Regional Development and the Competitive Dynamics of Global Production Networks: An East Asian Perspective

Abstract

Yeung H. W.-C. Regional development and the competitive dynamics of global production networks: an East Asian perspective, Regional Studies. The debate on the nature and dynamics of regional development in both academic and policy circles has now moved on from the earlier focus on endogenous regional assets to analysing the complex relationship between globalization and regional change. This position paper attempts to engage with this debate through the experience of regional development in East Asia. The paper shows that regional development cannot be understood independently of the changing dynamics of global production networks. While the existing literature on East Asia tends to focus on the state as the key driver of economic development at the national and regional levels, it is argued that the developmental state is a necessary but not sufficient condition for regional development to take place. Instead, one needs to study the complex strategic coupling of those economic actors, particularly large business firms, operating in specific regions in Asia with their lead firm counterparts orchestrating production networks on a global basis. To illustrate these strategic coupling processes and their impact on divergent regional development trajectories, the author draws upon his own primary data and other papers to be published in this special issue of Regional Studies. The paper concludes with some major implications for theorizing regional development and strategic regional policy options.

Yeung H. W.-C. L'aménagement du territoire et la dynamique compétitive des réseaux de production mondiaux: du point de vue de l'Asie de l'Est, Regional Studies. Le débat sur les caractéristiques et la dynamique de l'aménagment du territoire dans les milieux académique et politique ne met plus l'accent mis sur les atouts régionaux endogènes mais plutôt sur l'analyse du rapport complexe entre la mondialisation et l’évolution régionale. Cet article cherche à s'engager dans ce débat à partir de l'expérience de l'aménagement du territoire en Asie de l'Est. Cet article montre que l'aménagement du territoire ne peut pas s'expliquer indépendamment de la dynamique changeante des réseaux de production mondiaux. Alors que la documentation actuelle sur l'Asie de l'Est a tendance à porter sur l’état comme la principale force motrice sur les plans national et régional, on affirme que l’état du développement constitue une condition nécessaire mais insuffisante de l'aménagement du territoire. Plutôt, on étudie l’accouplement stratégique complexe de ces agents économiques, notamment les grandes entreprises qui opèrent dans des régions spécifiques en Asie pendant que leurs entreprises phares homologues organisent des réseaux de production mondiaux. Pour illustrer ces processus d'accouplement stratégique et leur impact sur diverses trajectoires d'aménagement du territoire, on puise dans les données de base de l'auteur et dans d'autres articles à paraître dans ce numéro spécial de Regional Studies. Pour conclure, l'article discute d'importantes implications quant à la théorisation de l'aménagement du territoire et aux options stratégiques pour la politique régionale.

Aménagement du territoire Réseaux de production mondiaux Accouplement stratégique Processus transfrontaliers Asie Entreprises Etats

Yeung H. W.-C. Regionalentwicklung und die Wettbewerbsdynamik globaler Produktionsnetze: eine ostasiatische Perspektive, Regional Studies. Die akademische und politische Debatte über die Art und Dynamik der Regionalentwicklung konzentriert sich heute weniger auf endogenes regionales Kapital; stattdessen wird zunehmend die komplexe Beziehung zwischen Globalisierung und regionaler Veränderung analysiert. In diesem Positionsaufsatz versuche ich, mit den Erfahrungen der Regionalentwicklung in Ostasien zu dieser Debatte beizutragen. Aus dem Aufsatz geht hervor, dass sich die Regionalentwicklung nicht unabhängig von der wandelnden Dynamik globaler Produktionsnetze verstehen lässt. Die vorhandene Literatur in Ostasien konzentriert sich in der Regel auf den Staat als wichtigsten Motor der Wirtschaftsentwicklung auf nationaler und regionaler Ebene; ich hingegen argumentiere, dass ein die Entwicklung fördernder Staat zwar eine notwendige, jedoch keine ausreichende Vorbedingung für Regionalentwicklung darstellt. Stattdessen ist es nötig, die komplexe strategische Kopplung dieser wirtschaftlichen Akteure zu untersuchen – insbesondere die von Großunternehmen, die in bestimmten Regionen Asiens tätig sind und deren Leitfirmen Produktionsnetze auf weltweiter Ebene steuern. Um diese strategischen Kopplungsprozesse und ihre Auswirkung auf divergente regionale Entwicklungsverläufe zu illustrieren, werte ich meine eigenen Primärdaten sowie weitere Aufsätze aus, die in dieser Sonderausgabe von Regional Studies veröffentlicht werden. Zum Abschluss des Beitrags werden verschiedene wichtige Auswirkungen auf die Theoretisierung der Optionen für die Regionalentwicklung und strategische Regionalpolitik dargestellt.

Regionalentwicklung Globale Produktionsnetze Strategische Kopplung Transregionale Prozesse Asien Unternehmen Staaten

Yeung H. W.-C. Desarrollo regional y las dinámicas competitivas de las redes de producción global: una perspectiva esteasiática, Regional Studies. El debate académico y político sobre la naturaleza y las dinámicas del desarrollo regional ya no se centra como antes en el capital regional de tipo endógeno sino que tiene como objetivo analizar la relación compleja entre la globalización y el cambio regional. En este informe pretendo contribuir a este debate a través de la experiencia del desarrollo regional en el este de Asia. En el artículo demuestro que el desarrollo regional no puede ser entendido independientemente de las dinámicas cambiantes de las redes de producción global. Si bien la literatura existente sobre el este de Asia tiende a centrarse en el estado como el principal motor del desarrollo económico a niveles nacionales y regionales, sostengo que el estado de desarrollo es una condición necesaria pero no suficiente para que ocurra el desarrollo regional. Más bien necesitamos estudiar la compleja conexión estratégica de estos protagonistas económicos, especialmente para grandes empresas comerciales que funcionan en regiones específicas en Asia y cuyos socios líderes organizan las redes de producción en todo el mundo. A fin de ilustrar estos procesos de conexión estratégica y sus repercusiones en trayectorias divergentes de desarrollo regional, me beneficio de mis propios datos primarios y otros documentos que se publicarán en este número especial de Regional Studies. Este ensayo concluye con algunas implicaciones principales para teorizar las opciones del desarrollo regional y de la política regional estratégica.

Desarrollo regional Redes de producción global Conexión estratégica Procesos trans-regionales Asia Empresas comerciales Estados

Keywords:

• Regional development
• Global production networks
• Strategic coupling
• Trans-regional processes
• Asia
• Business firms
• States

JEL classifications:

• L22
• O18

Acknowledgement

This paper was specifically written as an introductory position paper for this special issue. The author would like to thank Andy Pike for inviting him to bring these papers together. Apart from thanking the authors of the nine papers to follow, the present author is also grateful to Hege Knutsen, Balaji Parthasarathy, Martin Perry, Tulus Tahi, Hamonangan Tambunan, Jonathan Rigg, Markus Hassler, and the many referees for participating in this major undertaking to understand better regional development in Asia. Arnoud Lagendijk, as the new Editor-in-Chief of Regional Studies, is thanked for expediting the publication of this special issue. Meanwhile, this paper was first presented as a Plenary Lecture at the Regional Studies Association Annual Conference, London, UK, on 24 November 2006. The author would like to thank the Regional Studies Association, its Chief Executive, Sally Hardy, and Conference Coordinator, Andrew Cumbers, for inviting and funding him to deliver this plenary paper. The paper was also presented at the Annual Meeting of the Association of American Geographers, San Francisco, California, USA, on 17–21 April 2007. The NUS Academic Research Fund (Grant Number R-109-000-050-112) supported the research project underpinning this paper. The author is grateful to his research collaborators, Jang-sup Shin and Yong-Sook Lee, for their significant intellectual inputs, and to Angela Leung for her excellent research assistance. The paper was written while the author was a Visiting Researcher at the International Centre for the Study of East Asian Development (ICSEAD), Kitakyushu, Japan, during July–September 2006, and further revised while he was a Visiting Professor at the School of Geography, University of Hong Kong. The author is very grateful to the ICSEAD for its generous Visiting Researcher scheme and the University of Hong Kong. Detail and constructive comments were subsequently received from Andy Pike, Neil Coe, Nick Phelps, Jessie Poon, and two anonymous reviewers of Regional Studies. The author is solely responsible for the content of this paper.

Notes

While this important point is likely to be applicable to the experiences of regional development in North America and Western Europe, it is clearly beyond the scope of the present paper to examine these experiences empirically (Pike et al., 2006; Pike, 2007b).

Other major groups of actors are labour and civil society organizations (CSOs). But given the constraints of space in this paper, the author is unable to give sufficient analytical attention to them all (Henderson et al., 2002; Coe et al., 2004). The papers by Kelly, Lee, and Lepawsky in this issue demonstrate clearly how households and CSOs in the Philippines, South Korea, and Malaysia participate actively in these expanding global networks of regional development.

This observation might appear to be quite strange when key developmental state theorists had published their work by the late 1980s and early 1990s (for example, Amsden, 1989; Wade, 1990). While not denying the significance of state policies in paving the initial conditions for industrialization and economic development (see also Lee et al., 2005a), the present author believes their work was based on research conducted in and referring to mostly the early phases of development during the 1970s and the 1980s. For an updated analysis of the role of the developmental state in South Korea and Taiwan, see also the papers by Lee and Yang et al. in this issue. Lepawsky's paper also illustrates the political role of the Malaysian state in regional development initiatives.

For two detail case studies of strategic coupling mechanisms in China and Taiwan, see the papers by Yang and Yang et al. in this issue.

The empirical evidence presented here originates from a major transnational research project in which personal interviews with top executives of leading Asian firms were conducted in the four newly industrialized economies. A total of 68 leading Asian firms were interviewed between June 2004 and December 2006: nineteen Hong Kong firms, thirteen South Korean firms, 24 Taiwanese firms, and twelve Singaporean firms. These firms were selected on the basis of their 2003/2004 operating revenues or turnover captured in the OSIRIS database published by Bureau van Dijk Electronic Publishing, a comprehensive database containing detail financial information on publicly listed companies worldwide. The top fifty firms from each of the four newly industrialized economies were selected, and they were approached for personal interviews with their top executives. Among the 68 leading Asian firms interviewed, fifteen were in the top ten and 29 were in the top twenty by operating revenues in their respective economies. Eleven of them were ranked in the United Nations Conference on Trade and Development's (UNCTAD) (2005) top fifty transnational corporations from developing economies. Some 33 of the interviewees were CEOs/Presidents or Managing Directors, whereas another 32 were Executive Directors, General Managers, or (Senior/Executive) Vice-Presidents. In some cases (for example, Samsung Electronics), personal interviews with several top executives were conducted. In all interviews lasting between one and two hours, an open-ended approach was taken and only brief interview aides were used. Extensive background information from all available public sources was consulted to form the basis of customized qualitative questions during each interview. All interviews except one were taped and transcribed, and these transcripts and other relevant information form the empirical basis of this paper.

Admittedly, this is a narrow representation of Harvey’s (1982) idea of spatial fix that in its original formulation also includes opening up new spaces for capitalist production, new markets, or new sources of raw materials and re-creating or rejuvenating old production spaces. See also Glassman (2007) for a case of Thailand and the paper by Lepawsky in this issue on how the Multimedia Super Corridor in Malaysia serves a spatial fix through state-led national decentralization initiatives.

Constraints of space preclude the possibility of dealing fully with other important issues about market structures, inter-firm/network rivalries, regulation, and so on that characterize different forms of GPN dynamics (Hess and Yeung, 2006; Coe et al., 2008a).

Again, it is important to note that this concept, despite its potential misinterpretation as a structuralist or functionalist take, is a heuristic device for understanding the interconnections with regions and global production networks (Coe et al., 2004, n. 1).

On how entrepreneurial culture shapes regional trajectories in Japan and China, see the papers by Aoyama and Wei et al. in this issue.

Based empirically on the case of Cavite in the Philippines, the paper by Kelly in this issue specifically explores the role of transnational migration and remittances in constituting another critically important form of ‘global reproduction networks’.

See a variety of empirical examples in this issue on South Korea (by Lee), Malaysia (by Lepawsky), China (by Lin and Wei et al.), and Taiwan (by Yang et al.).

For an exception of two regions in Japan – Hamamatsu and Kyoto – see the paper by Aoyama in this issue.

There is now a credible body of literature in English examining the political economy of regional development in China (Fan, 1995; Lin, 1997; Marton, 2000; Wei, 2000; Zweig, 2002; Wei et al., 2007; Yang, 2007; Kim and Zhang, 2008; and the papers by Lin, Wei et al., and Yang in this issue), Malaysia (Jomo and Felker, 1999; Morshidi, 2000; Smakman, 2003; and the paper by Lepawsky in this issue), South Korea (Cho, 1997; Park, 2005; and the paper by Lee in this issue), Taiwan (Hsu and Cheng, 2002; Hsu, 2005; Lee and Saxenian, 2008; and the paper by Yang et al. in this issue), and Thailand (Unger, 1998; Dixon, 1999; Glassman, 2001, 2007; and the paper by Sajarattanochote and Poon in this issue). An overwhelming majority of these authors are nationals originating from or living in the respective East Asia economies. Their work in English represents a balanced view of their understanding of different strands of literature published in English and their local languages.

Singapore is taken as a region in this section, even though it is an independent nation-state. As a city-state, Singapore is territorially and functionally not too different from any major global city-regions in the world (Scott, 2001; Olds and Yeung, 2004).

Interviews with Macronix and TSMC in Taipei, July 2004.

Interview in Taipei, 9 July 2004.

Interviewed in Singapore, 19 May 2006.

Interviews with Samsung Electronics and LG Electronics in Seoul, May 2004 and June 2005.

Interview with the co-founder and Group Managing Director in Singapore, 22 June 2006.