated skills that are involved. The Anchoring of Corporate Networks Considered in the broadest terms, the overseas parks represent a created hinterland that would otherwise exist in most nation-states. In an early evaluation of the impact of MNEs on the Singapore economy, Mirza (1986, 263) identified this limitation to the future development of the economy, arguing that “disintermediation is difficult for a tiny economy with no hinterland.” It is no surprise that a city-state like Singapore is closely associated with extraterritorialization, since, as one interviewee indiTable 3 Indicative Summary of the Economic Impacts of Overseas Industrial and Technology Parks on the Singapore Economy Economic Impact Batamindo WSIP CSSIP VSIP ITP Bangalore Balance Anchoring of MNEs ++ + + = + + Stimulation of ++ + + = + + —business services Outward FDI ++ + + + + + Reputation + + – + ++ + Balance ++ + + + + + + Minor/moderate positive economic impact. ++ Major positive economic impact. – Minor/moderate negative economic impact. — Major negative economic impact. = Neutral economic impact. interviewees from organizations that are responsible for creating and managing the overseas joint-venture parks because of the sensitivity of the research topic. VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 385 cated, it represents too small a territory to reap the full spillover advantages of a knowledge economy—the simple fact being that Singapore has rarely been host to a collectivity of major businesses in the same product sector (Interview 15). Moreover, as Mirza (1986) no
ted, where such industry clusters have developed, they have been prone to relocation as a whole, such that the Singapore economy has already cycled through several such clusters. Here, then, the external economy becomes a means of managing the redistribution of these industry clusters. Thus, “the transborder industrialization strategy envisioned that, what follows, would be the generation of an economic space for Singapore-based companies, both indigenous and foreign, to re-distribute resource-dependent operations to lower-cost production sites and upgrade their Singapore-operations to higher-end activities” (Yeoh, Sin, and Jialing 2004, 17). These overseas parks were a determined response to the relocation of companies from Singapore at the end of the 1980s as domestic labor costs and the generalized overheating of the Singapore economy made production less viable for many activities that were initially attracted to Singapore. The attempt has been to manage this relocation process since “while ultimately it is the market that decides on such redistributions, the EDB attempts to facilitate smooth distribution .|.|. rather than have an exodus of the MNCs propelled more by push factors from Singapore than pull factors from the region” (Heng 1993, 169). It was recognized that the higher valueadded activities that Singapore was increasingly attempting to retain and attract could not be sustained without those lower value-added activities that Singapore was unable to cater to. As one interviewee highlighted: If you lose a large part of the base, the top is going to be in a very uncomfortable position. If I look at the economic benefits—I don’t know how to quantify it—but I know for sure that if the base is widened to the region, then the apex can still remain in Singapore.|.|.|. So the benefit to Singapore actually is in having a larger economic space. (Interview 4) Moreover, the economic benefits of retaining the apex activities associated with MNEs are unevenly felt, depending on their destination within Singapore’s extraterritorial hinterland. Thus, as one Singapore-based interviewee explained regarding the process by which the EDB attempts to manage the relocation of MNEs from Singapore, “In order to anchor the high value-added here, you need a low-cost option for the low valueadded activity.|.|.|. For us, if they have to go somewhere low cost, it is much better to be in the neighborhood, rather than, say, China, where you really cannot tap into whatever growth they have” (Interview 16). As lower value-added activities have relocated from Singapore, often to the overseas parks, their ongoing connections continue to produce economic benefits that are related to factories and regional head offices remaining in Singapore. These were exactly the types of benefits identified by several interviewees and pertain particularly to the U.S. and EU MNEs that have entered the East Asian arena via the likes of Singapore or Hong Kong (Interviews 1, 5, 12, and 14). As one interviewee in Vietnam observed: It’s the bottom line because the foreign companies that are set up here generally are subsidiaries of that regional headquarters, and the performance of that regional headquarters would take into account the performance of Vietnam. (Interview 12) Thus, not only is high-salary employment sustained in the domestic economy (with its consequent indirect and induced local multiplier effects), but, since the profits from subsidiary companies in the region are consolidated and recorded at regional head offices, there is a stream of monetary benefits in the form of taxes to the Singapore state. Indeed, companies in the parks that had no or only minor operations in Singapore appear to have established operations 386 ECONOMIC GEOGRAPHY OCTOBER 2007 there after they located in the parks (see also Pereira 2003, 102). One such example is Donaldson Filtration. Although it had Singapore-centered U.S. MNE Seagate as a major customer, Donaldson operated only a sales office in Singapore, choosing to supply Seagate from a Hong Kong factory opened in 1985 and reporting to its head office in the United States. When Seagate began to relocate some operations from Singapore to Wuxi, China, in 1994, Donaldson relocated to Wuxi from Hong Kong. In 1999, it established a new regional head office in Singapore with consequent benefits flowing to the Singapore economy (Interview 3). Being run by companies with headquarters in Singapore, such as SembCorp and Ascendas, the industrial and technology parks have been a source of profits remitted to Singapore. As Pereira (2003, 120) suggested, “For the Singapore government its developmental objectives would only be realized if and when the zone generated financial profits, which could then be utilised to supplement Singapore’s domestic economy.” Some interviewees identified the profits of the park operators and the linked property and real estate companies as the primary benefits to the Singapore economy (Interviews 5, 8, and 11). However, the profits that are generated may be small in absolute terms (Interview 5), while the success of the parks, even defined narrowly as financial returns, has been mixed. The success has been so mixed that SembCorp, operator of industrial parks on Batam and Bintan, and the Vietnam Singapore Industrial Park (VSIP), threatened to sell its stake in parks that underperformed (“SCI May Sell Parks that Under Perform” 1999). Stimulation of Domestic Commercial and Logistical Infrastructure Aside from the employment and revenues supported directly by corporate networks that are anchored in Singapore, there may be important backward and forward indirect effects domestically. As one interviewee, who speculated on the economic benefits to Singapore from the VSIP, suggested: Once that factory gets set up or offices get set up in Vietnam a whole string of benefits happen as well.|.|.|. It benefits suppliers [and] service providers, and Singapore definitely has a whole range of service providers, companies that provide equipment and support services, and that way they benefit. (Interview 12) The representatives of companies with operations in the industrial parks in China, India, and Indonesia highlighted various aspects of this effect (Interviews 2, 6, 8, 14, 21). It should be noted, however, that in the case of the VSIP, the effects may be different and perhaps less than on the other parks—since a greater diversity of industry sectors is represented as a result of the “marketseeking” FDI attracted (Interview 4) and interviewees from MNEs downplaying links with Singapore and its commercial infrastructure (Interviews 22 and 23). The backward indirect effects can be significant if overseas production and other activities in Singapore make use of domestic commercial and other infrastructure either of their own accord or via head or regional offices. Since it is commonly understood that overseas-owned companies often source abroad via preferred corporate suppliers of material inputs and services (Phelps 1993; Watts 1981), one may assume that these benefits can be significant. In this regard, Haley (1998, 348) argued that “industries in developing countries, tightly bound to Singapore through managerial, operational and logistical systems, encourage numerous spillovers to the Singaporean economy’s other sectors and more transactional efficiencies.” Such considerations appear to have been prominent in the case of the Singapore state’s first experiment with overseas industrial parks, on Batam and Bintan islands (Interview 20). However, the Singapore state’s pursuit of these spillovers for the domestic business services and logistical industries has gone further with incentives given to MNEs with headquarters opera- VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 387 tions in Singapore that are designed to stimulate the use of these industries (Haley 1998, 353). The following description offered by one interviewee is worth quoting at length: The parks with the most economic benefits to Singapore are Batam and Bintan because over there, what they need beyond the industrial park is a who
le host of services that Singapore can provide.|.|.|. So, for example, all the goods are shipped through Singapore. They use the telecommunications infrastructure of Singapore. The management of the industrial park can commute daily.|.|.|. With Batam and Bintan, the link to Singapore is very strong.|.|.|. The farther you get away from Singapore, the effect is less. In Vietnam, the cluster effect is still quite linked to Singapore because the number of suppliers in Vietnam is still not that significant. In Suzhou and Wuxi, a lot of infrastructure already exists there. (Interview 4) Modest induced and indirect economic multiplier effects from the development of the Batamindo industrial park have become apparent on Batam (Phelps 2004b), as have a plethora of social and environmental problems (Lindquist 2002; Sparke, Sidaway, Bunnell, and Grundy-Warr 2004; van Grunsven 1998). However, the lack of local economic impacts of the parks in the host country is more than just a reflection of geographic proximity. The failure of the Indonesian and Batam governments to develop a local physical and business infrastructure (such as port facilities and training institutions) that could substitute for the infrastructure in Singapore (Interview 19) may be contrasted with the Malaysian and Johor state governments’ deliberate strategy of making strategic competitive investments (Phelps 2004c). Thus, as recent studies have confirmed, in the industrial parks on Batam and Bintan, “the tenants were able to tap into the lowcost environments of the Parks, as well as leverage on Singapore’s infrastructure, management and expertise” (Yeoh, Lim, and Kwan 2004, 60–61). Nevertheless, even MNEs that have relocated to the most distant industrial parks, in Wuxi and Suzhou in China, may retain some ongoing demand for a commercial and logistical infrastructure, as the interviewees suggested (Interviews 1 and 17). The forward indirect economic effects of the establishment of overseas parks can be seen in the establishment of front-end or customer-facing operations in Singapore. The benefits were outlined by one interviewee: India is a bit different in the sense that Bangalore is just for IT [information technology]. So this is where a concept of what we call “Partner@Singapore” comes in. Having a factory there strengthens the capabilities of Singapore companies. Today, many of the IT companies do the front end of the designs in Singapore and do the labour intensive operations in India.|.|.|. Singapore represents an immediate market to those companies.|.|.|. By having a location in Singapore, Indian companies can get quite close to customers and customers can find good IT capabilities from Indian companies to which they can outsource their operations. (Interview 4) In the latter example, one may see a dual effect. The first is an inward or reverse FDI effect, in which direct investments from Indian MNEs (in the shape of sales offices) create employment in Singapore and may elicit further business for Singapore-based businesses. This effect may offset the second effect—a leakage from the Singapore economy in the form of the outsourcing of activities—although this latter effect nevertheless may enhance the competitiveness and growth prospects of Singaporean companies. Moreover, according to at least one interviewee, “overall, the reverse FDI has not been large enough to be a significant benefit because if you look at all these IT companies, they go where the markets are large. Singapore is just not one of them” (Interview 5). The Stimulation of Outward FDI One of the major strategic concerns of the Singapore state has been to stimulate outward FDI by internationalizing Singaporean companies, and such interna- 7 The stock of outward FDI by Singaporean companies increased more than 4.5 times from 1994 to 2004. The value of outward FDI flows from Singapore companies in 2003–04 was equal to 56 percent of the gross domestic product’s (GDP) fixed capital formation in 2004, while the accumulated stock of outward FDI in 2004 was valued at nearly twice the GDP in that year (Singapore Department of Statistics 2006). 8 China, Malaysia, and Hong Kong accounted for 63 percent of the overseas affiliates of Singapore companies in Asia in 2004, compared to the 13 percent accounted for by India, Vietnam, and Indonesia (Singapore Department of Statistics 2006, 14). 9 Singapore companies accounted for 25 percent of 59 foreign investors in WSIP in 2006, 22.5 percent of 111 foreign investors in 388 ECONOMIC GEOGRAPHY OCTOBER 2007 tionalization has figured strongly in its regionalization strategy. One interviewee suggested that the impact of the various joint-venture parks on the internationalization of Singaporean companies had been modest: In terms of numbers, it’s very small compared to the size of the Singapore economy, but I think there is an indirect economic benefit.|.|.|. These indirect economic benefits have got to do with creating multinational companies.|.|.|. Regionalization gives us the opportunity to grow Singapore companies.|.|.|. The Singapore market is so small [that] you can’t possibly grow international companies just from Singapore. (Interview 5) However, figures indicate that such outward FDI has grown significantly in absolute terms and in terms of what it represents to the total Singapore economy.7 With the exception of China, the outward FDI by Singaporean companies in the nations in which these parks are located has been comparatively modest (in terms of the number of affiliates established and the value of FDI), suggesting that much of it will indeed have been steered toward the parks themselves.8 According to figures supplied in the 2002 and 2005 interviews, Singaporean firms account for similar proportions of all foreign firms in the parks.9 Regardless of the distance of these parks from Singapore or the dissimilarity of the host-country business environment from that of Singapore, they appear to play a role in supporting this process precisely because they represent hybrids of the Singapore– host-country social order. Being steered to an important degree by government agencies and GLCs, outward FDI has also been quite distinctive in its effects on the domestic economy. On the one hand, there is evidence that the parks have played a role in facilitating the internationalization of Singaporean companies— often as a result of their following major MNE customers onto the parks. Along with outward FDI more generally, this efficiencyseeking outward FDI has not replaced exports from Singapore but has contributed to imports in industries that are subject to the fragmentation of vertical divisions of labor (Ellingsen, Likumahuwa, and Nunnenkamp 2006). On the other hand, the parks are a conduit for market-seeking outward FDI by Singaporean companies. This is most obviously the case for a wider group of Singapore companies with facilities management, land, real estate, and infrastructure interests to gain valuable experience and grow markedly in a number of rapidly expanding and urbanizing economies across East Asia. Thus, interviewees based in Singapore and Bangalore highlighted the wider benefits in terms of internationalization to a select group of Singapore companies, such as SembCorp, Ascendas, Keppel, JTC, and RSP (Interviews 9 and 10).10 CSSIP in 2007, 17.5 percent of 177 foreign investors in VSIP in 2005, and 29.8 percent of 84 foreign investors on Batamindo in 2002. Information was not available for ITP Bangalore (Interviews 1, 17, 18, and 20). 10 The opportunities in Bangalore alone are enormous, given the number of office and industry parks and company campuses that have sprung up since the ITP (Interview 9). VOL. 83 NO. 4 GAINING FROM GLOBALIZATION? 389 The Reputation of the Domestic Economy Reputation is an important but fragile ingredient in the collective success of companies that are and have been located in significant agglomerations of economic activity. The development and maintenance of the reputation and credibility of the state has been recognized as central to the past success of the East Asian developmental states and has
a potentially fragile relation to their present evolution. As Huff (1999, 234) observed, “A loss of reputation sufficient for a .|.|. belief that Singapore was no longer a “hard” state would signal a falling away of private sector investment. The footloose tendencies of many multinationals make this a particular danger: the agglomeration effects .|.|. could work .|.|. in reverse.” A number of interviewees suggested that the reputation of the Singapore government, Singaporean companies, and the Singapore business environment helped to garner intangible benefits. The parks at various times in their histories have commonly been referred to as “the Singapore park” in their respective host economies. Interviewees in Wuxi and Suzhou, China, suggested that the industrial parks promote Singapore and Singaporeans (as employees) within China (Interviews 2 and 17). Such benefits of reputation are manifest in flows of additional workers and tourists to Singapore and additional business for Singaporean companies. Reputation can also generate the types of geopolitical benefits that Gritsch (2005) saw as governments’ interest in promoting economic interests through extraterritoriality. Thus, the main benefit derived from the reputation of the VSIP that the interviewees identified was that it reflected well on diplomatic ties between Vietnam and Singapore (Interviews 11 and 13). ITP Bangalore appears to be the park that has had the largest impact on Singapore’s reputation. ITP “has arguably enhanced Singapore’s reputation for infrastructure efficiency and corrupt-free administration” (Yeoh, Sin, and Jailing 2004, 30). However, reputation can also stimulate economic benefits that are far removed from the industries that are involved with the parks themselves. One interviewee suggested that some of the main beneficiaries in the Singapore economy from ITP Bangalore have been those that are dependent on tourism, including Singapore Airlines (Interview 7). Perhaps what is more significant and more in keeping with the strategic thinking behind state extraterritorialization is the effect of reputation in the sphere of markets for internationally mobile highly qualified labor. For one interviewee in Singapore, then, “one of the benefits that nobody has been able to measure is [the] reputational element of a country and therefore people aspire to come and work. And I think we have seen quite a bit of that happening now” (Interview 5). This theme was underlined by another interviewee, who made the connection between the ITP Bangalore as part of Singapore’s “external economy” and the development of human resources in the IT industry in Singapore (Interview 7). Prior to and alongside the establishment of ITP Bangalore, Singapore’s EDB has run regular missions to India to recruit skilled IT labor (“EDB on recruitment drive in India” 1995). Still, another interviewee—the vice president of a company operating in ITP Bangalore— suggested that one of the main benefits to Singapore was to stimulate a reverse flow of skilled personnel to work in Singapore in light of what he perceived had been something of a “brain drain” in recent years (Interview 6). Conclusions Seen in the light of the tangible economic and soft geopolitical success of the Batam and Bintan industrial parks, the broader extraterritorialization of the Singapore state that was embodied in its regionalization program was, by 2001, considered unsuccessful (Pereira 2003). In particular, the economic and geopolitical template that was established with the parks on Batam and Bintan simply could not be replicated else- 390 ECONOMIC GEOGRAPHY OCTOBER 2007 where. My study allowed for slightly more generous conclusions regarding the likely magnitude of economic benefits of extraterritorialization taken as a whole. The main benefits have been to anchor corporate functions in Singapore and the wider head office–business service complex. The parks, as one territorial manifestation of state extraterritorialization, have also promoted the internationalization of Singaporean companies, although, with the exception of the land, infrastructure, property, and planning companies that are directly involved, less can be said of the depth and quality of this internationalization. The Singapore state’s explicit venture into extraterritoriality stands as a testament to the difficulties of gaining from globalization. Thus, as Yeoh, Sin, and Jialing (2004, 30) argued, “the ambition and optimism of developing an ‘exportable version’ of GLC networks, and strategic alliances with regional governments, have been misplaced. The limits of state networks beyond demarcated geographical boundaries have been exposed in the R2000 projects.” Overall, the economic benefits to Singapore from its overseas joint-venture parks have been modest. Two of the five parks appear to have had a significantly positive economic impact, but the other three appear to have had a marginally positive or neutral impact. Indeed, there is a case for arguing that one of the parks—at Suzhou, China—has had, in light of a period of strained relations, a negative impact. The Singapore state’s attempt to manage the processes of international economic integration—to intervene in the space of flows and to align it, when possible, with its territorially circumscribed domestic economy—has several implications. While in the past, states clearly engaged in extraterritoriality, they did so with nothing like the strategic apparatus that is associated with these industrial and technology parks. Indeed, in the past, states often handed over governmental functions to the superior machinery at the disposal of private companies. This also represents a strategy of extraterritoriality that would be largely unthinkable and probably impossible for most Western developed nations in which the maturity of national territorial demarcations has left states “trapped” geographically. In the West, then, states’ attempts to secure economic and soft geopolitical benefits have centered on what Ruggie (1993) referred to as the nonterritorial region, represented by new institutional mechanisms and arenas for regulation and decision making, and the export or promotion of domestic economic and soft-geopolitical interests through foreign policy rhetoric (Hay 2004; Wilkinson 2000). 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