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Globalisation and urban transformations in the Asia-Pacific region: A reviewFu-chen Lo; Peter J MarcotullioUrban Studies; Jan 2000; 37, 1; Academic Research Librarypg. 77

Urban Studies, Vol. 37, No. t, 77-111, 2000

Globalisation and Urban TransformationsAsia-Pacific Region: A Review

Fu-chen Lo and Peter J. Marcotullio

f Paper firs/ received. March 1998; in final form, J1111e 1999/

in the

Summary. In the Asia-Pacific context, over the past several decades, economic globalisation permitted the deepening of intrafirm trade, foreign direct investment and the division of labour between head offices and their subsidiaries abroad, thus effecting a greater interdependency between the developed nations and developing nations in the region. The linkages of this emerging transnational economy are embedded in the region's cities through the world city formation process and have led to the development of a 'functional city system'. Urban functions, within the system include, inter alia, production, finance, telecommunications, transportation, direct investment and even amenity provision. The accumulation of different functions by a given city provides for the foundation of its external linkage and economic growth and also underlies transformations in its physical form. While all cities have a variety of functions and play many roles within the regional economy, dominant characteristics found in cities allow for the identification of different types including capital export cities, regional entrepots, industrial cities and amenity cities.

Introduction

During the past few decades, the world economy has experienced structural adjustments affecting production, resource utilisation and wealth creation. Cross-border functional integration of economic activities and growing interdependency among regional economic blocs are part of a set of processes defined as'globalisation'. Important elements in theevolution of the global system are the expansion of trade, capital flows (particularly direct investments) and a wave of new technologies.

The logic of economic globalisation-driven growth has privileged some regions and cities over others. In general, the developed world and some developing and newly

industrialised economies (NIEs) have benefited, while many developing countries have been marginalised. Within developed countries, the centres of finance and advanced business services as well as high-tech industries have benefited, while cities dominated by traditional blue-collar employment have stagnated. Among developing states, the resulting sets of economic arrangements have benefited Asia-Pacific countries in particular (World Bank, 1993). (The Asia-Pacific region includes those nations bordering the South China Sea and the Western Pacific Ocean excluding Oceania.)

Cities have become nodes in the globalweb of economic flows and linkages. Until

Fu-chen lo and Peter J. Marcotullio are i11 the United Nations University Institute of Advanced Studies, 53-67 Jingumae S-cbome, Shibuya-ku. Tokyo 150-8304, Japan. Fax: + 151-3-5467-2324.E·mail:[email protected] and [email protected].

0042-0980 Print/ I 360-063X On-linc/00/0 I 0077-35 © 2000 The Editors of Urban Studies


78 FU-CHEN LO AND PETER J. MARCOTULLIO

recently, globalisation has had a dramatic and positive effect on cities in the Asia-Pacific region, a result of the emergence of an industrial belt based on the location of manufacturing firms in the major metropolitan centres of the Asian NIEs, ASEAN, China and In- dochina. These cities are becoming the new sites of global manufacturing production and are increasingly playing a key role in economic transformations. Indeed, as the recent financial crisis demonstrated, economic growth and development among countries throughout the region is highly dependent on the international activities that take place within its cities.

Economic growth, integration and the re-sultant interdependency has led to the emergence of a regional city system, called the Asia-Pacific functional city system (Yeung and Lo, 1996). A functional city system is

a network of cities that are linked, often in a hierarchical manner based on a given economic or socio-political function at the global or regional level (Lo and Yueng,l 996b, p. 2).

As cities articulate to this system, they undergo a process of development commensurate with their dominant economic roles within the set of transnational flows. While local characteristics play an important part in mediating globalisation processes, general patterns of development can be discerned based upon the intensity of the prevailing currents.

This review essay presents one understand- ing of urban and regional development in the Asia-Pacific region through the lens of economic 'globalisation' and the development of the functional city system. The first section presents some of the elements of the globalisation process and how they have played out within the Asia-Pacific region. The second section describes the world city formation process (Friedmann, 1986; Friedmann and Wolff, 1982) as it has impacted cities in the region. This part of the paper focuses on how globalisation flows have influenced the growth of major metropolitan centres in the region. The third describes the emergence of an Asia-Pacific urban corridor and the devel-

opment of a functional city system (Lo and Yeung, 1996; Lo and Marcotullio, 1998). It presents some patterns of urban development within the city system. Lastly, the implicationsof this mode of growth on the sustainabilityof cities will be discussed.

Economic Globalisation and the Asia- Pacific Region

Globalisation "implies a degree of functional integration between internationally dispersed economic activities" (Dicken, 1992, p. 1 ). Functional integration is progressing through increased stretching (geographical widening) and intensity (deepening) of international linkages. Evidence for the geographical scope of the processes usually includes the locations of nodes within the flows. The Asia-Pacific region has its share of these points in the global system in the form of urban centres. The intensity of globalisation is generally given by a number of trend indicators including trade and financial flows, foreign direct investments (FDI), communications (information flows) and personal and business travel. In the Asia- Pacific region, these trends have taken on a particular character. In this section we describe changes in the world and regional economy through the presentation of indicators of globalisation.

Trade and Financial Flows

World trade has been growing rapidly since1950 (Table I). From that time to 1992, the annual average growth rate topped 11.2 per cent, bringing the net value of global export trade from US$61 billion to over US$3.7 trillion (UNCT AD, 1994). However, this growth rate is not only unprecedented, it is also higher than that of global production. While in 1950 merchandise exports were 7 .0 per cent of world GDP, by 1992 global exports accounted for 13.5 per cent of total world output (Maddison, 1995). A pre-1997 financial crisis World Bank figure placed world merchandise exports at 18 per cent of world GDP. No doubt, the expansion of trade is a defining character- istic of the post-World War II global economy.


GLOBALISATION AND THE ASIA-PACIFIC REGION 79

Table 1. Regional annual average growth rates of trade (percentages)

Region 1950--60 1960-70 1970-80 1980-90

World 6.5 9.2 20.3

Developed market economies 7.1 10.0 18.8North America 5.1 8.7 17.0EC• 8.4 10.2 19.3

Developing countries 3.1 7.2 25.9South America" 2.3 5.1 20.6Sub-Saharan Africa 4.8 7.8 20.0South and south-east Asia 0.2 6.7 25.8

"Includes Belgium-Luxembourg, Denmark, France, Germany, Greece, Ireland, Italy, Netherlands Portugal, Spain and UK.

"lncludes Argentina, Brazil, Chile, Mexico, Paraguay and UruguaySource: UNCTAD (1994, Tables l.5 and 1.6, pp. 16-25).

East and south-east Asian economies exemplify the world trend in trade (Table 2). The regional pattern began with rapid increases in Japanese exports, was followed by trade expansion among the Asian NIEs in the1960s and has, up until recently, been suc- ceeded by explosive growth rates of trade inASEAN countries. While it is true that the

1970s had brought growth in trade to most countries around the world (average annual world growth rate in trade was 20.3 per cent), the Asian NIEs and the ASEAN countries experienced a particularly rapid expansion in their exports and imports (37.2 per cent for Korea, 28.6 per cent for Taiwan and28.3 per cent for ASEAN). In the 1980s,

Table 2. National annual average growth rates of trade (percentages)

Country

USA

1950-60

5.l

1960-70 1970-80

7.8 18.2 UK 4.8 6.3 18.4France 6.4 9.8 19.8Germany 16.6 11.4 19.lAustralia 0.9 7.7 15.9

Japan 15.9 17.5 20.8

Korea I.4 39.6 37.2Hong Kong -0.4 14.5 22.4Taiwan 6.5 23.2 28.6Singapore -0.1 3.3 28.2

Malaysia 0.6 4.3 24.2Indonesia -l.l 1.7 35.9Thailand l.5 5.9 24.7Philippines 4.5 7.5 17.5

China 19.1 1.3 20.0

Argentina -0.2 4.8 18.0Brazil -2.0 7.2 21.7Mexico 3.4 6.0 25.7

Source: UNCTAD (1994 Tables 1.5 and l.6, pp. 16-25).



world trade slowed due to the fall in primary commodity prices and a global recession in the first part of the decade, among other factors, but trade for countries in Asia con-

Table 3. Percentage share of service sector in GDPof G7 countries, 1960-93

Percentage change

tinued to grow. The exceptions were Indone-sia and the Philippines. Indonesian trade was

Country 1960 1993 1960-93

hard hit in the first half of the decade by the fall in demand for its agricultural and fuel oil products and political instability depressed the Philippines' export trade during that period.

Japanese trade with the rest of the Asia-

USAUK France GermanyJapan Canada Italy

58 75'53 6552 6941 6142 5760 7146 65

29.3122_6432.6948.7835.7118.3341.30

Pacific region has been the key to both its own success and the restructuring of many neighbouring economies (Shinohara and Lo,1989). Japanese exports have been increasingly directed to nations in the region. For example, between 1975 and 1985, the value of the Japanese products exported to Korea, Singapore, Malaysia and Thailand increased by 202 per cent, 226 per cent, 378 per cent, and 121 per cent respectively (Akita et al.,1997). By 1987, Japan's trade with the Asian N!Es had increased so sharply that it was roughly the same magnitude as its trade with the 12 countries of the then European Com- munity (Yeung and Lo, 1996). By 1996, Japan's exports to the world amounted to US$400.5 billion and over 45 per cent of that went to Asia (JETRO, 1997).

Notwithstanding its magnitude and rapid expansion, two important aspects of global trade during the past few decades were the growing importance of the service trade and the growing complexity of international finance. The service sector has increasingly become an important part of the global economy. It makes up the largest share of gross domestic product of all but the lowest- income countries. It also accounts for an increasing share of the gross domestic product of developed nations. By 1993, it accounted for over two-thirds of national production in these nations (Table 3). The national importance of the service sector is also reflected in trade statistics. Beginning in the 1970s, service trade internationalised and by the 1980s service industries were growing faster than any other sector of the world economy. From 1986 to 1995, commercial

•t991 figure, from Survey of Current Business,1993-

Source: World Bank, World DevelopmentReport (various years).

services trade grew at a rate of 12_5 per cent per year, while merchandise trade grew at a rate of 9.5 per cent per year. By 1996, trade in commercial services was worth US$ l .2 trillion representing 20 per cent of total world trade (ADB, 1998). Interestingly, in the Asia-Pacific region as a whole, the development of manufacturing production seems not to have been matched by a similar level of service-sector development, possibly because of the use of services from outside the region (Daniels, 1998). However, service-sector development in cities of the region has had fundamental effects upon metropolitan structure and urban form (Park and Nahm, 1998; Searle, 1998; Sirat,

1998)_Another significant trade-related phenom-

enon has been the development of the global finance system. While in the past, the world finance system grew to keep the global trade system working smoothly, the flows of global finance alone have subsequently taken on unique importance. Peter Drucker ( 1986) has suggested that this development represents a separation of the 'real economy' of the production and trade of goods and services from the 'symbol economy' of credit and financial transactions. This separation is significant in that each 'economy' now operates almost independently.


GLOBALISATION AND THE ASIA-PACIFIC REGION 81The importance of the international fi-

nance system can be seen in the absolute size and increases in foreign currency trade. For example, in the mid 1980s, foreign exchange trade exceeded US$150 billion a day, which annually amounted to 12 times the value of world trade in goods and services. By the late1980s, the total was up to US$600 billion aday, no less than 32 times the volume of international commercial transactions worldwide (Drucker, 1986; Strange, 1994). Annual transactions in the Eurocurrency markets have risen from US$3 billion in the 1960s to US$75 billion in I 970 to US$ I trillion in1984 (Strange, 1994). These transactionshave been encouraged by access to a 24-hour global network of capital markets concentrated in cities such as New York, London and Tokyo (Sassen, 199l ).

The institutional structure of the emerging global financial system contributes to its importance. Since the global financial system is a hybrid of states and markets, it is therefore not solely within the command of governments. As the 'symbol' and 'real' economies have separated, the influence of global markets for money has grown and the power of governments to influence or control these markets has diminished. The hard lesson of the Asian crisis is that this part of the system is vulnerable-the 'Achilles· heel' of the global economy (Strange, 1994). As has been demonstrated, if confidence in the system fails, decades of achievement can be wiped out in a relatively short period of time. The1980s debt crises pale in significance when compared with current events in Asia. Fur- ther, since the financial system is embedded in international transactions, 'shocks' in one place are quickly felt in another. While the Mexican financial crisis raised questions for investors and policy-makers, it was the l 997 currency and capital market crises that provided undeniable evidence of the intercon- nected nature of the global finance system. Within a period of days, the stock markets of Bangkok, Kuala Lumpur, Hong Kong, New York, London, Tokyo, Frankfurt, Paris, New Zealand, Brazil, Argentina and Mexico re- acted to the ASEAN bursting bubble. The

current climate within the global financial system demonstrates that, given impetus, the reaction on the part of investors to reduce their exposure, even in well-managed economies, can be translated quickly around the world. As a result, in 1997, private capital flows to the emerging markets fell by one- third, with Indonesia, Korea and Malaysia experiencing the largest declines (ADB,1998).

Foreign Direct Investment ( FD/)1

Trade linkages have been strengthened through growing cross-country manufacturing production processes facilitating intrafirm trade throughout the world and the region. In the 1980s, transnational corporations accounted for 70-80 per cent of world trade outside the centrally planned socialist countries (Feagin and Smith, 1987, p. 3).2This relationship makes FDI one of the dom- inating forces of global integration. The growth of FDl has been an integral part of the general economic growth in the world economy (UNCT AD, 1997).

The major channel of FDI is the transnational corporation (TNC). Global TNC activity was relatively unimportant until the late 1950s. Much of these flows were North- South and were heavily concentrated in resource-based industries, transport and utilities (Graham, 1995). The total accumulated stock of foreign direct investment rose from US$14.3 billion in 1914 to US$26.4 billion in 1938 before soaring to reach US$66 billion at the end of the 1950s (Dun- ning and Archer, 1987).

Notwithstanding fluctuations, beginning in the 1960s, FDI flows began to grow at twice the rate of growth of world gross national product and 40 per cent faster than world exports. During the 1970s, total flows of FDI on an outward basis were less than US$ l 3 billion (Graham, 1995). Then, after 1985, world FDI flows skyrocketed. In the late1980s, FDI inflows to countries around the world grew at the rapid annual averagegrowth rate of over 24 per cent (Table 4). Jnsubsequent years, the rate of growth of FDImore than doubled that for world trade. By

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GLOBALISATION AND TllE ASIA-PACIHC REGION 831996, FDI inflows had reached US$349 billion and FDI stocks reached approximately US$3.2 trillion, rising from US$ I trillion in1987, and the sales of TNC foreign affiliates (US$6.4 trillion) were higher than total world trade of goods and services (US$6. I trillion). Cross-border production processes reflect changes in corporate structures that arc being pursued t.irough foreign investment channels.

FDI has been overwhelmingly dominated by TNCs from developed countries. The re- sultant investment transactions have been described as mainly limited to a 'triad' including the EU, North America and cast and south-cast Asia (focused on Japan) as the dominant regional blocs (Ohmae, 1985; UNCTAD, 1997). In I 996, 59.6 per cent of world FDI flows were among OECD nations.

However, while transnational investment is primarily concentrated in the developed market economies, developing countries arc increasingly playing an important role (Table5). Cross-investment between the major developed market economics and developing economics had increased substantially. The percentage of total global FDI captured by developing countries had increased from 18 per cent in the mid to late I 980s to over 36 per cent in I 996. Asia has received more than 60 per cent of FDI flows to the developing world. Recently, China has captured the role of largest recipient, accounting for a third of all FDI flows to developing economies (ABO, 1998).

The most discernible impact of the currentfinancial crisis has been a sharp decline in private capital inflows to the five affected countries (Thailand, Indonesia, Malaysia, Korea and the Philippines). Together, they suffered net private capital outflows of US$12 billion in 1997, compared to net inflows of US$93 billion in 1996. However, despite the movement of equity capital out of the region, in 1997, FDI inflows into these economies remained at about US$7 billion, approximately the same as in 1996 (ABO,1998). This may indicate that the regionalmanufacturing production system has not collapsed.

A considerable number of TNCs from a small number of developing countries, most obviously some of the Asian NIEs, have emerged. Among a list of the 1995 top 50TNCs based in developing economies, 34 arc home institutions of the 4 Asian NIEs and China. These 50 firms have total assets ranging from US$1.3-40 million, total sales ranging from US$366 000 to 36 million and total number of employees ranging from7434 to 200 000. Two of them are included in the 1996 list of Top 100 global TNCs (UNCT AD, I 997).

Jn the Asia-Pacific region, Japanese trade grew with the importance of intrafirm trade among Japanese companies. Many Japanese TNCs have subsidiaries located in the region with which they trade parts and services. In this way, Japanese trade has strengthened its economic linkages to developing countries in the region. Therefore the basis for increased Japanese trade with the Asian NIEs and ASEAN originated and developed with Japanese FDI. In 1988, the region's catch of Japanese FDI was 11.7 per cent in I 988 at US$5.2 billion (Yeung and Lo, 1996).' It is the accumulation of Japanese FDI and the transfer of knowledge- based intangible assets (for example, production technology, marketing networks, management systems), which accompanied these investments that have provided the impulse for the region's growth (Hatch and Yamamura, I 996; Lo, 1994). Two important aspects of Asia-Pacific FDI arc that it is largely regionally based and that the manufacturing share dominates total FDI flows.

The flow of intra-Asia FDI began withJapanese industrial expansion in the 1960s. For example, with early liberalisation of investment regulations in Indonesia, Japan began investing in the country. The number of firms increased from 22 in 1967 to 48 in I 970 to 123 in 1975 (Syamwil, 1998, Table 4). Most recently, with increased liberalisation in China, Japanese FDI has flooded that country. In 1994, for example, there were 636 cases of FDI from

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GLOBALISATION AND THE ASIA-PACIFIC REGION 85Japan alone, slated for the Chinese mainland(Hatch and Yamamura, 1996).

Japan has maintained a considerable investment position in the region despite its sagging post-bubble economy. In the early1990s, Japanese manufacturers, particularly machine-makers, continued to invest heavily in the Asia-Pacific. The share of Japanese manufacturing FDI in Asia has grown from19.8 per cent in 1990 to 32.9 per cent in 1993while falling from 43.9 per cent to 37.2 per cent in North America and from 29.7 per cent to 18.3 per cent in Europe during the same period (Fukushima and Kwan, 1995). Japanese FDI increased sharply in Thailand during 1993 and 1994 as Casio, Sony, Toy- ota and Honda expanded their production capacities. Japanese firms also have recently increased investments in the Philippines, Indonesia, Malaysia and China (Hatch and Yarnamura, 1996).

Recently intraregional non-Japanese FDIhas increased significantly. By the early1990s, the region experienced increased investments from the Asian NIEs and ASEAN countries. By 1994, FDI from the individual Asian NIEs into the region was approaching the levels of flow from Japan and in the case of Hong Kong tripled Japanese investments. During that year, the investments from these countries were primarily directed at ASEAN and China (Table 6).

The growth of manufacturing FDI was related to changes of economic structure within developing economies in the region. These shifts were recorded in their export compositions. During the period 1980-90, manufacturers' share of exports almost tripled from 21.8 per cent to 59.8 per cent for all ASEAN countries. Indonesia's percentage increase was 15.6 times, while Singapore and Thailand also made impressive gains (Yeung and Lo, 1996). In general, the exports from the Asia-Pacific region increased dramati- cally after 1985. The four Asian NIEs and the ASEAN countries accounted for only 9 per cent of world exports in that year, but by1997 their share had climbed to 14 per cent.This demonstrates the intimate relationship between FDI and trade and the importance

of capital-exporting countries, like Japan, Korea and Taiwan to the region's economic growth.

Communication Networks

The world is in the midst of a 'revolution' led by advanced digital technologies. Com- munication networks and interactive multimedia applications are providing the foundation for the transformation of existing social and economic relationships into an'Information Society'. The growth of the telecommunications industry has been dramatic. In l 994, worldwide, there were more than 500 million connections to telephone main lines leaving the 25 leading telecommunications companies with revenues of US$400 billion and 38 million new subscribers. In that same year, the I 0 largest of these companies made bigger profits than the25 largest commercial banks (OECD, 1997).

These telecommunication technologies have made markets more transparent and they continue to steer globalisation processes as they push down prices for long-distance transactions. A 3-minute telephone call between New York and London has fallen from US$300 (in 1996 dollars) in 1930 to USS I in1997 (The Economist, 1997).

The main drivers for the communications explosion are infrastructure and new service development. Most of this development has been in industrialised nations. The OECD nations retain 67 per cent of the world's telecommunication main lines. From 1990 to1995, OECD nations' telephone main line provision grew at an annual rate of 3.9 per cent. By 1995, there was an average of47 main lines per I 00 inhabitants in thesecountries. OECD cellular mobile subscribers have increased at a compound rate of 45 per cent per year over the same period and now reach 71 million users. Similarly, their numbers of Internet hosts has increased from 0.6 million in 1991 to 12.4 million in1996. The current diffusion rate is 12Internet hosts per I 000 population. TV penetration per household in OECD countries is90 per cent. In terms of installed PC base, the


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Table 7. Changesin telephone servicesin Asia and selectedLatinAmericanNIEs

(main lines per 100 inhabitants)

Percentage change

Country 1990 1991 1992 1993 1994 1990-94

Japan 44.1 45.4 46.4 47.1 48.0

Singapore 39.0 39.9 41.5 43.5 47.3Hong Kong 43.2 45.9 48.5 51.0 54.0Korea 31.0 33.7 35.7 37.9 39.7

Thailand 2.4 2.7 3.1 3.8 4.7Indonesia 0.6 0.7 0.9 1.0 1.3Malaysia 8.9 10.0 11.2 12.6 14.7Philippines 1.0 1.0 1.0 1.3 1.7

China 0.6 0.7 1.0 1.5 2.3Vietnam 0.2 0.2 0.2 0.4 0.6

Argentina 9.6 9.8 11.l 12.2 14.1 46.9Brazil 6.3 6.7 6.9 7.4 8.1Mexico 6.6 7.2 8.0 8.8 9.3

Source: United Nations (1996, Table 19, pp. 135-144).

US averaged 30 PCs per 100 inhabitants in1994. Europe's and Japan's penetration rates are closer to 10 PCs per 100 inhabitants (OECD, 1997).

In general, developing countries have lower levels of telecommunications infrastructure development. Low-income economies in the world have an average of 1.97 main lines per 100 inhabitants. The lower middle- income economies have 9.17 main lines per100 inhabitants (OECD, 1997). In parts ofdeveloping Asia, however, telecommunications advances are progressing at increasingly advanced rates. In terms of telephone hook-ups, developing nations in Pacific Asia have increased their connectivity at a faster rate than either Japan or Latin American NIEs (Table 7). Between 1990 and 1994, the number of main lines per 100 inhabitants quadrupled in China, tripled in Vietnam and doubled in Thailand and Indonesia. The percentage ownership of TVs and radios is increasing much faster in these developing countries than in other developing nations (Table 8). Further, liberalised markets in Hong Kong, China, Singapore, Japan, Malaysia and Indonesia for telecommunications firms are having dramatic impacts on

not only hook-ups, but cellular phone andInternet services (FEER, 1998).

Transport Linkages

While the major breakthroughs in the transport of goods and services occurred in the19th and early 20th centuries, modern en- hancements-such as large cargo freighters and jumbo jets-have continued to improve the movement of people, goods and services. Since 1980, the number of scheduled international passengers globally has doubled (Table 9).

More importantly, the expansion and development of commercial high-speed passenger transport have allowed for a rise of annual distance travelled with personal income. That is, while people from different classes and societies are spending the same average amount of time travelling per day, those with higher incomes are travelling far- ther." Thus, as world GDP per person has increased, so has total person kilometre miles (PKM). For example, total PKM travelled has increased more than fourfold from 5.5 trillion PKM in 1960 to 23.4 trillion PKM in1990 and is expected to more than double by


88 FU-CHEN LO AND PETER 1. MARCOTULLIO

Table 8. Television and radio receivers (per 1000 persons)

Percentage change1980-93

Country 1980 1985 1990 1993 Radio TV

Japan TV 539 579 611 618Radio 678 786 899 911 34.4

Singapore TV 311 332 377 381Radio 373 606 636 644 72

Hong Kong TV 221 234 272 286Radio 506 596 666 671 32.6

Korea TV 165 189 210 215Radio 525 946 1011 1013 93.0

Thailand TV 21 81 106 113Radio 140 156 185 189 35

Indonesia TV 20 38 57 62Radio 99 128 145 148 49.5

Malaysia TV 87 115 148 151Radio 411 421 429 430 4.6

Philippines TV 22 27 44 47Radio 43 91 141 143 232.6

China TV 4 9 30 38Radio 55 112 181 184 234.5

Vietnam TV 33 39 42Radio 93 100 103 104 11.8

Argentina TV 183 214 218 220Radio 427 594 670 672 57.4

Brazil TV 124 185 207 209Radio 313 363 384 390 24.6

Mexico TV 57 113 146 150Radio 134 199 254 255 90.3

Source: United Nations (1996, Table 16, pp. 116-123).

2020 to 53 trillion PKM (Schafer and Victor,1997). This has helped to create a com- munity of global travellers with increasingly significant social consequences.

The trend in international travel for Asian passengers reflects these advances. As Table9 demonstrates, from 1980 to 1994, the number of passengers scheduled for international services increased, in most cases by twice the world average rate and faster than the rates of increase in comparable NIEs in Latin America.

In general, the increased widening andintensity of globalisation processes have been uneven around the world but, until recently, have affected the Asia-Pacific

region in positive ways. The intensity and diversification of international connectivity among nations within the region and between those of the Asia-Pacific region and the world have created regional interdependency. Notwithstanding the comments of those that are less impressed by these trends (for one of many sceptical views of globalisation, see Harris, 1998), the importance of economic globalisation processes is predicted to increase in the medium to long term (Lo,1994). The stability of FOi inflows into the highly affected economies during the 1997 financial crisis is a good sign that the economic base of the region is still on a sound footing.

Korea 2 105 5 633 6 372 7 368 250.0

Thailand I 924 5 343 6 203 6 775 252.1Indonesia 922 2 773 2 932 3 285 256.3Malaysia I 822 5 081 5 597 6402 251.4Philippines 997 2 113 2 229 2 356 136.3

China 360 4 500 4 667 4909 l 263.6Vietnam 6 130 137 137 2 183.3

Argentina 1300 I 787 I 661 I 999 53.8Brazil I 330 2 707 3 062 3 372 153.5Mexico 2 777 3 976 3 703 3 540 27.5



Table 9. Civil aviation trends (scheduled international service passengers, in thousands)

Country 1980

Percentage change

1992 1993 1994 1980-94

World 163 222 299 612 318424 343 712 110.6

Japan 4499 II 589 11 260 12 700 182.3Singapore 3 827 8477 9 271 9 929 159.4

Source: United Nations ( 1996, Table 65, pp. 575-589).

World City Formation

The emergence of the functional city system is defining roles for cities. The factors that help to explain the emergence and maintenance of the system encompass the economic flows among cities integrated into the system. These include the decisions made by TNCs to locate their activities within urban borders and the ways in which governments promote development. Much of the economic activity associated with growth and investment has occurred in the major metropolitan centres in the region (Table 10).

Given the type of development in the Asia-Pacific region (i.e. export-orientation, manufacturing production with accompanying information and technology-intensive service development), cities are the spaces of the most intensive change (Yeung, 1993). However, other cities within the Pacific Rim are increasingly being included within the regional city system (for example, Syd- ney, Vancouver and Los Angeles). 'World city formation' is the process by which the global economy impinges upon cities

and transforms their social, economic and physical dimensions. At one level, cities within the region and within the functional city system are growing more alike. They are converging (see also Armstrong and McGee,1985). In this section, we discuss the impacts of the flows of FDI, trade, information and people on cities in the Asia-Pacific to dem- onstrate ways in which they have become similar.

World City Formation Asia-Pacific Style

In general, world city formation can be thought of as the process in which the world's active capital becomes concentrated in cities (Friedmann and Wolff, 1982). In exploring the world city formation process, many scholars have focused on the role of command-and-control activities in large urban agglomerations (see, for example, Sassen, 1991, 1994 ). These authors concen- trate on the location of headquarters for transnational corporations, international institutions, business-services, transport access,


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GLOBALISATION AND THE ASIA-PACIFIC REGION 91population size, research and education facilities, and convention and exhibition functions (Friedmann, l 986; Rimmer, 1996). This focus, however, limits the numbers and types of cities included as 'world' or 'global'. On the other hand, a number of scholars have also included the role of industrial production activities and trade (Feagin and Smith, 1987; Lo and Yeung, 1996a). Re- gional and world cities include those that have become major centres of manufacturing and service-related activities.

The world city formation process implies that, in order to be effective in global and regional economies, cities have undergone physical restructuring. Some important physical characteristics that are part of the world city formation process include the development of transport facilities and communication infrastructure (including teleports). Many times these are incorporated into public projects financed by governments. At the same time, the private sector is also heavily involved in the production of urban mega-projects and 'prestige buildings', usually as part of inner-city development (Olds, 1995). These developments often include land reclamation. Further, urban transformations include the development of R&D complexes just outside the city's boundary.

The term 'infrastructure' includes a varietyof public structures such as utilities (power, telecommunications, piped water supply, sanitation and sewerage, solid waste collec- tion and disposal), works (roads and major dams and canal works for irrigation and drainage) and transport edifices (urban and interurban railways, urban transport, port and waterways and airports) (World Bank, 1994). In developing countries, these investments account for up to 20 per cent of total investment and 4 per cent of their GDP (World Bank, 1994). Good quality infrastructure is not only conducive to economic production, but is also important in attracting investment (Peck, 1996). In a survey by the Far Eastern Economic Review, infrastructure issues were considered crucial to investment decisions by

firms. Telecommunications and transport infrastructure were among the top seven deter- minants of investment location decisions (FEER, 1997).

Central governments have been important to the development of urban infrastructure. Asia-Pacific governments have taken note of the World Bank's (1994) conclusions that infrastructure investment was positively cor- related with economic growth and have acted accordingly.5 Table 1 I demonstrates investments in infrastructure among economies in the region compared to other fast-growing economies in South America. While there has been progress, infrastructure gaps have been one of Asia's bottlenecks. Because of rapid growth, Asia-Pacific nations have had a shortfall in infrastructure investment. Most countries in the region have grown by between 7 and 8 per cent since the 1980s, but they have only invested about 4 per cent of their GDP in infrastructure resulting in a 2-3 per cent investment gap (Thornton, 1995). Although, on the whole, national infrastructure investment has not been sufficient to keep up with demands country-wide, much of the infrastructure investment has been concentrated in major metropolitan centres, which has intensified the effects of globalisation processes in those spaces. Further, there has also been a specific and similar set of urban infrastructure developments across Asia-Pacific cities.

Whereas the emphasis in Latin Americaand in Eastern Europe has been on the pri- vatisation of existing infrastructure facilities, Asia has been investing heavily in, inter alia, new transport and telecommunications projects (OXAN, 1998). These investments were made to cope with rapidly growing global traffic. One popular project has been the large futuristic airport, such as the recently opened Chek Lap Kok airport in Hong Kong, Kansai airport in Osaka, the Seoul Metropolitan Airport and Nong Ngu Hao in Bangkok. Indeed, the concept of the 'Pearl River delta' could be marketed only because of the plethora of new airport openings in the region. Locations include Hong Kong, an


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GLOBALISATION AND THE ASIA-PACIFIC REGION 93airport capable of receiving large aircraft in Shenzhen, a modern new air facility in Macau, another in Zhuhai (city adjoining Macau) and approval from Beijing for one in

Guangzhou (Vittachi, 1995). Before the Asian financial crisis of 1997, 11 new airports were planned for opening within the next l 0 years in different cities throughout this area (Yeung, 1996). Those cities that already have large airport terminals are in the process of upgrading them. Cities such as Taipei and Singapore already have modern facilities, but are planning for future expan- sions (Japan Development Bank, 1996). Sin- gapore, for example, plans to enlarge Changi airport, so that it can handle over two and a half times more airplane take-offs (360 000)a year.

Asian countries have made significant strides in providing road and rail transport access to large cities. During the period

1965- 75 annual highway usage increased at the rate of l 0. 7 per cent and annual truck tonnage increased by 7 .19 per cent, while the growth rate of the region was only 4.7 per cent (Yeung, l 998). In road and rail trans-

port, Hong Kong and Japan have been high infrastructure investors. During the post-war years Japan successfully pioneered high-

speed trains (Shinkanseni that revolutionised short-distance travel in the country. Betweenl 990 and 1993, Hong Kong truck tonnage grew at 15.3 per cent annually and passenger growth grew by 8.9 per cent (Yeung. 1996). This represents the results of heavy investment in roads. Both Tokyo and Hong Kong have also invested heavily in bridges. Inl 994 alone, Hong Kong awarded six 'consid- erably sized' bridge contracts to international construction conglomerates (compared with one awarded during that year in all of France) (Thornton, 1995), including the Ts- ing Ma Bridge-the biggest railway suspen- sion bridge in the world. Hong Kong recently finished a US$20 billion transport project and is committed to spending another US$30 billion on future transport infrastructure over

the next 5 years (Leung, I 998).Other nations in the region have also in-

vested in road and rail transport infrastruc-

ture to connect their cities. South Korea started its transport investment with the Seoul-Pusan, Seoul-Incheon and Daejon- Jeonju express highways in the late 1960s and by 1990 had completed over 1551 km of expressways (Hong, 1997). South Korea has also been working on a high-speed railway system (Thornton, 1995). Kuala Lumpur in Malaysia recently finished the first line of an urban light rail system and their Renong group completed an 800-km North-South Highway for US$2.3 billion in 1994. Renong may also build a US$725 million high-speed'tilting-train' that would significantly reducetravelling times between Rawang, Kuala Lumpur and Ipoh, 174 km to the north (Jayasankaran, 1997).

The volume of trade generated by the region has facilitated the development of the world's largest cargo pons. Most of the im- port and export traffic flows through selected cities. Of the world's 'top 25' container pons

in 1992, 12 are located in the region; these include (in rank order) Hong Kong(!), Sin- gapore (2), Kaohsing (4), Pusan (5), Kobe (6), Keelung (10), Yokohama (I I), Tokyo (14), Bangkok (19), Manila (21), Nagoya (24) and Tanjung Priok (25) (Rimmer, 1996). In I 984, the league of largest pons was

headed by Rotterdam and bi-state New York/ New Jersey pons, but by 1992 Hong Kong and Singapore had moved up to first and

second posrtions respectively (Rimmer,1996). As entrepots, both Singapore and Hong Kong represent extreme cases of trade- city nexus. Singapore's exports of goods and

non-factor services were I 90 per cent of its GDP in 1990 and, during the same year, Hong Kong's exports were 137 per cent of its GDP (World Bank, 1992). Eighty per cent of Korea's imports and exports go through Pusan (Thornton, 1995). In Jakarta, Indone- sia, the 1989 value of the city's exports accounted for one-third of all Indonesia's exports (excluding oil and gas) and the city's share of trade has been increasing since1986. During 1989, 50 per cent of all imports to the country moved through the city

(Soegijoko, J 996).



Another type of urban development project encouraged by the world economy is the construction of high-speed information transmission infrastructure. This is particularly important for service-sector growth and maintenance. As mentioned previously, although the region is lagging behind the rest of the world, business services are of growing importance in selected cities (Edgington and Haga, 1998). In general, large cities in the region are the best providers of telecommunication services among the nations of east and south-east Asia. Two to three times the percentage of urbanites enjoy telecommunications links in the cities of Bangkok, Manila, Jakarta and Shanghai, compared with the inhabitants of the smaller cities and the rural areas in their respect- ive countries (Japan Development Bank,1996).

In some Asian cities, information technologies have taken on special importance. Singapore has attempted to restructure its economy towards the creation of an information city." A 1991 government publication set out the key role of the information economy in meeting the city-state's needs. The city-state is aiming to make itself a hub of communications, finance and travel. Infor- mation technology is at the core of plans for the city's future (Perry et al., 1997). The Teleport project in Tokyo, less than 6 km from downtown, was planned as an information and futuristic city. The estimated construction cost of the area's infrastructure alone is approximately US$20 billion (TMG,

1996). Malaysia is holding to its promise todevelop a 'Multimedia Super Corridor', Cy- ber Jaya, that will stretch from Kuala Lumpur 50 km to the south, ending at a new international airport. It will be connected to both the airport and the capital via several forms of transport (see Figure 1 ). Despite the nation's current fiscal situation, the project is still moving ahead (Hiebert et al., 1997). This project is envisaged as a setting for multimedia and information-technology companies and is being promoted through government incentives.

An additional information-related type of

development that is changing the urban region's landscape in the Asia-Pacific region is the construction of large R&D facilities. Asian cities have invested in R&D complexes that are typically located outside the city core. In Japan, the government has encouraged the construction of entire techno- Iogicall y advanced cities or 'technopolises' such as Tsukuba Science City located north- east of Tokyo (see below). Taiwan used this model to create Science Park, a new R&D and high-technology manufacturing centre located in Hsinchu outside Taipei.

Location decisions for TNCs not only include consideration of the amount of infrastructure, but also of its type and quality as particular industries have specific require- ments (Peck, 1996). Asia-Pacific governments, in efforts to provide incentives to firms, have developed 'industrial parks' at the outskirts of their cities. Much of this development has been concentrated in and around major metropolitan cities in the region (Table 12). In Singapore, Taipei and Seoul, industrial parks have operated with success, prompted and supported by government and private investments.

One important and controversial device to stimulate exports and foreign investment has been the development of export-processing zones (EPZs). An EPZ is a relatively small, separated area that is designated as a zone for favourable investment and trade conditions (compared with the host country). In effect, they are export enclaves within which special concessions apply-including extensive incentives and often exemptions from certain kinds of limiting legislation. The government provides the physical infrastructure necessary for industries. EPZs are set up for manufacturing. While some EPZs have been incorporated into airports, seaports or commercial free zones located next to large cities, others have been set up in relatively undeveloped areas as part of a regional development strat- egy. Asia contains 60 per cent of all EPZ employment in developing countries. Hong Kong and Singapore are zones of intensive export-processing activities concentrated in a


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number of industrial estates. In 1986, total employment in such zones was 89 000 and217 000 persons respectively. The other ma-jor concentrations are in Taiwan (80 469 employed in 4 EPZs), Malaysia (81 688 employed in 11 EPZs), South Korea (140 000 employed in 3 EPZs) and the Philippines (39 000 employed in 3 EPZs) (Dicken, 1992). This type of development is in stark contrast to that of South America

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where with the exceptions of Mexico and Columbia, EPZs have not played a prominent role in the industrialisation process.

Apart from infrastructure, the public and private sectors in Asia-Pacific cities have been involved in redevelopment efforts. Changes in the global economy are inducing cities throughout the world to look at large- scale development projects as a way to restructure land uses and stimulate the local

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Table 12. The location share of industrial parks around selected Asian cities, 1993

Percentage share of total industrial parks

Extended

up quickly"," According to the Tall Building Council, in 1986, the 10 tallest buildings

were all in the US. In 1996, 4 of the top IOwere in Asia (Petronas Towers, Malaysia;Central Plaza, Hong Kong; Bank of ChinaTower, Hong Kong; Shun Hing Square;

City Inner city metropolitan area Shenzen) (Gebhart, 1997). Typically these projects are usually conceived of as land-

Source: Japan Development Bank (1996).

economy (Amborski and Keare, 1998). For example, in many cities in developed and some developing countries, large, well- located areas previously occupied by railroad facilities, related transport and industrial uses have been left abandoned as more goods are now shipped in containers from a smaller number of ports and terminals. These deserted areas represent opportunities for redevelopment and have helped to advance megaprojects, which have come into vogue at the end of the 20th century. Over three dozen such projects have been identified around the world (Olds, 1995). In Tokyo, for example, over the last decades the four largest redevelopment projects were the Tokyo Metropolitan government office building in Shinjuku, the Ebisu Garden Plaza, the Tokyo International Forum and the Tokyo Teleport. These projects represent a redevelopment effort that has been compared to the rebuilding undertaken after the great Kanto earthquake in 1923 and reconstruction after the 1945 World War II bombings. The city has been expanding (more quickly during the 1980s) in all directions possible: up to new heights, out to the edges of the Kanto plain; off into Tokyo Bay and down below the ground (Cybriwsky, n.cl.).

These publicly and privately financed megaprojects often include high-profile'prestige' buildings to portray their status. As one architect suggested, "many Asian countries see the tall building as a device to move them quickly into the 21st century, to catch

Building in Tokyo, completed in 1985, is regarded as the first built in Asia. Since then Manila has completed a 32-storey Stock Ex- change Centre in 1992, which is run by an electronic nerve centre able to monitor the internal conditions of the building by regulat- ing air conditioning and lighting. Seoul's Sixty-four Building is also one of similar design and significance.

An aspect of many Asian projects is that they are on 'reclaimed' land. For example, much of the central-city area of Singapore since 1960s has been reclaimed, including the East Coast area, which over the past two decades has seen the arrival of new commercial and business centres such as Marine Parade. The Kansai, Chek Lap Kok and Seoul airports are all built on reclaimed land. Tokyo has been expanding through landfills along the Tokyo Bay since the 1960s to provide sites for its booming industries and a new airport. The Haneda airport, only 15 km from the city centre, was originally built as an international facility, but has only supported a domestic role after the opening of Narita. The demand for space in Hong Kong since the mid 19th century has necessitated land reclamation from its deep-water harbour.

World city formation is a continuing andvaried process. The few examples of related urban physical transformations in the Asia- Pacific are presented as common features. A description of this process, however, neither provides a prediction as to whether a particular city will continue to participate in globalisation-driven growth in the future, nor does it make possible the determination of a defined development path for all cities. The


GLOBALISATION AND THE ASIA-PACIFJC REGION 97next section presents generalised patterns of differentiated development among sets of cities in the region. The categorisation is not meant to be exhaustive, but rather demonstrates the ways that international functional networks have impacted city growth and development differently.

The Regional Functional City System

Although globalisation connotes an increasingly homogenised world, and has led to the use of such labels as 'global village', 'global market-place' or 'global factory', claims of movements towards seamless urban space are oversimplifications. The 'global city' concept connotes a uniform development that obscures the multifaceted dynamics of growth for cities in the world city system. Thus, rather than focus on the singular form of 'global cities', we present world city formation as a multifaceted process. Economic interdependency and government interven- tions have also allowed for divergence in urban growth and development patterns among cities in the region. As cities outside the Asia-Pacific region, as defined in the beginning of this paper, incorporate into the regional city system, they too take on unique and important functional characteristics. As the functions of cities within the regional system vary, so do their development patterns.

Although directed in many ways, thegovernment-backed pursuit of growth through the free market has privileged the process of capital accumulation. Many city public officials have formed coalition with either land-based entrepreneurs or business conglomerates. The weak tradition of local autonomy and lack of decentralisation among nations in the region have inhibited the formation of intermediate institutions and organisations for tighter regulation. Hence, growth has followed the broad outlines de- limited by the particular unique functional role of the city in the regional and global economy (Kim, 1997; Lo, 1994; Lo and Mar- cotullio, 1998; Yeung and Lo, 1998).

Among a variety of developing urban net-

works within the Asia-Pacific region, the emergence of a large urban corridor stretching between Tokyo and north-east China, via the two Koreas, to Malaysia, Indonesia and the Philippines, makes up the east Asian regional system. The large urban corridor consists of a set of smaller-scale urban corridors including the Pan-Japan Sea Zone, the Pan-Bohai Zone and the South China Zone, among others (Figure 2). Choe ( 1996) provides an illustration of a mature transnational sub-regional urban corridor, in which an in- verted S-shaped 1500-km urban belt from Beijing to Tokyo via Pyongyang and Seoul connects 112 cities with over 200 000 inhabitants each into an urban conglomeration of over 98 million people (Figure 3).

Cities networked into the functional city system in the Asia-Pacific region have not developed uniformly. The demands of the emerging city system in the region have been different for each city depending on a variety of factors, but predominantly upon the economic functions performed. Those cities that are on the top of the urban hierarchy include the major capital exporters. Within these cities, business firms play important command- and-control roles within the world and the region (for example, Tokyo, Japan, and to a lesser extent Seoul, Korea, and Taipei, Tai- wan). These cities are developing differently from the major industrial FDI recipients (for example, Jakarta, Indonesia, Shanghai, China, and Bangkok, Thailand). Further, two entrepots (Hong Kong and Singapore) have demonstrated a level of cross-border development not experienced as intensely as other metropolitan centres. Lastly, some cities in the system have been developing as 'amenity' cities. These, urban centres are taking steps to enhance their ecological environments in such a way as to attract investment and economic activity.

Capital Exporters (Post-industrial Cities)

The post-industrial city is dominated by the processing of information and knowledge (Savitch, 1988). Tokyo, Seoul and to a lesser

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extent Taipei exemplify the Asia-Pacific style of post-industrial development. Sassen ( 1991) has identified the economic and social order of 'global cities', of which New York,London and Tokyo are examples. By now,the argument is familiar to the reader. These cities are the sites of concentrations of TNC headquarters, multinational banks and producer and business services. In Tokyo, employment in manufacturing is decreasing and

employment in the service sector is increasing (Honjo, 1998). It houses a high concen- tration of central management functions (CMFs), research and development firms and government agencies within Japan. At the same time, the city is expanding, leaving inner-city workers with longer commutes as many of the jobs remain in the inner- city area.

Like Tokyo, Seoul has a disproportionate


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share of the national population (23 per cent in 1995). Service and high-tech activities are also highly concentrated within the Seoul metropolitan area. In 1992, 57 per cent of the total industrial establishments and 51 per cent of their workers were located in the Seoul Metropolitan Area (Hong, 1997). All of Korea's TNCs are based in the capital city and enjoy close contact with the central government, a necessary condition for Ko- rean business deals. While new 'down- towns', across the Han River have been created by moving the various back offices into locations close to the new towns of Pyongchon, Sanbon and Bundang, Seoul City retains the most important control-and- management functions (Kwon, 1996, 1998). Also, like Tokyo, the amount of inbound FOi is small compared to that of outbound flows. In the single year of 1996, outbound flows of FOi from Seoul reached US$4.2 billion. Compare this with US$6.25 billion, the total accumulated stock of inbound FOi in the city as of 1996.

These relations take on specific forms inthe urban landscape. Both cities have con-

centrations of large megaprojects, particularly those with large high-rent residential and commercial spaces, R&D centres, and recreational/entertainment facilities for the upper-income service-sector employees. Teleports for the smooth transmission of information and gleaming 'intelligent' buildings housing banks and other important financial institutions are developed in central business districts. Nodal clusters of spatially differentiated economic activities have ap- peared. This multicentric structure is seen in Tokyo (Figure 4) where areas such as Shibuya, Ikebukuro, Ueno and Shinjuku each capture different economic roles within the city's economy. While other cities in the region have similar types of development, in Tokyo they have highly evolved to meet the needs of a post-industrial urban centre. Tsukuba Science City, one of Japanese first technolopolis centres is only 60 km from central Tokyo and includes both living and working facilities within a satellite town (Figure 5). It has attracted 120 private research establishments, including international giants such as Du Pont, ICI, Intel and Texas

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Instruments and since 1985 the number of private company researchers and their sup- port staff have risen to 5000-almost match- ing the 6700 government researchers (Edgington, 1994).

Seoul also has undergone significant industrial restructuring and spatial reorganis- ation since the 1980s. Manufacturing industries have decentralised while advanced services are concentrated in the core regions of the city. Seoul's emerging multicentric structure is closely related to intraregional specialisation of producer services as each centre has distinctive characteristics in terms of local interfirm networks and firm structure

(Park and Nahm, 1998). Because of Seoul's continued growth, the government is consid- ering abandoning the 'green belt' ring concept and therefore intensifying use of a once protected area.

Sites of FD!: Industrial Cities

Industrial manufacturing processes are vi- tally important to the growth and development of the regional production system and hence these centres play an important role in the functional city system. Industrial centres include urban areas such as Bangkok (Kro- ngkaew, 1996), Jakarta (Soegijoko, 1996)

centration in the outer rings of the city. Em- ployment data for Jabotabek

Region/District 1971 1980 1990

trend (Tables 13 and 14). From 1971 to DK/ Jakarta

Primary 12.3 7.1 5.31990, despite absolute increases, the share

of Secondary 66.4 64.9 51.0employment in all sectors declined in Tertiary 74.2 71.8 59.6Jakarta, and increased in the outer adminis- Botabektrative districts (kabupatens) of Bogar, Primary 87.7 92.9 94.7Tangerang and Bekasi. Manufacturing devel- Secondary 33.6 35.1 49.0opment continues to be stimulated by various Tertiary 25.8 28.2 40.4

governmentally sponsored activities includ-


102FU-CHEN LO AND PETER J. MARCOTULLIO

and Shanghai (Cui, 1995). These urban centres have recently experienced a decline in agriculture and an increase in industrial con-

Table 13. Trends in the spatial distribution of employment by sector in Jabotabek, 1971-90

(percentages)

ing the creation of industrial parks within these districts (Figure 6).

Areas outside the urban cores have relatively more available land and somewhat less stringent regulatory controls on manufacturing-related growth and investment by multinational corporations. Hence, industrial activity start-ups result from the inflow of foreign direct investment. Global integration has affected the pattern of development by producing a ring of manufacturing plants concentrated in a 'doughnut' fashion around the city cores. In Jabotabek during the early1990s, real estate, mining and industrial- activity-oriented FDI dispersed to the outer area while construction, trading and service- oriented FDI concentrated in the centre (Table 15).

The Bangkok metropolitan region (BMR) of Thailand is located centrally, adjacent to the Gulf of Thailand. The Bangkok metropolitan region includes the Bangkok metropolitan area (BMA) and the administrat- ive regions of Nonthaburi, Pathum Thani, Sa- mul Prakan, Samut Sakhon and Nakhon Pathom. In the 1980s, manufacturing value added in the BMR accounted for more than 75 per cent of the nation's total manufacturing production. In the early 1990s, however, there was a significant shift of industrial production to the outer sections of the BMR and to Rayong, Chon Buri, Chachoengsao, (the East- ern Seaboard Region). The Thailand Board of

Table 14. Trends in the spatial distribution of employment by sector in Jabotabek, 1971-90 (thousands)

Region/District

DK/ Jakarta

1971 1980

Primary 46 122 51 510Secondary 202 901 428 533Tertiary 895 377 1447591

BotabekPrimary 329 087 674 662Secondary 102 848 232 067Tertiary 311 089 568 222

JabotabekPrimary 375 209 726 172Secondary 305 749 660 600Tertiary 1206466 2015813

Source: BAPPENAS-NLI Research Institute (1996).



Figure 6. Jabotabek: actual and proposed industrial estates, 1990 and 2010. Source: Executive AgencyDirectorate (I 990, Figure 4.4).

Table 15. Spatial distribution of foreign direct investment in Jabotabek, 199~94 (percentages)

Sector DKI Jakarta Botabek

Construction 100.0Trading 100.0Hotels and restaurants 94.3Agriculture 90.9Transport, warehouses and communications 86.0Other services 83.5Wood industries 24.2Non-metal mineral industries 22.8Food industries 19.4Textile industries 14.2Metal products and machinery 10.7Chemicals 6.7Other industries 4.4Paper industries 3.1Basic metal industries 2.0Mining 0.0Real estate 0.0

Source: BAPPENAS-NLI Research Institute ( 1996).



Investment suggests that Eastern Seaboard's share of industrial investment increased from23 to 63 per cent from 1991 to 1996 (Kit-tiprapas, 1998).

The flows of FDI into the industrial cities of Bangkok and Jakarta create an urban form that includes industrial development in the suburban or ex-urban fringes and commercial development in the centre. While we have only described these two cities, similar changes are happening in other places such as Shanghai. This development is distinctly different from that associated with the capital exporters.

The Entrepots: Borderless Cities

Economic globalisation has stimulated sub- regional economic co-operation in several locales. Successful growth triangles, a uniquely Asian development pattern, are lo- calised economic zones involving several countries; the centre of each is a major metropolitan area. These can be viewed as'borderless' economies where the inter-national division of labour has developed to the urban centre's advantage (Thant et al.,1994 ). Cities that have been impacted by borderless economies can no longer be considered distinct economies, but are really part of a larger extended metropolitan region (EMR) (Ginsburg et al., 1991; Macleod and McGee, 1996). EMRs may stretch up toI 00 km from an urban core and are charac-terised by high levels of economic diversity and interaction, a high percentage of non- farm employment and a "deep penetration of global market forces into the countryside" (Macleod and McGee, 1996, p. 418). EMR growth implies the increasing need for development to be seen as regional rather than rural or urban.

An existing 'borderless' economy hasgrown between Singapore, Malaysia (Johore) and Indonesia (Riau Islands) and is called SIJORI. It revolves around the city-state of Singapore, which has recently reached out to acquire the benefits that rural industrialisation can provide. The growth of the outer

reaches of Singapore's core was directly related to Singapore's maturing economy. The flows of people and goods from the city to the outlying areas have accompanied an increasing level of cross-border capital flows.

Another example of cross-border co-operative development, involving capital, technological and managerial inputs, concerns the integration of Hong Kong, Taiwan and China's southern provinces of Guang- dong and Fujian. Hong Kong is the centre of the Zhujiang Delta and has emerged as a financial and headquarters centre. A large proportion of the manufacturing production in Hong Kong has been relocated to southern Guangdong in China. Apart from Guangzhou, Shenzhen, Zhuhai and Huizhou, most other cities within the delta are basi- cally labour- and land-intensive production areas. They are dominated by manufacturing with a small tertiary sector. About 3-5 million workers in this part of China are report- edly employed in factories funded, designed and managed by Hong Kong entrepreneurs. Further, by 1990, about 20.8 per cent of Hong Kong's imports were from the interior of China and 31 per cent of her exports went to China (Sung, 1991 ). During 1990, as mea- sured in standard 20-foot equivalent units (TEUs), the trade volume entering Hong Kong was over I million TEUs. The volume of trade by road between Hong Kong and Shenzen totalled 805 000 TEUs and the volume ferried in by vessels from all over the Zhajiang delta totalled another 281 000TEUs (Chu, 1996).

In July 1997, China reabsorbed Hong Kong. However, the 'borderless' economy of the city still exists, perhaps even more so. Taiwanese capital has been attracted to the city and much of it has been channelled through Hong Kong intermediaries to the mainland. This is particularly true for Tai- wanese investments in rapidly growing cities such as Shanghai (Ning and Wang, 1996). Also, trade relations between China, Hong Kong and Taiwan are highly integrated and considered an important part of each country's continued growth (Hwang, 1995).


GLOBALISATION AND THE ASIA-PACIFIC REGION 105Amenity Cities

Notwithstanding the lack of attention given to environmental issues in some predominantly industrial cities within the regional city system, globalisation provides the impetus for the development of ecologically'sustainable' policies. Evidence of this trend can be seen emerging in Sydney and Van- couver. These two cities have three important aspects in common: post-industrial economies integrated into the Asia-Pacific regional economy; 'inviting' natural environments or high concentrations of 'amenities'; and, a sufficiently high level of per capita welfare accompanied by political acceptance for the enhancement of the environment.

Globalisation forces impacting Vancouverand Sydney include financial and capital flows consistent with their post-industrial economic structures, trade in goods (for Van- couver) and immigration flows. Sydney is the capital of New South Wales and Aus- tralia's most global city. Vancouver, as part of 'Cascadia', has been considered an emerging 'sub-global world city' (McGee, 1998).

Among Australia's cities, Sydney has the largest share of regional headquarters of transnational corporations serving the Asia- Pacific region. Sydney hosts three-quarters of the international and domestic banks oper- ating in Australia. It also has the country's largest stock exchange and its only futures exchange. Sydney is increasingly the pre- ferred location for multinational regional HQs in the Asia-Pacific region. Of the regional head offices of the top 20 firms in 4 sectors-accounting, advertising, management consulting and international real estate-39 per cent are in Sydney. These concentrations of functions relate to both the city's post-industrial economy and its roles as command-and-control centre (Murphy and Wu, 1998).

Trade is to Vancouver as information andfinancial flows are to Sydney. Among the trading connections the Vancouver-Hong Kong relationship has received the most attention. However, the Vancouver region has also had significant linkages with Japan. Due

to the need to secure large quantities of Canadian agricultural and industrial re- sources, 11 of Japan's major general trading companies, called sago shosha, established subsidiaries in Canada. Of these 11, 5 chose Vancouver as their local headquarters. This is because 60 per cent of the sogo shosha 's trade is done through the Port of Vancouver. While Japan accounted for only 6 per cent of Canadian export destinations in 1988, it made up 27 per cent of that of British Columbia. Further, Japanese trade with Canada expanded between 1960 and 1990 and the Canadian-based branches of the Japanese sogo shosha generated most of the business (Mcflee, 1998).

Both Vancouver and Sydney have recently become popular destinations for Asian immigrants. In 1991, Sydney had 28.5 per cent of Australia's born-overseas population. Approximatley 42 per cent of all recent immigrants to the country were from Asia. For Sydney, the growth of foreign-born resi- dents is twice as fast as the growth of the total population. Sydney's greater integration with the global economy, including the local airport's (Kingsford Smith) dominance as a hub of air traffic, plays an important role in these flows (Murphy and Wu, 1998). Van- couver is one of the most rapidly growing urbanised regions in North America. Be- tween 1981 and 1996, the population of the region increased from 1.2 million to 1.6 million. Of these, 600 000 people, almost one- third, arrived in the years 1991-94. Most significantly, net international migration increased from 33 per cent in the 1980s to 59 per cent during 1991-94. Many of these mi- grants are from Asia (McGee, 1998).

The cities' environmental amenities (cli-mate, harbour, beaches, mountains, low levels of pollution), and multicultural character are key to their competitive advantages. Van- couver is part of a wide region of 'geographical affinity' which stretches from Southern Oregon to the ski resort of Whistler, 120 km north of the city. However, one problem for Vancouver is managing growth as city expansion is sandwiched between the ocean and the foothills of the Rocky Mountains.



Sydney has many beaches, a beautiful harbour and climatic attractions that can be considered environmental amenities. The state of New South Wales and many local governments have come to appreciate that these amenities need protection. In large part, this is because both Sydney and Vancouver are major tourist stops within the region. Be- cause of their natural amenities, they attract a large and economically important number of tourists.

The local factor in the creation of amenitycities is essential. In the state of New South Wales, planning includes two phases (strategic and developmental). Consideration of implications of development on the environment is mandated in both phases. As a result, large areas of land earmarked for urban development in Sydney's west and south-west were put on hold in the early 1990s due to air pollution concerns. At the project level, environmental impact assessment applies to both public and private developers. Further, citizens and non-governmental organisations continue to press for more regulation and greater consideration of environmental impacts of development (Murphy and Wu,1998). In Vancouver, the urban region hasattempted to develop strategic planning processes that provide for both liveability and reinforced competitiveness. The Greater Vancouver Regional District Authority (GVRD), made up of 20 municipalities and 2 electoral areas, has developed a 'Liveable Region Strategic Plan for 2021 '. Important components of this plan include, inter alia, implementing a transport plan that involves a mix of private and public systems, im- plementation of environmentally acceptable policies of waste removal and treatment, water provision and pollution control and com- mitting more than two-thirds of the GVRD's land base to a green zone to protect water- sheds, parks, ecologically important areas, working forests and farmland (Figure 7) (McGee, 1998). Together, Vancouver and Sydney are carving out niches within the regional city system that includes the provision of a high-quality environment. This environment invites both business (TNCs)

and immigrants and can be viewed as part of their comparative advantages.

The development patterns described for these urban categories are, at best, general. Therefore it is not expected that every city in the Asia-Pacific functional city system will fit into this typology. The patterns represent, we believe, the impacts of international influ- ences on the growth and development of cities in the region.

Conclusions

At the centre of global economic integration and structural adjustment is the interlinkage of megacities and other major metropolises. In the Asia-Pacific region, economic and social linkages form the basis of a functional city system. Cities are the engines of economic growth in the new global and regional economy. In the Asia-Pacific region, because of intense economic integration and interdependence, an urban corridor has developed.

Those cities integrated into the functional city system are undergoing the process of world city formation. Whether they are la- belled as 'world cities' is irrelevant. Their inclusion in the system has had direct effects on their form and growth. The demands of the new economic and social order within the region have selectively included cities within the urban corridor running from Tokyo to Jakarta-i.e. large coastal cities with good transport and communication access. Econ- omic interactions are translated directly into a growing number of airports, container ports, road and rail transport linkages and teleports. These major infrastructure provi- sions are but a few examples of the world city formation process in action.

The urban system in the region is com-posed of hierarchically integrated cities. Typical examples of cities that are considered the nerve centres of the system are Tokyo, Seoul and Taipei. While they have retained the command-and-control roles of the regional and global economies, other aspects of production and distribution have decentralised to locations in other NIEs and


GLOBAUS:\TfON AND THE ASIA-PACIFIC REGION 107

km 10

Waterbodies Ill Protected areas n Areas lo be developed

Figure 7. The Greater Vancouver region's green zone plan. Source: Greater Vancouver Regional District(1996).

ASEAN countries. At a lower intensity of decentralisation, cities such as Hong Kong and Singapore have developed 'borderless' economies, although their economies have retained a strong neighbourhood character. Industrial centres, such as Jakarta, Shanghai and Bangkok, have developed an urban growth pattern resembling a 'doughnut', with commercial development occurring in the centre of the city and manufacturing firms locating around the periphery. Amenity cities are increasingly becoming important to the regional city system. They are highlighted as important urban nodes where economic activity is promoting a certain level of 'sustainable' urban policy. Each of these types of cities are integrated into the developing urban corridor of east and south-east Asia and each make up an essential component of the Asia-Pacific city system.

The functional city system has both growth and sustainability policy implications for regional development. Increasingly, cities cannot be considered outside their role in the regional or world city system. Enhancing investments and future growth will depend on the strength of these linkages until a new global or world economic formation devel- ops. Given that Asia, and hence the world, can overcome the current crisis, economic development under globalisation is expected to continue for the medium term. In terms of sustainability, each city must develop local responses that mediate the negative environmental externalities and unwanted social impacts accompanying this type of development. While some cities are encouraged to maintain and enhance their local environments and ethnic diversities, because of their roles within the functional city system, others



are not. However, all cities in the system will increasingly run up against limiting factors to

growth, in all varieties. The challenge for current and future city managers will be both to circumvent those limits and to provide a basic quality of life for all citizens. These tensions will only become both more sharply defined and more important in the new mil- lennium.

Notes

1. Foreign direct investment is defined as an investment involving a long-term relationship and reflecting a lasting interest and control of a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (UNC- TAD, 1997, page 295).

It is simply direct investment that occurs across national boundaries, but differs from'portfolio investment' in that it is structured to gain control of the firm.

2. Feagin and Smith cite Clairmonte and Ca- vanagh ( 1981, p. 5) for this number.

3. Since that point, the relative share of Japanese FD! has decreased, yet Japan is still a major influence in the Asia-Pacific region.

4. The average 'travel-time' budget is typically between 1.0 and 1.5 hours per person per day in a wide variety of economic, social and geographical settings.

5. The World Bank reports that "a I per centincrease in the stock of infrastructure is associated with a I per cent increase in gross domestic product" (World Bank, 1994, p. 2). This formula was used by the Asian Devel- opment Bank to calculate the US$7 trillion (USS280 billion annual) need for investment in urban infrastructure in the region over the next 25 years (see Brockman and Williams,

1996).6. In I 998, Singapore announced that it in-

tended to tum itself into an 'Intelligent Is- land' by the year 2000.

7. Eugene Kohn, architect in firm of Kohn Pedersen Fox architects in New York, as quoted by Gebhart (1997).

8. Yoshito Kato, managing director of Mori Bini Architects & Engineers in Tokyo, as quoted by Gebhart 1997.

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