Academic journal article Multinational Business Review

Growth Triangles: A Strategic Assessment

Academic journal article Multinational Business Review

Growth Triangles: A Strategic Assessment

Article excerpt

To remain competitive in attracting high value-added foreign investment, East Asian countries have looked to various sub-regional economic cooperation models. The "growth triangle" concept was developed by Singapore in cooperation with the Malaysian state of Johor and Indonesia's Riau Islands. The concept draws on the underlying notion that geographically contiguous sub-regions, characterized by significant differences in factor endowments can, by creating a strategic alliance, more effectively exploit the principle of comparative advantage to attract foreign investment committed to the production of exports. This study provides an overview of the growth triangle concept, explores its potential as a strategy for sub-regional economic development and identifies keys to creating a successful growth triangle.

INTRODUCTION

"Growth triangles" have been portrayed as a uniquely Asian solution to the strategic and administrative problems of regional cooperation among countries at different stages of economic development and with different social, economic and political systems. First introduced in the late 1980s, growth triangles represent the formal joining together of geographically contiguous areas of different countries to achieve complementation and synergism in the allocation of land, labor, capital, technology, management expertise, and essential natural resources, yielding sustainable comparative advantages in export promotion (Heng and Low 1993; Tang and Thant 1994). Growth triangles are not unlike strategic alliances, which are cooperative arrangements among companies to exploit specific endowments for sustainable competitive advantage. However, while the theory of strategic alliances is well understood, the same can not be said of growth triangles. In an effort to help fill what would appear to be a void in the literature, the study presented here examines the anatomy, role, and scope of growth triangles and identifies "keys to success" in creating and administering a growth triangle

REGIONAL TRENDS AND CHARACTERISTICS

The growth triangle concept was formally introduced in 1989 by Mr. Goh Chok Tong then Deputy Prime Minister of Singapore, as part of a formal proposal to Malaysia. This overture was the result of the Singapore Manufacturers Association's first mission to Johor in 1988, promptly followed in 1989 by an investment promotion seminar where the JohorSingapore Joint Committee on Investment was formed. Thereafter, Singapore's then Prime Minister, Mr. Lee Kuan Yew, met with President Suharto of Indonesia, and a short time later the "Southern Growth Triangle" (SIJORI) was formed by the state of Johor in Malaysia, Singapore and Batam Island in the Riau Province of Indonesia (Heng and Low 1993). Since 1989, a growing number of "sub-regional economic cooperation zones" or growth triangles have either been started or announced. And while there are subtle differences among them, they are the result of the same economic forces and they are characterized by a common anatomy and purpose.

One such force has been the a dramatic increase in the level of regional cooperation among Asian economies, creating an environment where national interests are now being addressed within a regional context. What was formerly an inward-looking, zero sum type of cooperation has been replaced by an outwardoriented, competitive, positive sum type of cooperation (Heng 1992). This change has resulted for several reasons. Earlier efforts at regional cooperation were undermined both by go-it-alone development strategies on the part of countries seeking political and economic autonomy following their emergence from colonial rule, and by political tensions among counties within the region. Though serious concerns remain about the military and political intentions of China, and about Japanese economic and political influence over the region, considerable progress has been made in easing regional tensions. Furthermore, the increasingly unpredictable world economy, characterized by the globalization of manufacturing processes, rapid technology transfer and massive flows of investment capital, has made going-it-alone more difficult. …

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