GROWTH TRIANGLES AND ASEAN ECONOMIC CO-OPERATION

Abstract

This thesis does not pretend to be anything but boring and tedious. It deals with a subject that is familiar to most in Southeast Asia, which has, to numerous observers and laymen, been the object of many opinions, and has been, for many, done to death. Nevertheless, much previous work, has in my opinion, been deficient in the level of formalisation. I intend to correct this. This thesis formalises many of the arguments for, against and about the growth triangle. It will be applied economics strongly grounded on theory. The thesis studies the relationship between growth triangles and economic cooperation. It shows that for ASEAN, growth triangles represent greater economic cooperation. Conventional classifications do not capture this adequately and hence a new taxonomy is invented to provides the necessary distinctions. A formal model of growth triangle dynamics is derived in order to study the determinants of a successful growth triangle. Economic cooperation played a prominent role in this, and the result was supported and expanded upon by a survey of firms working on Batam. Extensive welfare analysis in chapter IV shows that benefits (and costs) from the growth triangle are somewhat less persuasive (or painful) than conventionally thought. Not surprisingly, countries whose benefits from the growth triangle are clearer support the growth triangle more. Economic cooperation as a result of growth triangles in ASEAN is also analysed. The result of the analysis was that generally, triangles complement ASEAN economic cooperation. However, the thesis concludes with some notes about potential directions that growth triangles seem to be taking that may eventually diminish ASEAN economic cooperation.