EXPERIENCES OF DEVELOPMENT TRIANGLE CONSTRUCTION

Despite the differences in the specific structures of development triangles, we can describe the most general characteristics of them. A Development Triangle usually involves three or more states, although only sub-national units of these states are involved directly in the scheme. Development triangles are not trade blocs.

Development triangles are typically initiated by governments and require a certain level of government involvement to expand commercial and investment activities within the sub-region. The role of the central government in a development triangle is to provide a policy environment conducive for the development of that development triangle, such as the legal and regulatory frameworks. More specifically, the central government determines the investment incentives for its portion of the development triangle, controls the tariff and customs schedule for imports and exports and regulates the flow of people entering and exiting the country. The central government is also expected to provide the initial infrastructure for a development triangle to emerge, including electricity, water supply and transportation networks, etc.

Another core function of the central government is to develop the linkages with its counterparts and reach an agreement on the basic form of the development triangle and the most general policy requirements.

The contributions of the business sector to a development triangle include the provision of investment funds and employment opportunities while also performing production and export activities. Activities of the business sector are the driving force for growth and once the central government has created a positive business climate, the success of the sub-region will hinge on the performance of the business sector.

Experiences of the regional states show that it must be clearly recognised that a crucial factor in the establishment of development triangle and its potential for success is the public-private partnership.

1. The need for bilateral and informal networks and communication channels in a development triangle

Bilateral cooperation serves as the initial step in the development of a multilateral cooperation in a development triangle. Bilateral networks and communication channels occur at different levels: between governments; and between business sectors. At the government level, cooperative bilateral ties are necessary to establish the development triangle and also to facilitate cross-border development. Thus it is important for the central and local governments to maintain cooperative relations if the development triangle is to succeed. Equally important are the informal networks between the business sectors.

Government and the business sector must reach common points of view through exchanging information and ideas about their needs and concerns.

2. Equal development cooperation and mutual assistance for the sake of development are important to the success of a development triangle

The literature and evidence from the case studies concur that equal cooperation is vital to the development of cross-border economic activities. However, the literature on development triangle considers only one aspect of complementarities and that is in regard to factor endowment. The other form of complementarities involves interests and challenges.

The capability to cooperate with and complement one another among the members of a development triangle is established when these members who share common interest realise that they cannot achieve their goals independently. Similarly, cooperation also ensues when individual actors face similar challenges that are more easily solved by working together.

3. The role of a "centre" or a "growth pole"

Successful development triangles often include a modern, wealthy, and capital surplus “centre”. Development triangles lacking a centre that can inject the above-mentioned elements into the others have not considerably prospered. Clearly, not every sub-region contains a centre or a growth pole like Hong Kong or Singapore, and thus alternative strategies must be developed in order to operationalise the development triangle. Due to limited capacity of governments in the Development Triangle and the absence of a leading economic centre, the only alternative is to improve the business sector’s capabilities by creating an ideal business environment for cross-border economic activities.

4. Geographic proximity: important but declining

Geographic proximity and contiguity will probably continue to be important for sub-regions lacking modern infrastructure and advanced technology, as they are less equipped to take advantage of comparative advantages around the globe. The lack of geographic proximity or contiguity, however, should not discourage sub-regional actions to resolve their difficulties.

5. Critical contribution of the business sector

Governments are those who establish development triangles but the leading role in implementing them falls into the hands of the business sector. The successful development triangles in Asia are all characterised by limited involvement of the Government in production activities as a result of a thriving business sector.

In a Development Triangle, the business sector has emerged only recently and has not been strong enough to play a leading role. While multinational companies and governments can play a role, the domestic business sector must be strengthened so as to become capable of leading economic growth and development. The government can assist in the development of the business sector by improving and expanding the education system at primary, secondary and higher education levels; devote greater resources to research and development and push up the activities of vocational training centres.

6. The role of the government in facilitating a development triangle

a) Minimising regulatory obstacles and providing the requisite legal framework: A conducive business environment is characterized by simplified administrative procedures for investment and trade (including one-stop services for licences, permits, investment approval…), minimising or eliminating unnecessary transaction costs, promulgating laws related to business, and establishing mechanisms for dispute settlement.

b) Avoiding picking winners: The government should concentrate on the above-mentioned business environment and simply let the market determine which sectors will utilise the development triangle.

c) Continued liberalisation as a key factor: Continued liberalisation of the national economy will produce even greater benefits not only for the sub-national units involved in the development triangle but also for the entire country.

d) Need for demonstrating a clear political commitment: Government commitment to the development triangle is vital for its success.

e) Promoting the micro-economic factors of competitiveness: The government needs to give sufficient attention to promoting the micro-economic factors of competitiveness instead of focusing all of its attention on the macro environment.

7. Potential for special economic zones

Increasing the flow of goods, people and capital into a sub-region may require special economic incentives by the government. This occurs for two reasons.

First, by offering special economic policies to the sub-national units within the development triangle, the government clearly expresses its commitment to the development triangle.

Second, the favourable economic conditions in the special economic zones give incentives never available before for investors to establish cross-border production and new activities.

Source:clv-triangle.vn

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RATIONALES OF DEVELOPMENT TRIANGLE FORMATION

1. Economic Rationale

In theory, a development triangle will generate economic growth by making maximum use of the inherent but under-utilised economic potential in the proposed development area.

The driving force behind the creation of a development triangle is the recognition that greater benefits can be obtained through sub-regional cooperation than would be possible through independent action. Development triangles enable states to overcome deficiencies in labour, technology, resources, land and infrastructure by an easier access to the required inputs available within the sub-region.

In addition to the individual interests of each state or sub-regional unit, development triangles can facilitate overall regional economic cooperation. In instances where region-wide integration is difficult to achieve, bilateral and sub-regional economic arrangements can be forerunners to broader cooperation.

Development triangles tend to consist of sub-national units that are located on the periphery of a country and, in many cases, are among the least developed territories of the country.

2. Political Rationale

Development triangles are also significant in consolidating peace and security in the region. This applies not only to at national level as governments try to cooperate to enable the development triangles to materialise, but it also brings local governments into more formalised relationship. By creating more linkages of interdependence among the local economies, force is less likely to be used in settling a dispute because of its disruptive impacts on economic activities.

Domestic security is also enhanced within development triangles because of the economic development that occurs along the frontiers. In many countries, the periphery areas are inhabited by ethnic minorities. The economic benefits from greater cross-border trade and investment will develop these fringe areas which are often neglected in national development strategies and by foreign investors. The generation of greater wealth for people in the periphery will help remove many of the economic sources of contention between people in these areas.

3. Social Rationale

The social rationale for development triangles is closely related to the political and economic justifications. Increased contact through cross-border economic activities will help promote mutual understanding of cultures, which in turn enhances border security. The social rationale also parallels the economic one in that the citizens involved in a development triangle will likely gain substantial improvements in their living standard and quality of life. Presumably, economic development will bring concomitant benefits such as better education, improved health services and a more elaborate social safety net.

The Development Triangle ensures the improvement of the well-being of the local people, especially women and children in the Development Triangle area and promotes the cooperation on combating trans-national crimes, such as cross border human trafficking, drug trade and smuggling.

Source:clv-triangle.vn

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INTRODUCTION OF DEVELOPMENT TRIANGLE

In recent years, given the mobility of international capital and labour, geographical borders between countries have become increasingly "softer" with respect to production and exchange of goods. An increasing number of countries are attempting to exploit the flow of goods, labour and capital by utilising the complementary factors of production in their neighbouring countries. As a result, many economic sub-regions have been established in Asia. New forms of multilateral economic cooperation have emerged, and development triangle (or growth triangle) is one of these.

A development triangle will generate economic growth through increasing the efficiency of utilising economic potentialities like labour, natural resources, capital, and technology that are distributed irrespective of national borders. Efforts are made to increase the flow of goods, labour and capital among countries to develop and expand production. The driving force behind the creation of a development triangle is the recognition that greater benefits can be obtained through sub-regional cooperation than would be possible through independent action.Development triangles enable states to overcome deficiencies in labour, technology, resources, land, and infrastructure by an easier access to the required inputs available within the sub-region.

Development triangles are also significant in consolidating peace and security in the region and help maintain internal security of the countries involved thanks to the economic benefits that they bring about.

Expanded economic exchange resulting from across-border trade activities would enhance mutual cultural understanding of the countries involved and hence the improvement of border security.As the standard of living and quality of life of the citizens involved in the development triangle improve, they will create favourable conditions for better education, improved health services and a stronger social safety net.

In addition, development triangles also contribute to strengthening cooperation and balancing such policies as customs, tariff as well as banking and finance, thus facilitating cross-border flows of goods, capital and labour. To bring a development triangle into operation, such cooperation is not confined to national level, but also develop intensively into more formalised relationship among local governments.

Apart from benefits brought to individual countries, development triangles also push up regional economic cooperation.

Development triangles tend to consist of sub-national units that are located on the periphery of a country and, in many cases, are among the least developed territories of the country. At present, a number of development triangles have been established and put into operation in South East Asia. Typical examples are the Indonesia – Malaysia – Singapore Development Triangle, Indonesia – Malaysia – Thailand Development Triangle and Brunei – Indonesia – Malaysia – Philippines Development Territory, etc. In addition, the idea of establishing the “Emerald Triangle” in the border area of the three countries of Cambodia, Laos and Thailand has been mentioned by their respective leaders and initial pre-feasibility studies on this triangle have been conducted.

At the Meeting of the three Prime Ministers of Cambodia, Laos and Vietnam, all sides agreed that the consolidation and strengthening of solidarity, cooperation and mutual assistance between the three countries in the spirit of traditional fraternity, neighbourliness and friendship constitute a greatly significant factor for the stability and development of each country under the present circumstances.During this meeting, the idea of establishing a development triangle in the border area of the three countries, consisting of some provinces in the North East of Cambodia, South of Laos and the Central Highlands of Vietnam, was put forward.

At the second Meeting of the three Prime Ministers in Ho Chi Minh City on the 25 –26^th of January 2002, the determination to establish the Development Triangle in the border area of the three countries was confirmed and regarded as one of the primary priority tasks in the development cooperation among the three countries. All sides agreed to assign the Vietnamese side to take the lead in the formulation of a Socio-economic Development Master Plan for the Cambodia - Laos - Vietnam Border Area (also called the Cambodia - Laos - Vietnam Development Triangle or the Development Triangle in short).

The Cambodia - Laos - Vietnam Development Triangle covers the territory of the following provinces: Mondulkiri, Rattanakiri and Stung Treng (Cambodia); Attapeu, Saravan and Se Kong (Laos); and Dak Lak, Dak Nong, Gia Lai and Kon Tum (Vietnam). These are the provinces that are located in the border area of the three countries and that share many similarities in terms of natural, economic and social conditions. The development level of the provinces in the Development Triangle is generally low compared to the average national level of their respective countries. The intellectual level of the people in the Triangle is low. The share of agriculture in GDP remains high. Compared to other development triangles, the provinces in this triangle almost share borderlines in pair and important pairs of border checkpoints have been established, constituting a favourable condition for development cooperation among the provinces while their development level remains low. Unlike a number of other development triangles (territories) in the region, the Cambodia - Laos - Vietnam Development Triangle has no growth pole or centre (like Singapore) and therefore, it has to find its own way to develop. Member countries may include other provinces at a later stage.

Source: clv-triangle.vn

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