The Contested Rescaling of Economic Governance in East Asia

Shahar Hameiri, Jeffrey Wilson

• Publisher: Taylor & Francis
• Year: 2017
• Print ISBN: 9781138951297
• eBook ISBN: 9781317360674
• Edition: 1
• Topic: Social Sciences
• Subtopic: Regional Studies
• Index: Social Sciences

One of the apparent contradictions which has puzzled observers of East Asian politics is why, despite the region's considerable economic integration, economic governance institutions remain largely underdeveloped. This book stems from the observation that the study of actual forms of economic governance in Asia has been impeded by the dominance of a 'regionalism' problematique. Scholars have focused on the emergence – or not – of regional multilateral institutions, seeking to evaluate these institutions' capacities to enforce disciplines on Asian states.

However, they have also neglected prior, and more pertinent, questions regarding the causal determinants of regional economic governance, which animate the contributions to this collection: What factors shape the scale and instruments of economic governance in Asia; and how and why is economic governance being rescaled between the sub-national, national and regional levels?

In the chapters of this book, the contributors explore the social and political struggles over the scale and instruments of economic governance. They identify and explain the emergence of a wide variety of regional modes of economic governance, explain the factors shaping the spatial scale of economic governance in Asia, and discern the patterns of regional integration to which they give rise. This book was originally published as a special issue of the Australian Journal of International Affairs.

The contested rescaling of economic governance in East Asia¹

SHAHAR HAMEIRI AND JEFFREY D. WILSON^*

The special issue this article opens engages with an apparent conundrum that has often puzzled observers of East Asian politics—why, despite the region’s considerable economic integration, multilateral economic governance institutions remain largely underdeveloped. The authors argue that this ‘regionalism problématique’ has led to the neglect of prior and more important questions pertaining to how patterns of economic governance, beyond the national scale, are emerging in East Asia and why. In this special issue, the contributors shift analytic focus onto social and political struggles over the scale and instruments of economic governance in East Asia. The contributions identify and explain the emergence of a wide variety of regional modes of economic governance often neglected by the scholarship or erroneously viewed as stepping stones towards ‘deeper’ multilateralism.

Introduction

Observers of East Asia’s economic and political transformations over the past few decades are often puzzled by an apparent contradiction. On the one hand, considerable regionalisation—the intensification and deepening of economic, political and social ties—has taken place. In the two decades to 2012, intra-regional trade between the East Asia 15 group increased tenfold to US$5.316 trillion,² and regional partners now account for 50 percent of Asian countries’ trade and 48 percent of their foreign direct investment inflows (ADB 2014). As a result, many regional production networks—transnationally organised manufacturing systems where production is spread across different countries linked through trade and investment ties—have emerged in the East Asia textiles, electronics, consumer goods and automotive industries (Yeung 2009). But, on the other hand, East Asian regionalism—the construction of intergovernmental multilateral institutions to manage cross-border ties—remains relatively underdeveloped and weak (Breslin and Higgott 2000; Narine 2008; Pempel 2005). Attempts to institutionalise binding forms of cooperation within the region’s principal multilateral bodies (the Association of Southeast Asian Nations [ASEAN], Asia-Pacific Economic Cooperation [APEC] and the East Asia Summit) have been generally unsuccessful. As Ravenhill (2009) has put it: intergovernmental regionalism in Asia is, to a large extent, ‘much ado about nothing’.

The special issue this article opens stems from our observation that the study of actual forms of economic governance in East Asia has been impeded by the dominance of this ‘regionalism problématique’. In essence, the literature has tended to focus on the strength of formal regional multilateral institutions, seeking to evaluate these institutions’ respective capacities to enforce cooperation and collective action between East Asian states. When these capacities have failed to materialise, scholars have concluded either that there is something distinctive about East Asian states that makes them less willing to cede sovereignty to regional organisations than those in other regions (Acharya 2009; Katzenstein 1996; Narine 2008) or that Asian regionalism is still in its infancy and the capacity of multilateral institutions will grow as rising economic integration demands greater policy and regulatory coordination (Mattli 1999; Munakata 2006; Pomfret 2011).

However, observers have generally neglected analytically prior and more salient issues regarding the causal determinants of regional economic governance which animate the contributions to this collection. For us, the issue is not the comparative development of formal East Asian institutions, since this focus obscures the emergence of variegated modes of regional governance that do not take a formal multilateral form but, nonetheless, involve the rescaling of economic governance beyond the national level. These are uneven across East Asia and different economic sectors, reflecting fundamental shifts in the region’s political economy over recent decades (Hameiri and Jayasuriya 2011). For example, the Chiang Mai Initiative currency-swap arrangement of 2000, and its recent ‘multilateralisation’ through the development of a common regional liquidity pool, cannot be understood solely in terms of the proclivity of Asian governments to engage in regional cooperation. Rather, its establishment and subsequent expansion are closely related to changes in global financial governance—particularly financial liberalisation, the Asian (1998) and global (2008) financial crises, and the declining capacity of the International Monetary Fund to underwrite currency stability in the region (Amyx 2008; Ciorciari 2011). Indeed, rather than pooling sovereignty, the Chiang Mai Initiative works through the transformation of domestic governance structures in East Asia and their regional networking. Similarly, many economic regional governance initiatives in Asia are not top-down and state-led, but bottom-up and driven by business, including provincial state capital and societal interests. Examples include most projects in the Greater Mekong Subregion (GMS) (Glassman 2010), the Roundtable on Sustainable Palm Oil (Schouten and Glasbergen 2011), and the private governance arrangements in regional production networks for electronics (Ernst 2006). These developments indicate that scholars must investigate how modes of economic governance creatively interface with the diverse forms of regionalism emerging in East Asia, rather than simply measuring the functions of regional organisations against underlying patterns of economic interdependence between countries.

Economic governance and the politics of scale

Explaining regional forms of economic governance in East Asia requires placing the politics of scale at the centre of inquiry. To be sure, the notion of scale is inherent, although underdeveloped, in all scholarly investigations of regionalism. While most scholars agree that regions are socially and politically constructed (Van Langenhove 2011; Pempel 2005), a region is nonetheless seen as having a necessary geographical limit defined by its spatial scale (Hettne and Söderbaum 2000; Payne and Gamble 1996). Thus, the existing literature on East Asian economic regionalism implicitly considers questions of scale when asking whether an issue is governed through national- or regional-level institutions. However, scale in these studies is reduced to one of two binary constructs—either the national territory or an agglomeration of the region’s constituent states. Regionalism is thus evaluated simply as the extent to which the locus of economic governance is shifted from the former to the latter scale, or, in a practical sense, from national governments to regional multilateral institutions. This, in essence, is what geographer John Agnew (1994) describes as international relations’ ‘territorial trap’—the tendency to view social, economic and political relations as being confined within a single, national or regional, territorial space.

In this collection, we instead analyse economic regionalism in East Asia by conceiving of regionalism as the politically contested rescaling of economic governance between different spatial scales and attendant governance instruments. We view patterns of regional economic governance as dynamic, shaped by struggles between coalitions of political actors and societal groups over the scale, scope and functions of economic governance. This emerges out of the view, long accepted by political geographers, that regardless of whether a particular issue is managed at the local, subnational, national, regional or global level, it is politically contested. This is because each scale involves different configurations of actors, resources and political opportunity structures, and shifting governance between spatial scales carries not only economic distributional effects, but also privileges particular societal interests, normative agendas and values. Therefore, the scale at which any matter is governed is likely to be hotly contested by powerful interests in state and society seeking to advance their preferred social and political order (Gough 2004; Hameiri and Jones 2013). In this view, the national territorial space is no more natural than other spatial configurations, and has to be constantly produced and reproduced through state action and societal contestation (Brenner and Elden 2009). Similarly, what governance instruments emerge to regulate economic activities is also conditioned by social and political conflict over scale, as all modes of economic governance privilege a certain spatial scale (and those actors powerful within it) over others.

Indeed, multilateralism, which is equated with regionalism in most scholarly accounts, also has distinct social foundations and is no more natural than other modes of regional governance. When it exists and functions as intended, it is a reflection of relatively complementary socio-political agendas among regional governments manifesting in a coherent ‘sovereignty regime’—the rules and expectations shaping non-interference and intervention (Agnew 2009). During the cold war, the internal and external communist threat provided a shared interest to East Asian elites, mainly in South-East Asia, leading to the formation of ASEAN by the original non-communist five members. ASEAN’s non-interference norm reflected in no small part fledgling regimes’ fear of communist revolution in their countries, whereby the enemy within joined forces with communist allies without (Jones 2012). And even as the communist threat began to wane, the ‘embedded mercantilism’ of many East Asian regimes, in which competitive export-focused tradable sectors supported crony-dominated non-tradable sectors, reinforced APEC’s intergovernmentalism or the ASEAN Free Trade Agreement (Jayasuriya 2003; Nesadurai 2003). But the Asian crisis has undermined this accumulation strategy, leading to the greater transnationalisation of East Asian economies. This, in turn, has led to a far more uneven integration of East Asian subnational regions and sectors into regional and global economic flows, and to considerable elite fragmentation. These circumstances are simultaneously undermining multilateralism in East Asia and promoting various forms of experimentation in economic governance, with which this special issue is especially concerned.

We therefore collectively ask: What factors shape the spatial scale of economic governance in Asia? How and why (if at all) is economic governance being rescaled between the subnational, national and regional levels? And how have distinctive patterns of rescaling conditioned the forms of Asian economic regionalism observed today?

As our case studies show, many forms of ‘rescaling’ are evident in East Asia, apart from multilateralism, but are often not granted sufficient empirical or conceptual consideration by the literature (Hameiri 2013). Because we conceive of economic regionalism as the contested rescaling of economic governance, we are able to identify and explain modes of economic governance that fall outside the national/multilateral binary. Regional economic governance may take the form of regulatory regionalism, whereby ostensibly domestic institutions come to function as part of a regionally networked and coordinated regulatory regime, thus blurring the lines between national and regional governance instruments (Jayasuriya 2009). It might also take the form of multilevel governance, in which policy making is pluralistic and dispersed across various spatial levels (through the subnational to the supranational), and negotiated linkages between political actors intertwine to create governance arrangements (Stephenson 2013). It might further take the form of soft-law regionalism, where intergovernmental organisations develop rules of conduct that are not considered legally binding, but nonetheless can promote regional cooperation by enumerating principles, sharing information and mediating negotiation (Abbott and Snidal 2000). These modes of regional governance are not mutually exclusive and may converge in particular instances. Scholars of East Asian politics are typically so convinced of the commitment of the region’s states to upholding strict forms of non-interference in each other’s domestic affairs that they simply never imagine that such governance arrangements could exist there, so they do not bother looking for them. By conceiving of regionalism as the rescaling of economic governance, we seek to explore how these myriad forms of regionalism have developed in East Asia, their distinctive social foundations, and the social and political conflicts shaping their emergence and functioning.

Structure of the special issue

Despite their differing empirical foci, each article in this collection engages directly with contestations over the scale and instruments of East Asian economic governance in a region that is increasingly economically integrated. Individually and collectively, these articles seek to explain the factors shaping the spatial scale of economic governance in Asia and the patterns of regional integration to which they give rise. Following this introduction, the first two articles address questions regarding the design and functioning of regional governance regimes in functional spheres. Shaun Breslin and Jeffrey D. Wilson begin by revisiting the seminal work of David Mitrany and examine its relevance in the Asian context. They argue that while many of Asia’s large multilateral institutions have delivered little more than summitry, a wide range of relatively effective functional cooperative arrangements are growing—albeit unevenly—through lower-level and ‘bottom-up’ initiatives, such as financial cooperation schemes, technical dialogues and free trade agreements. Breslin and Wilson thus conclude that there is no single ‘regional space’ in Asia, but rather a layering of regionalisms differentiated between issue areas. Shahar Hameiri and Lee Jones then begin exploring these patterns of differentiation by examining the impressive growth of regional anti-money-laundering initiatives since the 1990s. They argue that this takes the form of ‘regulatory regionalism’, whereby instead of sovereignty being pooled upwards into a supranational body, ostensibly domestic agencies take on regulatory capacities within a regional governance regime. However, their case study of Myanmar shows that, far from this being a purely functional exercise, the form and actual functioning of regional anti-money-laundering governance is determined by socio-political conflicts over the exercise of state power. The result is a regulatory framework that is actually aimed at undermining rivals of the ruling regime in Myanmar, rather than tackling money laundering per se.

The two following articles explore political contestation within multiscalar regionalism initiatives in East Asia. Natasha Hamilto...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Citation Information
• Notes on Contributors
• 1. The contested rescaling of economic governance in East Asia
• 2. Towards Asian regional functional futures: bringing Mitrany back in?
• 3. Regulatory regionalism and anti-money-laundering governance in Asia
• 4. Multilevel (mis)governance of palm oil production
• 5. Internationalisation of the Chinese subnational state and capital: the case of Yunnan and the Greater Mekong Subregion
• 6. The limits to China’s non-interference foreign policy: pro-state interventionism and the rescaling of economic governance
• 7. Regionalising resource security in the Asia-Pacific: the challenge of economic nationalism
• Index