Government policy in South East Asia

Globalisation cannot be defined as one, single process. It is a complex of processes including aspects such as the growth of global trade routes and global markets. Globalisation is linked to the growth of supraterritorial relations between people. This is the idea that international borders are becoming permeable, and that the time space divide between people and business continues to become less significant. There have been countless attempts to define globalisation. One of the most respected is Ohmae's notion of a borderless world.

Globalisation has resulted in a change in the international division of labour. Historically, the old international division of labour (OIDL) consisted of few global metropoles, with several satellite regions (peripheral areas). The model show below was developed by Frank. The metropoles shown are global cities. These include London, England and Paris, France. The arrows represent the flow of exploitation. Small settlements expropriate surplus from the surrounding regions, and this chain continues until the largest settlements are exploited by the metropolis.

The result of globalisation is a new international development of labour. This has been the result of the post war rapid growth of the Trans-National Company (a company with its operations spanning more than one country). The TNCs are born in market developed, capitalist economy nations (mainly USA, EU, Japan). As profit is the main objective for many of these enterprises, they take advantage of cost reducing opportunities. The geographical shift of routine manufacturing operations has led to South East Asia becoming an increasingly popular destination for TNC manufacturing processes.

South East Asia is shown on the map below. It contains the 'Tiger Economies' of Taiwan, Singapore, Hong Kong, Malaysia and South Korea. These nations are described as newly industrialising countries. According to the theories of Rostow, nations must have a huge financial investment in order to experience industrial takeoff. For the nations of South East Asia, the TNC has provided an excellent opportunity for this investment. Although the TNC carries many issues regarding ethics and its huge power of domestic economies, it is regarded as a positive influence by many developing nations. For these reasons, South East Asia must try to attract the TNC to their nation, and provide benefits over other nations in competition with them.

It is the government that plays a large role in providing incentives to large TNCs to attract them to their nation. The state of certain nations adopted a strategy to become export oriented as opposed to an import substitution approach. This means that instead of protecting the home-grown industries with high taxes and tariffs in order to promote a long term development in the overall industrial structure, the approach was modified to encourage foreign investment, manufacturing goods specifically to be exported to the developed market economies. Not all nations within South East Asia have radically changed. Hong Kong and Singapore operated open-door policies, with many incentives offered to TNCs. In contrast Taiwan and more specifically South Korea have been much more restrictive.

The main incentive offered to the TNC has been the export-processing zone. EPZs are export enclaves specifically developed to meet the needs of the TNC. EPZ's are often exemplary from national legislations. These include legislation that protects the employee being scrapped. An example being in some EPZs, it is illegal for an employee to be a member of a union, or take any industrial action against the firm. EPZs are specially developed for manufacturing. This means that all necessary services and infrastructure is provided. High quality roads, transport facilities, power supplies and low cost buildings are all examples.

The EPZ is a fast growing strategy. By 1986, seventy-four countries either had an EPZ in place or were planning to do so. The total employment within EPZs was 1.3 million. The largest concentration was in South East Asia (over 60% of all employment), and more specifically in Hong Kong and Singapore.

Shenzehn in China is an example of a special economic zone (SEZ). This is the same as an export-processing zone. The liberalisation of trade regulations within the People's Republic of China has resulted in a huge growth region on the Eastern Coast. This is also known as the 'Gold Coast'. The region contains a vast range of facilities, specifically developed for manufacturing operations. It has been successful in attracting TNCs as it is able to offer an even cheaper, and vaster labour pool than South East Asian nations. The other major contributing factor is the opportunity for market penetration. There are over one billion people, and China is full with unsaturated markets, meaning existing products can be sold.

The special economic zones have created areas of large wealth. These regions are the wealthiest in China. The result has been a huge migration pattern from rural to urban. A pattern not dissimilar to that seen in Brazil. However, like Brazil, the wealth within these regions is not shared equally. Many migrants fail to achieve a higher standard of living, due to the huge demand, and short supply of housing, water and electricity.

The huge demand for jobs in TNCs means that large multi national firms are able to dictate the terms to their employees without any fear of consequence. Firms can be confident that production will never cease, as employees are not protected by unions, and little legislation is in force to protect their rights. This has led to critics branding special economic zones as 'commercial concentration camps'.

China has become a land of inequality, a complete contrast to its communist status. The impact of globalisation in Eastern and South East Asia has been aided by the state, whose strive for industrial takeoff, and now maturity has allowed the TNC to take advantage in the hope that their nation will one day will rise above the Brandt line to join the developed market economies.