Subregional growth zones in greater China and ASEAN, an analysis of trade, investment, and industrial relocation

by Chong, Allen Ku

The emergence of subregional growth zones, also known as growth triangles, in Asia Pacifk, involving the relocation of labour intensive industries &omHong Kong and Singapore, refiects changing comparative advantage conditions, the rise of transnational production networks amongst participants, and key political decisions encouraging the relocation of selected manufacturing fiom the metropolitan cores to their neighbouring hinterlands. Subregionaigrowth zones are geographically contiguous areas separated by political boundaries but possessing different factor endowments due to v-g development . stages of The ernpincal evidence shows increased FDI, exports, imports, and reexports between growth zone participants diring the period lmder study. Production profiles in pdcipating economies changed during 1985- 1997. Initial investrnents from core hubs into their hinterlands were forproducfion relocation, then later forprhct and market integrdon. There is also mixed evidence regarding whether MNC subsidiaries located in both zones are part of buyer or producer driven global comrnodity chahs in transnational credit, knowledge and production structures. Political ciecisions were cmcial to the establishment of these subregional economic zones. Without the requisite politicai coopermon to support cross border trade and investment, closer economic ties between participants would not have taken place. Growth zone development ernbodies aspects of the neoclassical, keynesian demand stimulus, and mercantilist policy options, more so than the protectionist option. MNC production, relocation, and investment decisions reflect theû relationai and indirect structural powers over governrnents. Their choice of production and investment locations reved, implicitly, their preferred types of host investment regimes.