sought to nurture domestic-owned capital amidst global market competition.
4
The final
section of the paper addresses the question of why member
governments were promoted to
halt their attempt at developmental regionalism in September 2001.
The Analytical Framework: Developmental Regionalism and the Domestic
Political Economy
Contemporary regionalism is generally conceived of as a response to the pressures
and incentives associated with economic globalisation (Gamble and Payne, 1998; Hveem,
2000; Mittelman, 2000: 111). One source of these pressures and incentives is the growing
economic inter-linkages between countries that generate common interests in cooperation
(Hurrell,1995: 56). But, globalisation is much more than the interactions and
interdependencies between countries. Globalisation is best regarded as a multi-faceted
structural phenomenon generating multiple pressures and incentives arising from the
complex interplay of its material, institutional and cognitive dimensions (Higgott, 2000:
70).
Material changes in production, trade and finance, especially since the 1980s have
heightened both the pressures on governments as well as competition among them as they
seek to generate wealth for their societies by attracting transnational corporations (TNCs)
to locate within their territories (Stopford and Strange, 1991: 1). Increasingly, the assets
required for wealth creation in the ‘new’ world economy centre on information,
technological innovation as well as management and organisational competence, what are
termed ‘created assets’ that reside within these global firms (Dunning, 1993: 6). While
previously salient ‘natural assets’ such as labour, land and natural resources remain
important in many sectors, governments wishing to involve their economies in higher
valued-added economic activities have become increasingly reliant on the wealth-creating
resources controlled by TNCs (Stopford and Strange, 1991: 1). In addition, neoliberal
economic rules instituted at the multilateral level, especially through the WTO,
increasingly prescribe free markets and proscribe government intervention in and control
of economic activity, which effectively adds a second set of pressures on governments
unable to employ traditional policy instruments to meet domestic social and political
4
The analysis focuses on the original ASEAN members – Indonesia, Malaysia, the Philippines, Singapore
and Thailand, as these were responsible for initiating major policy decisions in AFTA.
3
objectives (George, 2002). Moreover, these multilateral rules
are creating an environment
in which TNCs face fewer and fewer restrictions worldwide on their activities. This has
contributed to a shared consciousness among governments of heightened global market
competition vis-à-vis the global corporate giants and a sense of the growing dominance of
these TNCs in markets everywhere. Governments, therefore, not only react to actual
external pressures associated with globalisation they often respond in anticipatory fashion
to perceived challenges to the competitiveness of the home economy and of home country
firms (Palan and Abbott, 1996: 32). Regionalism can emerge as one such response to
these multiple pressures.
The literature identifies two ideal-type models of the globalisation-regionalism
relationship, with open regionalism the dominant theoretical model as well as in practice
(Mittelman, 2000: 126). Open regionalism
5
is aimed primarily at advancing the
competitive position of business in global competition (the liberal economic
interpretation) or to attract wealth-creating FDI to the region amidst competition with
other sites for it (the economic realist interpretation).
6
The main driving force behind open
regionalism is the concern with economic efficiency, or more broadly with ensuring
economic growth through participation in global wealth creating activities. An alternative
ideal-type model of the globalisation-regionalism relationship in the literature is the
‘resistance to globalisation’ model of regionalism (Hveem, 2000: 75-78). Resistance
projects are driven largely by concern with non-economic or social values like distribution
and social justice, seeking to preserve through regionalism particular forms of domestic
social/economic arrangements that are arguably difficult to sustain individually amidst
globalisation (Mittelman, 2000: 116-30). While proponents of regionalism in this model
seek to resist globalisation, the advocates of both variants of open regionalism accept full
engagement with globalisation.
While providing useful insights into the relationship between globalisation and
regionalism, these two models are limited in their treatment of the state-market
5
The term ‘open regionalism’ originally meant a form of regionalism that was based on the principles of
unilateral liberalisation as well as non-discrimination in tariff preferences between members and outsiders
(Drysdale and Garnaut, 1993: 187-88). The term is now used in a more general sense to characterise
regionalist schemes that are fundamentally about engaging with the global market (Gamble and Payne, 1996:
251).
6
The conceptual distinctions between the two variants of open regionalism are discussed in Nesadurai
(2001: 60-70).
4