Institutions and Regional Development in Southeast Asia
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Institutions and regional development in Southeast Asia proefschrift-Andriesse.indd 1 11-04-2008 13:52:29 Nederlandse Geografische Studies / Netherlands Geographical Studies Redactie / Editorial Board Drs. J.G. Borchert (Editor in Chief ) Prof. Dr. J.M.M. van Amersfoort Dr. P.C.J. Druijven Prof. Dr. A.O. Kouwenhoven Prof. Dr. H. Scholten Plaatselijke Redacteuren / Local Editors Dr. R. van Melik, Faculteit Geowetenschappen Universiteit Utrecht Dr. D.H. Drenth, Faculteit der Managementwetenschappen Radboud Universiteit Nijmegen Dr. P.C.J. Druijven, Faculteit der Ruimtelijke Wetenschappen Rijksuniversiteit Groningen Drs. F.J.P.M. Kwaad, Fysich-Geografisch en Bodemkundig Laboratorium Universiteit van Amsterdam Dr. L. van der Laan, Economisch-Geografisch Instituut Erasmus Universiteit Rotterdam Dr. J.A. van der Schee, Centrum voor Educatieve Geografie Vrije Universiteit Amsterdam Dr. F. Thissen, Afdeling Geografie, Planologie en Internationale Ontwikkelingsstudies Universiteit van Amsterdam Redactie-Adviseurs / Editorial Advisory Board Prof. Dr. G.J. Ashworth, Prof. Dr. P.G.E.F. Augustinus, Prof. Dr. G.J. Borger, Prof. Dr. K. Bouwer, Prof. Dr. J. Buursink, Dr. J. Floor, Prof. Dr. G.A. Hoekveld, Dr. A.C. Imeson, Prof. Dr. J.M.G. Kleinpenning, Dr. W.J. Meester, Prof. Dr. F.J. Ormeling, Prof. Dr. H.F.L. Ottens, Dr. J. Sevink, Dr. W.F. Sleegers, T.Z. Smit, Drs. P.J.M. van Steen, Dr. J.J. Sterkenburg, Drs. H.A.W. van Vianen, Prof. Dr. J. van Weesep ISSN 0169-4839 proefschrift-Andriesse.indd 2 11-04-2008 13:52:29 Netherlands Geographical Studies 374 Institutions and regional development in Southeast Asia A comparative analysis of Satun (Thailand) and Perlis (Malaysia) Edo Andriesse Utrecht 2008 Koninklijk Nederlands Aardrijkskundig Genootschap Faculteit Geowetenschappen Universiteit Utrecht proefschrift-Andriesse.indd 3 11-04-2008 13:52:29 This publication has been submitted as a Ph.D. thesis in partial fulfilment of the requirements for the degree of Doctor in Human Geography at Utrecht University, the Netherlands, June 4 2008. Promotor: Prof. dr. O. Verkoren Co-promotoren: Dr. A. van Westen Dr. L. van Grunsven Examination Committee: Prof. dr. I.S.A. Baud Prof. dr. R. A. Boschma Prof. dr. M.A.F. Rutten Prof. dr. E. B. Zoomers This thesis forms part of the research programme Regional Development in a Global Context of Urban and Regional research centre Utrecht (URU). ISBN 978-90-6809-417-6 Graphic design, cartography and figures: GeoMedia (Faculty of Geosciences, Utrecht University) Copyright © Edo Andriesse p/a Faculty of Geosciences, Utrecht University 2008 Niets uit deze uitgave mag worden vermenigvuldigd en/of openbaar gemaakt door middel van druk, fotokopie of op welke andere wijze dan ook zonder voorafgaande schriftelijke toestemming van de uitgevers. All rights reserved. No part of this publication may be reproduced in any form, by print or photo print, microfilm or any other means, without written permission by the publishers. Printed in the Netherlands by A-D Druk b.v. – Zeist proefschrift-Andriesse.indd 4 11-04-2008 13:52:29 Contents Boxes 7 Figures 8 Tables 10 Glossary 13 Preface 15 1 Introduction 17 1.1 Background to the study 17 1.2 Objectives of the thesis 18 1.3 Why the Thailand/Malaysia borderlands? 20 1.4 Outlining the study 22 1.5 Research methodology 24 2 Theoretical Framework 29 2.1 Regional development and diversity 29 2.2 Approaches to explain regional development 35 2.3 Institutions and economic development 39 2.4 Varieties of Capitalism and institutions 43 2.5 Varieties of Capitalism for empirical analysis 52 2.6 The research questions 56 3 The national and regional context 61 3.1 Thailand and Malaysia in Southeast Asia 61 3.2 Varieties of embedded mercantilism in Thailand and Malaysia 63 3.3 Satun and Perlis as part of the Kedah Sultanate 74 3.4 Diverging developmental trajectories after the Anglo-Siamese Treaty 78 4 Inter-firm relations and access to private finance 91 4.1 Background of the surveyed firms 91 4.2 Inter-firm relations 95 4.3 Access to private finance 105 4.4 The influence of ethnicity on regional capitalist varieties 109 5 Institutional and political relations between the private and the public sector 117 5.1 Cooperation and coordination between the public and private sector 117 5.2 The politics of cooperation and coordination 124 5.3 Case 1: institutions and politics within Satun Town Municipality 132 5.4 Case 2: institutions and politics within Perlis’ construction industry 136 5 proefschrift-Andriesse.indd 5 11-04-2008 13:52:30 6 Access to budgets and policies for regional development 143 6.1 An overview of (regional) development policies 143 6.2 Formal access to development assistance 150 6.3 The influence of informal arrangements on side payments to Perlis 156 6.4 The influence of informal arrangements on side payments to Satun 161 7 Institutional complementarities and regional economic activity 167 7.1 The impact of the Thai institutional complementarities 168 7.2 The impact of the Malaysian institutional complementarities 173 7.3 Enabling institutional complementarities and economic activity 178 8 Looking back and looking forward 187 8.1 Retrospect 187 8.2 Research findings 189 8.3 Interpreting the results 193 8.4 Policy implications and future research 197 References 201 Appendices 215 1 Research methodology 215 2 Behavioural assumptions of neo-classical and neo-institutional economic theory 226 3 Variants of Fordism 227 4 The institutions and ideological basis of the world’s dominant capitalisms 228 5 A brief overview of the political and economic geography of Thailand and Malaysia 229 6 Core regions of Thailand and Malaysia 231 7 The Thai-Malaysian borderlands 234 8 Satun professional meeting, spring embedded Gower metric scaling 235 Samenvatting 237 243 Ringkasan 245 Curriculum Vitae 247 6 proefschrift-Andriesse.indd 6 11-04-2008 13:52:30 Boxes 2.1 The nature of the region 32 2.2 Innovation in developing countries 40 2.3 The role of the state and uneven development 50 3.1 Political instability in Thailand 73 3.2 Troubles in Kedah between 1821 and 1842 75 3.3 The price of natural rubber and smallholders in Southern Thailand 84 4.1 An ethanol factory in Perlis 100 4.2 Thai shrimps exports 105 4.3 Car dealers in Satun and Perlis 108 4.4 Ethnic-Chinese and entrepreneurial isolation in Perlis 112 5.1 State Economic Development Corporations in Malaysia 119 5.2 The newly built Brahmana hotel in Kuala Perlis 123 5.3 The Perlis State Economic Development Corporation (SEDC) 130 5.4 Chao phos (provincial godfathers) in Thailand 134 5.5 The Governor versus the Menteri Besar 138 6.1 The new highway between Padang Besar and Changlun 152 6.2 Changing factions within UMNO 159 6.3 Pak Bara deep sea port: the interplay of formal and informal access 163 7 proefschrift-Andriesse.indd 7 11-04-2008 13:52:30 Figures 1.1 The research regions 21 1.2 Outline of the study 24 2.1 A model for an innovation system 38 2.2 Institutions, organisations and economic and human development 42 2.3 Institutional relations and institutional complementarities 45 2.4 Policy space for economic development in Southeast Asia 51 2.5 Conceptual model 53 2.6 Analytical model for inter-firm relations and access to finance 57 2.7 Analytical model for institutional arrangements between the private and public sector 58 3.1 Structure of output (% of gross domestic product) 63 3.2 Labour force (people above 15 years by industry) 80 3.3 Economic map of Satun and Perlis 81 3.4 Historical developments of transportation networks 82 3.5 a Rubber price in US$/metric ton, b Similarity between national and international rubber prices 84 3.6 Ratio of GRP per capita to national average 87 4.1 Economic structure of the surveyed firms 94 4.2 a-d: Geography of supply and demand 96 4.3 Fisheries’ trends in Satun 101 4.4 The seafood value chain in Satun 103 4.5 Most important sources of capital (%) 104 4.6 Most important organisation to call in case of a business problem 107 4.7 Access to start-up capital along ethnic lines 111 4.8 Inter-firm relations and access to finance in Satun 114 4.9 Inter-firm relations and access to finance in Perlis 115 5.1 Number of monthly professional meetings in Satun 125 5.2 Number of informal monthly meetings in Satun 126 5.3 Frequent informal meetings in Satun (5-6 monthly only) 127 5.4 A simplified overview of networks in Perlis 131 5.5 Important members of the Thim Piboon (mayor) 133 5.6 ‘Political business’ in the construction industry of Perlis 137 6.1 Revenues minus expenditures of PSG (RM millions) 152 6.2 Development of assets and liabilities of PSG (RM millions) 153 6.3 Assets divided by liabilities for selected state governments 153 6.4 Funds for Satun province (THB millions) 154 6.5 Budget per capita for 7 Southern Thai provinces (THB) 156 7.1 Institutional and political relations in Satun 169 7.2 Institutional and political relations in Perlis 174 8 proefschrift-Andriesse.indd 8 11-04-2008 13:52:30 A1 The core regions of Thailand 232 A2 The core regions of Malaysia 233 A3 The borderlands 234 A4 Initial network positions 235 9 proefschrift-Andriesse.indd 9 11-04-2008 13:52:30 Tables 1.1 Number of interviewees 26 2.1 HDI for selected countries 33 2.2 HDI for selected regions in Southeast Asia 34 2.3 Summary of three schools on regional economic development 35 2.4 Characteristics of three varieties of capitalism 46 2.5 Economic dominance of ethnic-Chinese in Southeast Asia 55 3.1 Human development indicators, 2003 62 3.2 Key indicators 64 3.3 Major political economic developments and most important prime