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UBC Theses and Dissertations

Cities in the international system Winchester, David J. 1988

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CITIES IN THE INTERNATIONAL SYSTEM By DAVID J . WINCHESTER B.A., Concordia U n i v e r s i t y , 1987 A THESIS SUBMITTED IN PARTIAL FULFILLMENT THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n THE FACULTY OF GRADUATE STUDIES DEPARTMENT OF POLITICAL SCIENCE We accept t h i s t h e s i s as conforming to the r e q u i r e d standard THE UNIVERSITY OF BRITISH COLUMBIA October 1988 © David J . Winchester, 1988 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of ft>\?ircA.\ <,d*M.ce. The University of British Columbia Vancouver, Canada Date OcV . I> If gg  DE-6 (2/88) i i Abstract M u n i c i p a l a c t i o n s aimed a t p r o m o t i n g l o c a l e c o n o m i c development t h r o u g h t r a d e may i n c e r t a i n c a s e s have become s u f f i c i e n t l y d e v e l o p e d t o warrant c o n s i d e r a t i o n of m u n i c i p a l governments as a c t o r s i n the i n t e r n a t i o n a l system. T h i s paper analyzes that p o s s i b i l i t y by d e s c r i b i n g the d i r e c t i o n of ongoing changes i n the i n t e r n a t i o n a l system and a s s e s s i n g the p o t e n t i a l f o r p o l i t i c a l c o n f l i c t between c i t y and s t a t e . Because the nascent q u a l i t y of the hypothesized c o n f l i c t p r e c l u d e s a d i r e c t h y p o t h e s i s - t e s t i n g methodology, the aim i s r a t h e r to juxtapose the c o n f l i c t i n g l o g i c s o f the s t a t e system and the e v o l v i n g g l o b a l e c o n o m i c s y s t e m t o w h i c h c i v i c g o v e r n m e n t s must simultaneously conform. R e c e n t work i n u r b a n g e o g r a p h y and e c o n o m i c s h a s h y p o t h e s i z e d t h a t g e o g r a p h i c a l and economic l i n k a g e s have c r e a t e d i n t e r n a t i o n a l systems of c i t i e s which a r t i c u l a t e the e x p a n s i o n of the c a p i t a l i s t - d o m i n a t e d world economic system. T h i s paper shows how changes i n the g l o b a l economy are a f f e c t i n g t h e n a t u r e and r o l e o f c i t i e s w i t h i n t h e s e i n t e r n a t i o n a l subsystems. The a n a l y s i s p o s i t s that the changing i n t e r n a t i o n a l economic environment may be a l t e r i n g the r e l a t i o n s h i p between c i t i e s and the s t a t e s i n which they are imbedded. While i t i s n o t s u g g e s t e d t h a t a f o r m a l d e v o l u t i o n o f p o w e r t o m u n i c i p a l i t i e s i s l i k e l y , i t i s s u g g e s t e d t h a t s t r u c t u r a l i i i r equirements f o r economic development may be pushing n a t i o n a l governments i n the d i r e c t i o n of removing themselves somewhat from the sphere of i n t e r n a t i o n a l economic r e l a t i o n s . The case of the Vancouver m u n i c i p a l government's i n c r e a s i n g l y p r o a c t i v e stance i n the development of commercial l i n k s with China i s used t o i l l u s t r a t e t h e c o n t e n t i o n t h a t the power of m u n i c i p a l governments t o d e t e r m i n e the f e a t u r e s of many i n t e r n a t i o n a l r e l a t i o n s h i p s i s beginning t o i n c r e a s e . i v Table of Contents Introduction. 1 I. Conceptual Frameworks A. The P o l i t i c a l Economy Approach 14 B. Two Systems of I n t e r n a t i o n a l R e l a t i o n s ... 16 C. Economic Development i n an Interdependent World..... 20 D. C i t i e s , S t a t e s , and M u l t i n a t i o n a l C o r p o r a t i o n s 25 E. C o n c l u s i o n 31 I I . C i t i e s i n the World P o l i t i c a l Economy A. C i t i e s as Centres of Change 36 B. The Economy of C i t i e s 38 C. The C o n s t i t u t i o n a l and F i s c a l Dependence of C i t i e s . . . 4 5 D. C i r c u i t s and Networks of C a p i t a l 51 E. C o n c l u s i o n 56 I I I . Canada and the China Trade A. China's H i s t o r i c a l Impact on Canada 60 B. Contemporary Canada-China Trade 65 P o l i t i c a l Dimensions 65 The Taiwan Problem 67 Economic Dimensions 70 C. Complementarity and Comparative Advantage 73 D. C o n c l u s i o n 79 IV. The P o l i t i c s of Trade and Investment A. F e d e r a l Trade I n i t i a t i v e s , 82 B. P r o v i n c i a l A c t i v i t i e s 85 C. M u n i c i p a l A c t i v i t i e s 91 D. C o n c l u s i o n 102 V. Conclusion 104 Bibliography 108 Tables 112 1 I n t r o d u c t i o n The n o t i o n o f a m u n i c i p a l government making i t s own f o r e i g n p o l i c y seems at f i r s t g l ance to c o n t a i n insurmountable c o n t r a d i c t i o n s . D i p l o m a t i c and s e c u r i t y i s s u e s of course f a l l under the purview of the n a t i o n - s t a t e and n a t i o n a l i n t e r e s t i s u n i v e r s a l l y p r i o r to t h a t of c i v i c government. In the "low p o l i t i c s " o f i n t e r n a t i o n a l t r a d e , however, I b e l i e v e t h a t a c ase can be made t h a t m u n i c i p a l a c t i o n s aimed a t promoting l o c a l economic development through trade may i n c e r t a i n cases have become s u f f i c i e n t l y developed to warrant c o n s i d e r a t i o n of m u n i c i p a l governments as i n t e r n a t i o n a l a c t o r s . I f t h i s i s so, then a n a l y s i s of c i t y - t o - f o r e i g n - c i t y r e l a t i o n s h i p s may be of i n t e r e s t as a subsystem of i n t e r n a t i o n a l r e l a t i o n s . T h i s paper attempts such an a n a l y s i s . The p r a c t i c a l and t h e o r e t i c a l j u s t i f i c a t i o n s f o r t h i s approach are based on very recent changes i n the s t r u c t u r e of the world's economy. T h i s venture i s t h e r e f o r e e x p l o r a t o r y and somewhat s p e c u l a t i v e i n n a t u r e . I t attempts to d e s c r i b e the d i r e c t i o n of ongoing changes i n the i n t e r n a t i o n a l system and the p o t e n t i a l f o r p o l i t i c a l c o n f l i c t between c i t y and s t a t e . The n a s c e n t q u a l i t y o f t h i s c o n f l i c t p r e c l u d e s a d i r e c t h y p o t h e s i s - t e s t i n g methodology. The aim i s rather to juxtapose the c o n f l i c t i n g l o g i c s of the s t a t e system and the e v o l v i n g g l o b a l e c o n o m i c s y s t e m t o w h i c h c i v i c g o v e r n m e n t s must 2 s i m u l t a n e o u s l y conform. I t s h o u l d be s t r e s s e d a t the o u t s e t that t h i s endeavour breaks new ground i n p o l i t i c a l s c i e n c e . To t h e w r i t e r ' s knowledge, n o t h i n g q u i t e l i k e t h i s has been attempted b e f o r e . I t i s h i g h l y e c l e c t i c i n i t s c o n c e p t i o n , attempting to draw together d i s p a r a t e l i t e r a t u r e s and p a i n t i n broad s t r o k e s the o u t l i n e s of a h e u r i s t i c framework f o r study of the changing r o l e of m u n i c i p a l government. One of many c o n s t r a i n t s on our a b i l i t y to make statements about contemporary i n t e r n a t i o n a l p o l i t i c s i s the problem of d i f f e r e n t i a l r a t e s of change o c c u r r i n g w i t h i n the i n t e r n a t i o n a l system. The e s s e n t i a l f e a t u r e of the Westphalian s o v e r e i g n t y system, the p o l i t i c a l border, i s r e l a t i v e l y s t a b l e over time. However, a g e n t s and e l e m e n t s o f change -- m u l t i n a t i o n a l c o r p o r a t i o n s , t e c h n o l o g i c a l i n n o v a t i o n and d i f f u s i o n , e n v ironmental and m i l i t a r y i n t e r c o n n e c t e d n e s s , and above a l l i n t e r d e p e n d e n t w o r l d m a r k e t s -- a r e c a p a b l e o f r a p i d l y t r a n s f o r m i n g s o c i a l , economic and p o l i t i c a l r e l a t i o n s h i p s w i t h i n t h e s t a t e s y s t e m . T h e o r i e s o f g l o b a l p o l i t i c a l i n t e r a c t i o n should take i n t o account a l l of these elements of change. In r e c e n t years emphasis has been i n c r e a s i n g l y p l a c e d on t h e r o l e o f m a r k e t s v e r s u s t h e r o l e o f g o v e r n m e n t i n m u l t i l a t e r a l , n e g o t i a t i o n s among s t a t e s . T h i s may be p a r t i a l l y e x p l a i n e d by the f a c t t h a t the impersonal phenomenon of the m a r k e t t e n d s t o a d a p t more q u i c k l y and e f f i c i e n t l y t h a n governments to r a p i d change, t e c h n o l o g i c a l shocks, or the r i s e 3 o f new c o m p e t i t o r s . E v e n t h e t r a d i t i o n a l l y s o c i a l i s t c o u n t r i e s , w h i l e not a b a n d o n i n g t h e i r o l d i d e o l o g i e s , a r e i n c r e a s i n g l y p u r s u i n g economic development o b j e c t i v e s through i n t e g r a t i o n with the c a p i t a l i s t world economy. The i n c r e a s e d i n t e r e s t of governments i n i n t e r n a t i o n a l economic c o o r d i n a t i o n may a l s o be e x p l a i n e d by the i n a b i l i t y of both M a r x i s t and neo-c l a s s i c a l t h e o r i e s of i n t e r n a t i o n a l t rade, which have p r o v i d e d the i n t e l l e c t u a l foundation f o r the post-war economic o r d e r , to d e a l a d e q u a t e l y w i t h t h e d y n a m i c s and c o m p l e x i t y o f t h e contemporary world economy. The b a s i c model o f i n t e r n a t i o n a l t r a d e d e v e l o p e d by R i c a r d o and h i s c o n t e m p o r a r i e s i n the 19th c e n t u r y has o f c o u r s e been r e f i n e d and m o d i f i e d by modern econ o m i s t s . The s t a n d a r d l i b e r a l p o s i t i o n i n t h e 1980s i s b a s e d on a r e f o r m u l a t i o n known as t h e H e c k s h e r - O h l i n - S a m u e l s o n (H-O) theory of i n t e r n a t i o n a l t r a de which expands the customary focus on c a p i t a l , labour and n a t u r a l resources to i n c l u d e management e x p e r t i s e and t e c h n o l o g y . 1 Newer t h e o r i e s are attempting to come to g r i p s with some of the problems which the H-0 model does not adequately e x p l a i n , e.g. i n t r a - f i r m trade and i n t r a -i n d u s t r y t r a d e , but t h e s e competing a n a l y s e s have not y e t produced g e n e r a l l y accepted theorems. The essence of the new t h e o r i e s however, i s t h a t " t r a d e t h e o r y i s the s t u d y o f ^Robert G i l p i n . The P o l i t i c a l Economy of I n t e r n a t i o n a l  R e l a t i o n s , P r i n c e t o n U n i v e r s i t y Press, N.J., 1987, pg. 175. 4 i n t e r n a t i o n a l i n d u s t r i a l o r g a n i z a t i o n " 2 and they s t r e s s the increasing importance of the relationship between o l i g o p o l i s t i c corporations involved in international trade and investment and the modern states which play a much more a c t i v e role i n the economy than i n the past. Marxist models of international trade are based on class a n a l y s i s and t h e o r e t i c a l l y avoid the problems inherent i n s t a t e - c e n t r i c analyses. In p r a c t i c e , however, th e i r view of the s t a t e as s u b o r d i n a t e to the i n t e r e s t s of c a p i t a l (a "committee of the bourgeoisie"), errs i n the other d i r e c t i o n of undervaluing the powerful i n f l u e n c e of s t a t e s i n the world marketplace. In a d d i t i o n , the p o l i c i e s which the l a r g e s o c i a l i s t states have followed in their trading practices have often been highly n a t i o n a l i s t i c , i n contradiction to the i d e a l of proletarian internationalism. For these reasons the models developed by both the l i b e r a l and Marxist schools become problematic when c a p i t a l seeks an international rather than a national equilibrium. While i t i s perfectly sensible to base analyses of global p o l i t i c s on a r e l a t i v e l y f i x e d feature within a changing world, i . e . the nation-state, t h i s t r a d i t i o n a l focus of inquiry may obscure important changes within the system which states have not i n i t i a t e d , but to which they must formulate p o l i t i c a l responses. The alternative focus offered here i s based on the notion that sets of c i t i e s , bounded either by national borders, 2 I b i d . pg. 176. 5 geographical proximity, or economic linkages, are s u f f i c i e n t l y i n t e r r e l a t e d to form systems, i . e . to act as coherent wholes. There has been a long standing r e c o g n i t i o n that systems of c i t i e s within national states play a v a r i e t y of roles which help determine the nature of the p o l i t i c a l economy of the s t a t e . 3 Within Canada, for example, a d i v i s i o n of s o c i a l labour e x i s t s among p o l i t i c a l ( c a p i t a l ) c i t i e s , port c i t i e s , regional c i t i e s , etc. Recent work i n urban geography and economics has hypothesized that g e o g r a p h i c a l and economic linkages have created international systems of c i t i e s which a r t i c u l a t e ( i . e . put t o g e t h e r i n a connected way) the e x p a n s i o n of the ca p i t a l i s t - d o m i n a t e d world economic system. The purpose of this paper i s to show how changes in the global economy, some of which are produced by conscious p o l i t i c a l choice, others by " n o n - p o l i t i c a l " factors, are a f f e c t i n g the nature and role of c i t i e s w i t h i n these i n t e r n a t i o n a l systems of c i t i e s . The a n a l y s i s p o s i t s that the changing i n t e r n a t i o n a l economic environment may be a l t e r i n g .the relationship between c i t i e s and the s t a t e s i n which they are imbedded. While i t i s not suggested t h a t a f o r m a l ( i . e . l e g a l or i n s t i t u t i o n a l ) devolution of p o l i t i c a l power to municipalities i s l i k e l y , i t i s suggested t h a t s t r u c t u r a l requirements f o r economic development may be pushing n a t i o n a l governments i n the 3See L.S. Bourne and J . Simmons. Systems of C i t i e s : Readings  on Structure, Growth and P o l i c y , Oxford Univ e r s i t y Press, New York, 1978. 6 d i r e c t i o n of removing themselves somewhat from the sphere of i n t e r n a t i o n a l economic r e l a t i o n s . The power of municipal governments to determine the features of many i n t e r n a t i o n a l r e l a t i o n s h i p s , i t i s hypothesized, w i l l therefore increase. The case of the Vancouver municipal government's increasingly pro-active stance i n the development of commercial l i n k s with China i s used to i l l u s t r a t e the contention that t h i s process has already begun. P o l i t i c a l s c i e n t i s t s c u s t o m a r i l y a n a l y z e m u n i c i p a l p o l i t i c s either by examining relationships within a single c i t y or comparing differences between c i t i e s . These approaches tend to c o n c e p t u a l l y i n s u l a t e c i t i e s from t h e i r r e g i o n a l and i n t e r n a t i o n a l environment by focusing on the p l u r a l i t y of i n t e r e s t s which compete f o r the power to make r u l e s and a l l o c a t e values which a f f e c t the l o c a l i t y i n question. The l e v e l of a n a l y s i s used here i s q u i t e d i f f e r e n t and draws s u b s t a n t i a l l y on l i t e r a t u r e from outside the d i s c i p l i n e — w orld systems a n a l y s i s from s o c i o l o g y , the "Wo r l d - C i t y Hypothesis" from urban planning and geography, and from recent work i n the f i e l d of economics. It i s hoped that p o l i t i c a l s c i e n t i s t s w i l l f i n d the incorporation of these contributions from other d i s c i p l i n e s useful and germane. The subject and methodology of this paper was sparked by a c o n j u n c t i o n of o b s e r v a t i o n s : that i n t e r n a t i o n a l economic interdependence appears to be incr e a s i n g l y a constraint and source of demands on pol i c y makers world-wide, that o f f i c i a l s i n a number of c i t i e s appear to be moving more a g g r e s s i v e l y i n t o t r a n s n a t i o n a l n e g o t i a t i o n s i n t h e i r q u e s t f o r l o c a l economic development, and t h a t these changes are a p p a r e n t l y not b e i n g m a t c h e d by a n y r e s t r u c t u r i n g o f t h e p o l i t i c a l r e l a t i o n s h i p s between c i t y and s t a t e . Trade, as an e s s e n t i a l f e a t u r e of both urban l i f e and i n t e r n a t i o n a l r e l a t i o n s , i s the area on which a t t e n t i o n w i l l be focused. While the People's R e p u b l i c of China (PRC) and Canada are s u f f i c i e n t l y u n a l i k e to make comparisons d i f f i c u l t , t a k i n g c i t i e s as the b a s i c u n i t of a n a l y s i s a l l o w s some i n t e r e s t i n g c o n t r a s t s to be made on the b a s i s of the almost u n i v e r s a l l o t of c i t i e s as p o l i t i c a l l y dependent a r t i f a c t s o f the s t a t e . C i t i e s can be c l a s s i f i e d a c c o r d i n g to t h e i r mode of i n t e g r a t i o n i n t o the w o r l d p o l i t i c a l economy. W i t h i n t h i s framework Vancouver, Canada and Guangzhou, China w i l l be seen to share a number o f s i m i l a r i t i e s . They a r e a l s o e c o n o m i c a l l y and c u l t u r a l l y l i n k e d through c i r c u m s t a n c e and c o n s c i o u s c h o i c e . The p o l i t i c a l economy of t h e i r t r a d i n g r e l a t i o n s h i p w i l l be e x p l o r e d , although the data r e l a t e mostly to Vancouver due to u n a v a i l a b i l i t y of i n f o r m a t i o n and d i f f i c u l t i e s of d e s c r i b i n g c u r r e n t a f f a i r s i n the PRC, which i s now u n d e r g o i n g r a p i d p o l i t i c a l and economic changes. The c o n t e x t w i t h i n which the Vancouver-Guangzhou t r a d e r e l a t i o n s h i p has developed i s c r u c i a l to t h i s a n a l y s i s . A s i d e f r o m h i s t o r i c a l and l o c a t i o n a l f a c t o r s , w h i c h w i l l be c o n s i d e r e d , both c i t i e s ' p o s i t i o n w i t h i n the emerging P a c i f i c 8 Rim economy i s h y p o t h e s i z e d to be a d e t e r m i n i n g f e a t u r e i n t h e i r r e l a t i o n s h i p . Secondly, although a t t e n t i o n i s focused on the r e l a t i o n s h i p between one Canadian c i t y and a c i t y w i t h i n the PRC, the ambiguous s o v e r e i g n t y of the R e p u b l i c of C h i n a (ROC) on Taiwan and Hong Kong are a l s o c o n s i d e r e d to have an i m p a c t on t h i s r e l a t i o n s h i p . At t h i s w r i t i n g a l l t h r e e " f a c e t s " of China are t r e a t e d as de f a c t o s t a t e s by Canada, and i n p a r t i c u l a r , as having three q u i t e separate economies. Hong Kong, of course, w i l l be p o l i t i c a l l y absorbed by the PRC nine years from now. The r e u n i f i c a t i o n of Taiwan with the mainland i s s t i l l o f f i c i a l l y a f i r s t order p r i o r i t y f o r both the PRC and ROC and cannot be r u l e d out at some f u t u r e date. Evidence w i l l be p r o v i d e d which i n d i c a t e s t h a t a rapprochement between the two i s now o c c u r r i n g . A l l t h r e e s t a t e s i n t e r f e r e i n d i f f e r e n t ways, and t o v a r y i n g degrees, i n t h e i r domestic economies and i n the g l o b a l economy, i n order to p r o t e c t t h e i r domestic economic autonomy f r o m t h e p e r c e i v e d d e p r e d a t i o n s o f d e p e n d e n c e a n d / o r interdependence. At the same time a l l three attempt to secure s t a b l e and s t r a t e g i c n i c h e s w i t h i n an i n c r e a s i n g complex and u n p r e d i c t a b l e w o r l d economy, which i s none the l e s s s t i l l p r e d i c a t e d on a l l o w i n g market f o r c e s a r e l a t i v e l y high degree of f r e e d o m . The dilemma which th e s e competing p r i o r i t i e s engenders encompasses many elements which are s i g n i f i c a n t i n e x p l a i n i n g the n a t u r e of C h i n a ' s e f f e c t on a middle-power, t r a d i n g n a t i o n such as Canada. 9 In 1978, the PRC began i t s h i s t o r i c expansion of t r a d e with the c a p i t a l i s t west ending a long p e r i o d of semi-autarchy and i d e o l o g i c a l committment t o an extreme form of n a t i o n a l s e l f - s u f f i c i e n c y . T h i s i s of i n c r e a s i n g importance to Canada as i t adapts to the h i s t o r i c s h i f t i n trade p a t t e r n s away from Europe and toward the P a c i f i c . As the world's most populous country, a l b e i t with a very backward economy, the PRC o f f e r s a p o t e n t i a l l y v a s t market at some f u t u r e date. Taiwan's dynamic economy, on t h e o t h e r hand, has g e n e r a t e d a l a r g e c u r r e n t a ccount s u r p l u s ( a p p r o x i m a t e l y US $80 b i l l i o n ) a p o r t i o n of which Canada would l i k e t o a t t r a c t i n the form of c a p i t a l investment. Hong Kong's e q u a l l y v i b r a n t economy i s of g r e a t i n t e r e s t t o C a n a d a , e s p e c i a l l y t o B r i t i s h C o l u m b i a and Vancouver. The p e r s p e c t i v e t a k e n i n t h i s paper u n d e r s c o r e s t h e importance of m u n i c i p a l i n s t i t u t i o n s i n i n t e r n a t i o n a l economic r e l a t i o n s . S t a t e - c e n t r i c t h e o r i e s of i n t e r n a t i o n a l r e l a t i o n s 4 , i t i s argued, have l i m i t e d u t i l i t y i n e x p l a i n i n g the r i c h n e s s and v a r i e t y of these s u b n a t i o n a l t r a n s a c t i o n s , because of t h e i r emphasis on t h e n a t i o n a l s t a t e ' s u n i t y and autonomy f r o m s o c i e t a l p r e s s u r e s . An a l t e r n a t i v e conception of the s t a t e i s o f f e r e d here as "a network of i n s t i t u t i o n s , d e e p l y imbedded w i t h i n a c o n s t e l l a t i o n of a n c i l l a r y i n s t i t u t i o n s a s s o c i a t e d 4For example most " r e a l i s t " t h e o r i e s (see Morgenthau, Waltz, G i l p i n ) which l o o k to adjustments w i t h i n the balance-of-power system to e x p l a i n p o l i t i c a l change. 10 wi t h s o c i e t y and the economic system." 5 The major competing paradigm which may be used f o r t h i s s o r t of a n a l y s i s , w o r l d systems theory, o f f e r s a p o i n t of departure f o r the development o f a f r a m e w o r k c a p a b l e o f a c c o m m o d a t i n g s u b n a t i o n a l t r a n s a c t i o n s i n a meaningful way. A systems p e r s p e c t i v e 6 runs the r i s k of being too broad a theory, t h a t i s to say, i t may e x p l a i n too much, and i n o v e r l y g e n e r a l terms, about the " g l o b a l " p o l i t i c a l economy to shed l i g h t on i t s c o n s t i t u e n t p a r t s . A m o d i f i e d form of the modern world systems theory which takes c i t i e s as i t s b a s i c o p e r a t i n g u n i t s w i l l be developed and employed. T h i s may be c a l l e d World C i t y a n a l y s i s . T h i s form of a n a l y s i s has been c r i t i c i z e d f o r r e m a i n i n g a t t h e m a c r o - l e v e l , r e l y i n g on u n r e l i a b l e , uncomparable s t a t i s t i c a l data, l a c k i n g an h i s t o r i c a l dimension and f a i l i n g t o take i n t o c o n s i d e r a t i o n p r o c e s s e s of change which a r e n e i t h e r i n d u c e d by t h e w o r l d s y s t e m nor o f an economic n a t u r e . 7 These c r i t i c i s m s h o l d t h a t W o r l d C i t y a n a l y s i s i s u s e f u l o n l y i f based on d e t a i l e d a n a l y s i s of a p a r t i c u l a r c i t y . In r e s p o n s e to t h e s e c r i t i c i s m s , t h i s paper t a k e s the 'Peter H a l l . G o v e r n i n g t h e Economy, P r e n t i c e - H a l l , New Jersey, 1986. 6see Immanuel W a l l e r s t e i h , The Modern World System. V o l . I, Academic P r e s s , N.Y., 1974; The Modern World System. V o l . I I , 1980; The C a p i t a l i s t World-Economy, Cambridge Press, N.Y., 1977. 7. R. K o r f f . "The World C i t y H y p o t h e s i s : A C r i t i q u e " , Development and Change, Sage P u b l i c a t i o n s , B e v e r l y H i l l s , V o l . 18, (1987), pp. 483-495. p o s i t i o n t h a t a m e s o - l e v e l framework w h i c h d e s c r i b e s t h e r e l a t i o n s o f a p a r t i c u l a r c i t y ( i n t h i s case Vancouver) to a sub-system w i t h i n the g l o b a l p o l i t i c a l economy (the P a c i f i c Rim economy) p r o v i d e s unique i n s i g h t s on a r e g i o n a l l e v e l . T h i s approach aims at b r i d g i n g the gap between m i c r o l e v e l s t u d i e s of i n d i v i d u a l o p e r a t i n g u n i t s and m a c r o t h e o r e t i c a l arguments about the nature of the system as a whoie. I m p l i c i t i n t h i s approach are s e v e r a l assumptions, argued f o r i n Chapters I and I I . The f i r s t i s t h a t c i t i e s p r o v i d e an important a l t e r n a t i v e to the s t a t e as a u n i t of economic a n a l y s i s . The second assumption, t h a t the g l o b a l system may be m e a n i n g f u l l y d i s a g g r e g a t e d i n t o f u n c t i o n a l r e g i o n a l economies, f o l l o w s from the f i r s t . T h i r d l y , i t i s argued t h a t t h e s e p r o c e s s e s a r e b e g i n n i n g t o o p e r a t e somewhat i n d e p e n d e n t l y o f t h e s t a t e s y s t e m . Q u e s t i o n s r e g a r d i n g the degree of autonomy from the s t a t e system which c i t i e s enjoy become important i n t h i s paper. Chapter I continues to d i s c u s s the t h e o r e t i c a l concerns of t h i s paper. I t begins with the o b s e r v a t i o n that s t a t e - c e n t r i c a n a l y s e s of the p o l i t i c a l economy of i n t e r n a t i o n a l r e l a t i o n s a r e under i n c r e a s i n g i n t e l l e c t u a l p r e s s u r e t o a c c o u n t f o r r e c e n t dynamic changes and a d a p t a t i o n s i n the i n t e r n a t i o n a l economy. The argument developed i s that although a d u a l i s t i c conception of i n t e r n a t i o n a l r e l a t i o n s goes some d i s t a n c e toward a more a c c u r a t e m o d e l l i n g of the i n t e r n a t i o n a l p o l i t i c a l economy than p r e v a i l i n g s t a t e - c e n t r e d t h e o r i e s , a more a c c u r a t e d e s c r i p t i v e and a n a l y t i c a l framework may be d e r i v e d from a 12 modified form of world systems a n a l y s i s . I t i s argued t h a t as the world economy evolve s , methods of a n a l y z i n g i t must undergo a s i m i l a r e v o l u t i o n . C h a p t e r I I i d e n t i f i e s l a r g e m e t r o p o l i t a n c i t i e s as the l o c i o f s u r p l u s c a p i t a l g e n e r a t i o n , g l o b a l e c o n o m i c t r a n s a c t i o n s and r e l a t e d p o l i t i c a l change. Many of t h e s e c i t i e s may be u s e f u l l y c o n c e p t u a l i z e d as n o d e s i n a t r a n s n a t i o n a l system of c a p i t a l flows which i n t e r a c t s with the s t a t e s y s t e m i n an i n c r e a s i n g l y p o w e r f u l manner. T h i s i n t e r a c t i o n i n f l u e n c e s the s t r u c t u r e of the world p o l i t i c a l economy (WPE) which may be d i s t i n g u i s h e d from the i n t e r n a t i o n a l p o l i t i c a l economy. Conceiving the g l o b a l economy i n terms of the f o r m e r s y s t e m p l a c e s c i t i e s , r a t h e r than s t a t e s , i n a c e n t r a l p o s i t i o n i n m o d e l l i n g s o c i a l , economic and p o l i t i c a l change. T h i s i s c o n t r a s t e d w i t h the p o l i t i c a l p o s i t i o n of f i s c a l and c o n s t i t u t i o n a l dependency which v i r t u a l l y a l l m u n i c i p a l governments a r e s u b j e c t t o i n r e l a t i o n t o t h e i r n a t i o n a l s t a t e s . C h a p t e r I I I p r o v i d e s the r e a d e r w i t h h i s t o r i c a l and contemporary background m a t e r i a l on the economic and p o l i t i c a l d i m e n s i o n s o f Canada's t r a d e r e l a t i o n s w i t h C h i n a . I t i s w r i t t e n from a s t a t e - c e n t r i c p o i n t o f view and attempts to s u mmarize c u r r e n t t h i n k i n g a b o u t t h e n a t u r e , v a l u e and p r o s p e c t s o f t h e C h i n a t r a d e to Canada. I t p r o v i d e s an h i s t o r i c a l c o n t e x t w i t h i n which the l o n g - t e r m r e l a t i o n s h i p between t h i s trade and Canadian h i s t o r i c a l development may be 13 assessed. T h i s b r i e f economic h i s t o r y focuses on the impact of B r i t i s h and C a n a d i a n t r a d e a c t i v i t i e s d u r i n g the i m p e r i a l p e r i o d of Canada's development, a t t r i b u t i n g l e s s s i g n i f i c a n c e to indigenous n a t i o n - b u i l d i n g e f f o r t s than i s customary i n most Canadian h i s t o r y w r i t i n g . C h a p t e r IV i s a c a s e s t u d y of C a n a d i a n g o v e r n m e n t a l e f f o r t s t o promote trade with China. A f t e r d e s c r i b i n g f e d e r a l and p r o v i n c i a l a c t i v i t i e s i n g e n e r a l t e r m s , t h i s c h a p t e r f o c u s e s on Vancouver's e f f o r t s , e s p e c i a l l y programs developed by the m u n i c i p a l Economic Development O f f i c e . The emphasis i s on areas i n which the Vancouver m u n i c i p a l government i s a b l e to a c t autonomously i n the i n t e r n a t i o n a l sphere and what, i f any, are the r a m i f i c a t i o n s f o r intergovernmental r e l a t i o n s of these a c t i v i t i e s . M u n i c i p a l l i n k s w i t h the i n t e r n a t i o n a l s y s t e m which were h y p o t h e s i z e d to e x i s t i n C h a p t e r s I and I I a r e examined. 14 Chapter I Conceptual Frameworks A. The P o l i t i c a l Economy Approach F o r a n a l y t i c a l and t h e o r e t i c a l c l a r i t y i n t e r n a t i o n a l p o l i t i c s and i n t e r n a t i o n a l economics have been i s o l a t e d from one another i n much academic r e s e a r c h . While the u s e f u l n e s s of t h i s d i v i s i o n i s i n c o n t r o v e r t i b l e , most r e s e a r c h e r s acknowledge t h a t the mutual p e r m e a b i l i t y of the d i s c i p l i n e s weakens the explanatory and p r e d i c t i v e powers of both. The interdependence of s t a t e and market cannot be wished away nor e n t i r e l y subsumed by the models of one or the other d i s c i p l i n e . H i s t o r i c a l and e m p i r i c a l evidence suggests that p o l i t i c a l i n t e r v e n t i o n s i n t h e i n t e r n a t i o n a l economy a r e n e i t h e r t r a n s i e n t nor random i n nature. Conversely, i t i s a matter of r e c o r d t h a t n o n - s t a t e a c t o r s s u c h a s m u l t i n a t i o n a l c o r p o r a t i o n s , or even wealthy i n d i v i d u a l s , have p e r i o d i c a l l y e x e r c i s e d s u f f i c i e n t economic power t o a l t e r the c o u r s e of i n t e r n a t i o n a l e v e n t s . The scope of such i n t e r v e n t i o n s are a m a t t e r o f some de b a t e among t h e o r e t i c i a n s of the l e f t and r i g h t . B o t h s i d e s o f t h e argument a g r e e , however, t h a t i s o l a t i n g s t a t e and market i s an a n a l y t i c a l convenience which a l l o w s r e s e a r c h e r s t o downplay the c o m p l e x i t i e s o f t h e i r i n t e r a c t i v e and c y c l i c a l r e l a t i o n s h i p . Sometimes the two operate r e l a t i v e l y autonomously, a t o t h e r times they e x h i b i t 15 h i g h degrees of i n t e r a c t i o n . A p o l i t i c a l economy approach t h e r e f o r e assumes t h a t c o n s i d e r a t i o n o f t h e m u t u a l and contingent i n t e r a c t i o n s of these two means of o r g a n i z i n g human a c t i v i t y i s necessary to an understanding of many s u b s t a n t i v e p o l i t i c a l problems. The p o l i t i c s of t r a d e , one focus of t h i s paper, i s o b v i o u s l y one such area. The p o l i t i c a l s i g n i f i c a n c e of g l o b a l economic r e l a t i o n s i n our e r a of i n c r e a s e d economic interdependence among v i r t u a l l y a l l s t a t e s compels us to assess the p o l i t i c a l i m p l i c a t i o n s of i n t e r n a t i o n a l e c o n o m i c t r a n s a c t i o n s w i t h o u t u n d e r v a l u i n g " m e r e l y " c o m m e r c i a l m a t t e r s as n o n - p o l i t i c a l n o r w i t h i d e o l o g i c a l b l i n k e r s which v i s u a l i z e p o l i t i c a l a c t i v i t y as "mere" s u p e r s t r u c t u r e . R o b e r t G i l p i n p r o v i d e s a b a s i c d e f i n i t i o n of t h i s approach: In t h e a b s e n c e o f s o c i a l , p h y s i c a l , and o t h e r c o n s t r a i n t s , a market economy has an e x p a n s i v e and dynamic q u a l i t y . I t tends to cause economic growth, to expand t e r r i t o r i a l l y , and to b r i n g a l l segments of s o c i e t y i n t o i t s embrace. Groups and s t a t e s seek to r e s t r a i n the o p e r a t i o n of a market because i t has the p o t e n t i a l to e x e r t a c o n s i d e r a b l e f o r c e on s o c i e t y ; e f f o r t s to c o n t r o l markets g i v e r i s e to the p o l i t i c a l economy of i n t e r n a t i o n a l r e l a t i o n s . 8 The p o l i t i c a l economy l i t e r a t u r e may be d i v i d e d i n t o three b r o a d t y p e s . The f i r s t d e f i n e s p o l i t i c a l economy as t h e a p p l i c a t i o n of the m e t h o d o l o g y of e c o n o m i c s , f o r example " r a t i o n a l a c t o r " models of human behaviour (e.g. Anthony Downs) or the " p u b l i c c h o i c e " models employed by Bruno F r e y and ^Robert G i l p i n . The P o l i t i c a l Economy o f I n t e r n a t i o n a l  R e l a t i o n s , P r i n c e t o n U n i v e r s i t y Press, N.J., 1987, pg. T9~. o t h e r s . These a p p r o a c h e s a t t e m p t t o r e d u c e t h e l o g i c o f p o l i t i c s t o economic ( i . e . p r o f i t or p l e a s u r e m a x i m i z i n g ) r a t i o n a l i t y . The second approach employs a s p e c i f i c p o l i t i c a l or economic theory such as Marxism to e x p l a i n s o c i a l behaviour. The t h i r d approach i s based on a set of qu e s t i o n s generated by e m p i r i c a l o b s e r v a t i o n of the i n t e r a c t i o n and interdependence of s t a t e and market. I t asks how the s t a t e and i t s a s s o c i a t e d p o l i t i c a l p r o c e s s e s a f f e c t the p r o d u c t i o n and d i s t r i b u t i o n of w e a l t h a n d , i n p a r t i c u l a r , how p o l i t i c a l d e c i s i o n s and i n t e r e s t s i n f l u e n c e the l o c a t i o n of economic a c t i v i t i e s and the d i s t r i b u t i o n o f the c o s t s and b e n e f i t s of these a c t i v i t i e s . T h i s t h i r d approach forms the b a s i s of t h i s i n q u i r y . A f i r s t cut at the problem r e q u i r e s some r e f i n i n g of the broad c a t e g o r i e s " s t a t e " and "market". V a r i o u s d e f i n i t i o n s have been o f f e r e d which p r o v i d e s l i g h t l y d i f f e r e n t i n s i g h t s . Lindblom has proposed " a u t h o r i t y " and "exchange" as the c e n t r a l concepts. Others have used " c o e r c i o n " and "exchange", "power" and "money", or " h i e r a r c h y " and "markets" 9. For reasons which w i l l become c l e a r I p r e f e r Rosecrance's c o n c e p t u a l i z a t i o n which c o n t r a s t s "market" and " t e r r i t o r i a l i t y " . B. Two Systems of I n t e r n a t i o n a l R e l a t i o n s R i c h a r d R o s e c r a n c e i n The R i s e of the T r a d i n g S t a t e , argues t h a t s i n c e the end of the Second World War the world "has been p o i s e d between two fundamentally d i f f e r e n t modes of 9See R. G i l p i n , op. c i t . , pg 46. 17 o r g a n i z i n g i n t e r n a t i o n a l r e l a t i o n s : a t e r r i t o r i a l system which hearkens back to the world of Louis XIV and which i s p r e s i d e d over by the USSR and to some extent the United S t a t e s , and an o c e a n i c or t r a d i n g system that i s the legacy of B r i t i s h p o l i c y i n the 1850s and which i s today or g a n i z e d around the A t l a n t i c and P a c i f i c B a s i n s " . 1 0 The former system i s composed of s t a t e s which view power i n terms of t e r r i t o r y and whose p o l i c i e s are aimed a t a t t a i n i n g s e l f - s u f f i c i e n c y through conquest. T h i s system c o r r e s p o n d s c l o s e l y t o the a n a r c h i c a l w o r l d of many r e a l i s t t h e o r i s t s wherein t e r r i t o r i a l s t a t e s are o n t o l o g i c a l l y i d e n t i c a l u n i t s of d i f f e r i n g c a p a c i t i e s competing i n the z e r o -sum game of n a t i o n a l s u r v i v a l and aggrandizement. T h i s " m i l i t a r y - p o l i t i c a l w o r l d " i s c o n t r a s t e d w i t h the " t r a d i n g world" system w i t h i n which s t a t e s recognize t h a t s e l f -s u f f i c i e n c y i s an i l l u s i o n and t h e r e f o r e promote n a t i o n a l o b j e c t i v e s through n a t i o n a l d i f f e r e n t i a t i o n of f u n c t i o n s i n an interdependent g l o b a l economy. T h i s system o b v i o u s l y r e l i e s on r e l a t i v e l y f r e e and open trade and p r o v i d e s a k i n d of e q u a l i t y o f s t a t u s t h r o u g h s p e c i a l i z a t i o n and d i f f e r e n t i a t i o n . I n d u s t r i a l c o u n t r i e s such as S w i t z e r l a n d and I t a l y o p e r a t e e f f e c t i v e l y w i t h i n t h i s s y s t e m by c o n c e n t r a t i n g on t h e p r o d u c t i o n of high q u a l i t y goods, Korea and Taiwan by producing low-cost, h i g h - e f f i c i e n c y products and Canada through resource e x t r a c t i o n and, t o some e x t e n t , c a p i t a l and t e c h n o l o g y -1 0 R i c h a r d R o s e c r a n c e , The R i s e of the T r a d i n g S t a t e :  Commerce and Conquest i n the Modern World, B a s i c Books, N.Y., 1986. pg. 16 18 i n t e n s i v e m a n u f a c t u r i n g . T h i s l a t t e r s ystem c o r r e s p o n d s c l o s e l y t o the w o r l d view of contemporary l i b e r a l economic t h e o r i s t s w h e r e i n the open t r a d i n g system g i v e s r i s e t o an i n t e r n a t i o n a l d i v i s i o n of labour based on comparative advantage i n which a l l p a r t i c i p a n t s may g a i n , a v a r i a b l e - s u m game i n w h i c h t h e d i v i s i v e n a t u r e o f i n t e r n a t i o n a l p o l i t i c s i s m i t i g a t e d by t h e m u t u a l b e n e f i t s o f t r a d e and e c o n o m i c c o o p e r a t i o n . These two "worlds" of i n t e r n a t i o n a l r e l a t i o n s a re p o l a r or i d e a l types, of course, and i t i s u n l i k e l y that the world w i l l e n t i r e l y adopt one system or the o t h e r . On the other hand "the c o n t e m p o r a r y k n i f e - e d g e e q u i p o i s e between the two systems cannot be s u s t a i n e d i n d e f i n i t e l y " 1 1 and i t seems c l e a r that the i m p e r a t i v e s o f i n t e r d e p e n d e n t w o r l d c a p i t a l m a r k e t s , t e c h n o l o g i c a l developments i n t r a n s p o r t a t i o n and communication, e c o l o g i c a l interdependence and mutual v u l n e r a b i l i t y t o nuc l e a r a t t a c k — i n s h o r t , a sma l l e r and more dangerous world — are f o r c i n g t h e s t a t e s of the w o r l d t o d e f i n e t h e i r n a t i o n a l i n t e r e s t more and more i n terms of the t r a d i n g system. For example, c o n s i d e r the c o s t - b e n e f i t c a l c u l u s f a c i n g a n a t i o n today which i s c o n s i d e r i n g m i l i t a r y expansion i n p u r s u i t of s e l f - s u f f i c i e n c y or i n t e r n a t i o n a l s t a t u s and wealth. I t i s v e r y l i k e l y t o f i n d , as Japan and the F e d e r a l R e p u b l i c of Germany have done, t h a t more s p e c t a c u l a r r e s u l t s i n terms of the economic w e l f a r e of i t s people are l e s s c o s t l y to achieve 1 1Rosecrance, op. c i t . , pg. 211. 19 through p e a c e f u l economic development and t r a d e . Although the a t a v i s t i c ways o f the t e r r i t o r i a l system s t i l l r e c u r w i t h d i s h e a r t e n i n g f r e q u e n c y , e s p e c i a l l y i n the l e s s d e v e l o p e d world, the d i r e c t i o n of a s h i f t of some magnitude i s c l e a r l y i n t h e d i r e c t i o n o f t h e t r a d i n g s y s t e m , d r i v e n by t h e i n t e r d e p e n d e n c e of the w o r l d economy and i n p a r t i c u l a r the r e c e n t emergence of the w o r l d c a p i t a l market. There i s an element of s o c i a l l e a r n i n g i n t h i s p r o c e s s . The t e r r i t o r i a l g i a n t s , the US and USSR, have been i n r e l a t i v e economic d e c l i n e f o r c l o s e t o two d e c a d e s now, a n d t h e y h a v e b e c o m e " a n a l y t i c a l l y s m a l l . " They can no l o n g e r compete w i t h o u t buying and s e l l i n g abroad. The r e v o l u t i o n a r y r e s t r u c t u r i n g now o c c u r i n g i n t h e S o v i e t U n i o n cannot be u n d e r s t o o d w i t h o u t refere n c e to i t s d e s i r e to be more co m p e t i t i v e i n t e r n a t i o n a l l y . E v e n t h e US, w h i c h has had t h e g r e a t e s t c a p a c i t y f o r i n d e p e n d e n t a c t i o n i n the w o r l d system s i n c e 1945, i s now f o r c e d to c o n s i d e r g r e a t e r r e l i a n c e upon a t r a d i n g s t r a t e g y i n w o r l d p o l i t i c s . China i s now p u r s u i n g a p o l i c y of i n c r e a s e d economic i n t e g r a t i o n i n t o the g l o b a l economy motivated i n l a r g e m e a s u r e by t h e q u e s t f o r e c o n o m i c d e v e l o p m e n t , f o r e i g n t e c h n o l o g y and c a p i t a l . 1 2 I t s huge p o p u l a t i o n and v a s t t e r r i t o r y count f o r l e s s i n the c l o s i n g y e a r s o f the 20th century than they might have i n the past; i t i s a t best a one-dimensional great power i n the emerging i n t e r n a t i o n a l system. 1 2Ho, Samuel, and Huenemann, R., China's Open Door P o l i c y :  The Q u e s t f o r F o r e i g n T e c h n o l o g y and C a p i t a l , UBC P r e s s , Vancouver, 1984. 20 The t r a d i n g a n d m i l i t a r y s y s t e m s a r e n o t s i m p l e e q u i v a l e n t s to n a t i o n a l market and s t a t e . Each system c o n t a i n s c o n f l i c t , c o m p e t i t i o n and c o o p e r a t i o n i n both p o l i t i c a l and economic terms. In the former system though, one f i n d s t h a t economic, r a t h e r than m i l i t a r y , power i s the c r i t e r i o n o f a s t a t e ' s p l a c e i n the i n t e r n a t i o n a l h i e r a r c h y . The e s s e n t i a l c h a l l e n g e s of the p o l i t i c a l economy of the two systems are d i f f e r e n t . The problematic of i n t e r n a t i o n a l r e l a t i o n s i n the m i l i t a r y - p o l i t i c a l system i s war; i n the t r a d i n g system i t i s economic growth — h o w to c r e a t e i t , s u s t a i n i t , and manage i t s s o c i a l , p o l i t i c a l and environmental consequences. C. Economic Development i n an Interdependent World P o l i c i e s aimed a t g e n e r a t i n g economic development a r e p r a c t i c a l l y addressed i n terms of economic growth as expressed by a s e r i e s of s t a t i s t i c a l i n d i c a t o r s which measure the r a t e of e x p a n s i o n o f economic a c t i v i t y w i t h i n a g i v e n s t a t e . The r e l a t i v e wealth of the developed world has had a demonstration e f f e c t u p o n p o l i t i c a l e l i t e s a n d p o p u l a t i o n s i n t h e underdeveloped world, encouraging them e i t h e r t o emulate the s t r a t e g i e s of i n d u s t r i a l i z a t i o n and market freedom i f they adopt the p h i l o s o p h y of economic l i b e r a l i s m , or t o p u r s u e a u t a r k i c , p r o t e c t i o n i s t or c o n f r o n t a t i o n a l p o l i t i c a l s t r a t e g i e s i f they s u b s c r i b e to c l a s s i c a l M a r x i s t or dependency t h e o r i e s of unequal exchange. Whatever p e r s p e c t i v e i s taken however, i t i s almost u n i v e r s a l l y a c c e p t e d t h a t l e s s d eveloped economies 21 a r e by and l a r g e being i n c o r p o r a t e d i n t o an expanding w o r l d economy and c h a n g i n g from t r a d i t i o n a l t o modern modes o f p r o d u c t i o n t h r o u g h the d i f f u s i o n of t r a d e , t e c h n o l o g y and investment. W i t h o u t e n t e r i n g i n t o a d i s c u s s i o n about the r e l a t i v e m e r i t s or assumptions which u n d e r l i e the competing viewpoints ( l i b e r a l , M a r x i s t , dependency) of how i n t e r n a t i o n a l economic growth i s achieved, the p o i n t may s t i l l be made that there i s no o v e r r i d i n g d e t e r m i n i s m t o the e x p a n s i o n o f the g l o b a l economy. P o l i t i c a l autonomy g i v e s the r i g h t and c a p a c i t y to sovereign s t a t e s to "go i t alone" i f they wish. The p r i c e of a u t a r c h y i n t h e c o n t e m p o r a r y w o r l d , however, i s a r e d u c e d standard of l i v i n g f o r the p o p u l a t i o n of the a u t a r c h i c s t a t e . The recent h i s t o r i c a l experiences of China, Burma, A l b a n i a and to some extent the USSR, bear t h i s out. The r i s e of the NICs, c o n v e r s e l y , h a s d e m o n s t r a t e d t h e p o s s i b l e b e n e f i t s o f i n t e g r a t i o n i n t o t h e i n t e r n a t i o n a l e c o n o m i c s y s t e m , p a r t i c u l a r l y i n recent times through the adoption of an e x p o r t -l e d growth s t r a t e g y . The s u c c e s s of the NICs i s " a l r e a d y having an impact on the i n t e r n a t i o n a l balance of economic power and p o l i t i c a l economy, an impact t h a t c o u l d prove to be as s i g n i f i c a n t as the emergence of Western c i v i l i z a t i o n as the dominant f o r c e i n i n t e r n a t i o n a l economics". 1 3 Sovereign s t a t e s may r e j e c t , e n c o u r a g e or attempt to m a n i p u l a t e and manage economic i n t e r d e p e n d e n c e f o r the b e n e f i t of t h e i r e l i t e s or 1 3 G i l p i n , o p . c i t . , pg.264. 22 t h e i r p o p u l a t i o n s as a w h o l e . A c c e p t i n g t h e t e r m s o f interdependence i n the quest f o r economic development, however, a r g u a b l y a l t e r s the r e l a t i o n s h i p between s t a t e managers and t h e i r s o c i e t y . Interdependence imposes c o n s t r a i n t s on domestic policy-making and l i m i t s the range of domestic p o l i c y o p t i o n s . Interdependence p r e c i p i t a t e s the r i s e of what one w r i t e r c a l l s the " m e d i a t i v e " s t a t e , i n which " p o l i c y i s no l o n g e r governed by f i a t " , but i s r a t h e r "a matter of n e g o t i a t i o n . " 1 4 Interdependence as p r e s e n t l y s t r u c t u r e d has l e d n a t i o n s to r e l y on goods and raw m a t e r i a l s produced by other s o c i e t i e s . Rapid and massive flows of c a p i t a l i n t o or out of a s o c i e t y i n f l u e n c e i t s i n t e r e s t r a t e s , r a t e o f i n f l a t i o n a n d amount o f unemployment. Such t r a n s n a t i o n a l f l o w s — t r a n s b o u n d a r y t r a n s a c t i o n s i n which one of the p a r t i e s i s not n e c e s s a r i l y a government — are i n c r e a s i n g l y c h a r a c t e r i s t i c of world economic i n t e r d e p e n d e n c e . Managing interdependence r e q u i r e s economic p o l i c y c o o r d i n a t i o n among s t a t e s through m u l t i l a t e r a l f o r a such as the GATT, OECD, World Bank, IMF, e t c . Member s t a t e s a r e c o n s t r a i n e d by the web of c o n t r a c t u a l agreements which they have e n t e r e d i n t o i n order t o secure economic growth w i t h i n t h e i r b o r d e r s . The f u n c t i o n of the s t a t e t h e r e f o r e e n l a r g e s beyond i t s t r a d i t i o n a l i n t e r n a t i o n a l r o l e of p r o v i d i n g s e c u r i t y f o r i t s c i t i z e n s t o take on as w e l l the r o l e of n e g o t i a t i o r , mediating between the imperatives of g l o b a l c o mpetitiveness and the demands and e x p e c t a t i o n s of i t s s o c i e t y . The s t a t e i s ( i n 1 4Rosecrance, o p . c i t . , pg. 208. 23 d e m o c r a t i c c o u n t r i e s a t l e a s t ) an instrument of the p o p u l a r w i l l , however i m p e r f e c t l y e x p r e s s e d , but a l s o a manager of g l o b a l interdependence. In an interdependent world the s t a t e "cannot a s s u r e economic s e c u r i t y or w e l f a r e f o r i t s c i t i z e n s . I t c a n o n l y n e g o t i a t e w i t h t h e s e o b j e c t i v e s i n m i n d . " 1 5 Economic interdependence, on the one hand, i n c r e a s e s a s t a t e ' s v u l n e r a b i l i t y t o e x t e r n a l economic and p o l i t i c a l f o r c e s . On the other hand, interdependence, i f not o v e r l y a s y m e t r i c , may provide the best means f o r a c h i e v i n g economic growth through a more e f f i c i e n t i n t e r n a t i o n a l d i v i s i o n o f l a b o u r . The b e s t s t r a t e g y may t h e r e f o r e be t o e n c o u r a g e t h e g r o w t h o f interdependence. The s t a t e can be s a i d to mediate between the op p o s i n g demands of r e d u c i n g economic v u l n e r a b i l i t y through s e l f - s u f f i c i e n c y and g e n e r a t i n g e c o n o m i c g r o w t h t h r o u g h economic interdependence. None of the above should be i n t e r p r e t e d as an i n d i c a t i o n of a weakening of the power of the contemporary s t a t e . Indeed, the r e v e r s e i s t r u e i n the arena of geoeconomic c o m p e t i t i o n , where the s t a t e has become an a c t i v e p a r t i c i p a n t i n the process o f c a p i t a l a c c u m u l a t i o n . The i n t e r n a t i o n a l i z a t i o n o f p r o d u c t i o n and the f i s c a l c r i s i s of the w e l f a r e s t a t e which o c c u r e d i n the 1970s i n t h e i n d u s t r i a l i z e d c o u n t r i e s has i n c r e a s e d the l e v e l of s t a t e i n t e r v e n t i o n i n the marketplace. In Canada, f o r example, the F i n a n c i a l Post's l i s t i n g of the top 500 i n d u s t r i a l c o r p o r a t i o n s f o r 1985 ranked by s a l e s i n c l u d e d 1 5 I b i d 32 companies w h o l l y owned by government (16 f e d e r a l and 16 p r o v i n c i a l ) and a n o t h e r 22 which had s u b s t a n t i a l government i n v e s t m e n t . 1 6 In 1980 the Post l i s t e d o n l y 22 w h o l l y owned companies (nine f e d e r a l and 13 p r o v i n c i a l ) and onl y seven which had s u b s t a n t i a l government investment. 1 7 The r e l a t i v e l y recent e n t r a n c e o f t h e s t a t e i n t o t h e s p h e r e o f d i r e c t c a p i t a l accumulation (as opposed to p r o v i d i n g i n f r a s t r u c t u r e , loans and t a x - i n c e n t i v e s to a s s i s t p r i v a t e accumulation) has been c a l l e d " s t a t e c a p i t a l i s m " . 1 8 E x t e n s i v e data e x i s t which support the co n t e n t i o n that the s t a t e no longer merely r e g u l a t e s the market as l i b e r a l economists would hope, nor evidences "capture" by p r i v a t e c a p i t a l as c l a s s i c a l Marxian thought would p r e d i c t . In a w o r l d economy c h a r a c t e r i z e d by i n t e r n a t i o n a l i z a t i o n o f p r o d u c t i o n , interdependent c a p i t a l markets and the i n c r e a s i n g l y dynamic and a r b i t r a r y n ature of comparative advantage ( i . e . c o m p a r a t i v e a d v a n t a g e as a p r o d u c t of c o r p o r a t e and s t a t e p o l i c i e s ) p o l i c y makers seek to counteract t h e i r v u l n e r a b i l i t y t o e x t e r n a l change and a s s e r t g r e a t e r c o n t r o l over domestic resources by extending the d i r e c t r o l e of the s t a t e as i n v e s t o r and p r o d u c e r . I n c r e a s i n g l y , the s t a t e i s p r o d u c i n g f o r the market. i bJeanne Laux and M.A. M o l o t . S t a t e C a p i t a l i s m : P u b l i c  E n t e r p r i s e i n Canada, C o r n e l l U n i v e r s i t y Press, I t h a c a , 1988, pg. 61. 1 7The F i n a n c i a l P o s t 500, Summer 1980, Toronto, Maclean-Hunter. 1 8Laux and Molot. op. c i t . 25 Canada again p r o v i d e s a good example of t h i s t r e n d among the OECD c o u n t r i e s . As H a r o l d Innes has p o i n t e d out, s t a t e i n t e r v e n t i o n i n the Canadian economy i s an h i s t o r i c a l f a c t due t o p o l i c i e s p r o m u l g a t e d i n r e s p o n s e t o the e x i g e n c i e s o f d e v e l o p i n g i t s s t a p l e s e x t r a c t i n g economy. Canada's i d e n t i t y as a " p u b l i c e n t e r p r i s e n a t i o n " has a long h i s t o r y , which i s o f t e n u s e d t o d i s t i n g u i s h i t f r o m t h e " f r e e - e n t e r p r i s e l i b e r a l i s m " to the south. In the area of i n t e r n a t i o n a l t r a d e , the e x i s t e n c e of s t a t e owned m u l t i n a t i o n a l f i r m s i s , however, o n l y one d i m e n s i o n of the s t a t e ' s t r a d i n g a c t i v i t i e s . A l l l e v e l s o f government now a c t i v e l y a s s i s t C a n a d i a n f i r m s i n l o c a t i n g export o p p o r t u n i t i e s , r e d u c i n g the c o s t to f i r m s of d e a l i n g with f o r e i g n b u r e a u c r a c i e s ( c u t t i n g "red tape") and at the f e d e r a l l e v e l , p r o v i d i n g f i n a n c i n g to f o r e i g n buyers of Canadian products. These a c t i v i t i e s w i l l be d i s c u s s e d at some le n g t h i n Chapter IV. These d i r e c t i n t e r v e n t i o n s by the s t a t e i n t o the world economy ar e i n many cases an a n t i d o t e to the g r e a t power w i e l d e d i n the t r a d i n g w o r l d by m u l t i n a t i o n a l c o r p o r a t i o n s . D. C i t i e s , S t a t e s , and M u l t i n a t i o n a l C o r p o r a t i o n s The r e l a t i o n s h i p b e t w e e n c i t i e s and m u l t i n a t i o n a l c o r p o r a t i o n s c o n s t i t u t e s one of the two p o i n t s of c o n t a c t between m u n i c i p a l government and the i n t e r n a t i o n a l system. C i t i e s which u n d e r s t a n d the need of MNCs f o r more r e g i o n a l o f f i c e s w i l l be. the ones to a t t r a c t corporate tenants and thus 26 i n t e g r a t e themselves more f u l l y i n t o the g l o b a l economy. Benefits which accrue to a c i t y may be purely economic — more j o b s , a d d i t i o n a l tax re v e n u e s and g r e a t e r i n d u s t r i a l d i v e r s i f i c a t i o n -- or s o c i a l -- the h a l t of urban decay, c u l t u r a l erosion and diminishing q u a l i t y of l i f e . Costs may likewise be e i t h e r economic or s o c i a l . C i t i e s are a major point of entry for transnational c a p i t a l into a national state. MNCs are powerful actors i n the world p o l i t i c a l economy; in f a c t , they are the only actors whose power r i v a l s that of individual states. If we take a simple working d e f i n i t i o n of MNCs as being firms that own and manage economic units i n two or more c o u n t r i e s , we f i n d a great deal of v a r i a t i o n , of course, in the capacities of these firms to influence or remain uninfluenced by, s t a t e s . The l a r g e s t however — P h i l i p s , S h e l l , IBM, Nissan, Nestle, M i c h e l i n , NatWest, Hong Kong and Shanghai Bank, C i t i c o r p , Exxon, and the l i k e — are c l e a r l y powerful i n purely economic terms, having f i n a n c i a l , i n d u s t r i a l and t e c h n o l o g i c a l resources g r e a t e r than the m a j o r i t y of states. Although these firms are n o n - t e r r i t o r i a l , their trans-j u r i s d i c t i o n a l a c t i v i t i e s have powerful and c o n t r o v e r s i a l impacts on national economies and trade. I n t e r n a t i o n a l i z a t i o n of production, r a p i d and massive transfer of funds and a more dynamic international d i v i s i o n of labour have occurred i n large part because of the a c t i v i t i e s of MNCs. The c a p i t a l and technology which these firms possess and diffuse are increasingly mobile while labour remains r e l a t i v e l y 27 i m m o b i l e . T h e i r p o s s e s s i o n o f t h e s e v i t a l f a c t o r s o f p r o d u c t i o n c o n f e r s on MNCs the c a p a c i t y t o a f f e c t the r a t e , degree and form of economic development w i t h i n s t a t e s through investment d e c i s i o n s taken o u t s i d e of a s t a t e ' s borders. While MNCs may c l a i m t o o p e r a t e a c c o r d i n g t o p u r e l y f u n c t i o n a l , p o l i t i c a l l y d i s i n t e r e s t e d , p r o f i t - o r i e n t e d " l o g i c " , t h e i r d e c i s i o n s shape p o l i t i c a l agendas and outcomes. C o n v e r s e l y , the p o s i t i o n t a k e n by s t a t e s i n r e l a t i o n t o m u l t i n a t i o n a l a c t i v i t i e s has p o l i t i c a l consequences of profound importance. The v a l u e o f t h e c o n t r i b u t i o n o f MNCs t o n a t i o n a l d evelopment i s h o t l y d e b a t e d . In the d e v e l o p e d c o u n t r i e s p o l i t i c a l a c t i v i s t s and p a r t i e s w i t h d i v e r g e n t i d e o l o g i c a l p r e f e r e n c e s form uneasy a l l i a n c e s a g a i n s t what they present as a " c a p i t a l i s t rogue e l e p h a n t " . In the underdeveloped w o r l d a t t i t u d e s range from e x t r a o r d i n a r y e f f o r t s t o a t t r a c t them through the m o d i f i c a t i o n o f domestic p o l i c i e s t o e f f o r t s t o e x p e l l them as n e o - c o l o n i a l i s t e x p l o i t e r s . There i s widespread r e c o g n i t i o n by n a t i o n s t a t e s t h a t h a ving MNCs l o c a t e d w i t h i n t h e i r t e r r i t o r i e s w i l l i n f l u e n c e t h e i r economic f u t u r e s . Having no p o l i t i c a l l e g i t i m a c y , however, MNCs cannot serve as the b a s i s f o r a new system of i n t e r n a t i o n a l p o l i t i c s or f o r c o o p e r a t i o n among s o c i e t i e s . U n l i k e governments, MNCs a r e a c c o u n t a b l e o n l y t o a r e l a t i v e l y s m a l l p e r c e n t a g e o f a po p u l a t i o n , t h e i r s h a r e h o l d e r s , f o r t h e i r a c t i o n s . The r e l e v a n c e of MNC a c t i v i t i e s to p o l i t i c a l outcomes has been r e c o g n i z e d by n o n g o v e r n m e n t a l and i n t e r g o v e r n m e n t a l 28 agencies, which have attempted to work out codes of conduct f o r MNCs rega r d i n g such i s s u e s as n a t i o n a l s o v e r e i g n t y , employment and w o r k i n g c o n d i t i o n s , t e c h n o l o g y t r a n s f e r s , consumer p r o t e c t i o n and environmental p r o t e c t i o n . 1 9 The w i l l i n g n e s s on the p a r t o f many s t a t e s t o n e g o t i a t e a modus v i v e n d i w i t h t r a n s n a t i o n a l c a p i t a l through m u l t i l a t e r a l f o r a i s i n d i c a t i v e of a need to r e j e c t a s i m p l i s t i c c o n f l i c t u a l model of state-MNC r e l a t i o n s . C r i t i c s of MNCs sometimes appear to f o r g e t t h a t MNCs are i n the f i n a l i n s t a n c e n a t i o n a l l y based and are viewed as a source of i n t e r n a t i o n a l p r e s t i g e and power by t h e i r host c o u n t r i e s . At the same time t h e r e i s widespread r e c o g n i t i o n t h a t t h e i n t e r e s t s o f m u l t i n a t i o n a l s do n o t n e c e s s a r i l y correspond to those of t h e i r host s t a t e s . The r e s u l t appears to be that MNCs and s t a t e s cooperate f a r more o f t e n than they c o n f l i c t . The p r o b l e m c r e a t e d by the d u a l nature of MNCs, being s i m i l t a n e o u s l y i n t e r n a l i n and e x t e r n a l to n a t i o n - s t a t e s , has become i n p r a c t i c a l t e r m s one o f r e c o n c i l i n g t h e t r a n s n a t i o n a l dimension of these firms with the p u r e l y n a t i o n a l o b j e c t i v e s of s t a b l e currency, f u l l employment, and i n d u s t r i a l and r e g i o n a l r e s t r u c t u r i n g . MNCs by t h e i r v e r y n a t u r e , however, cannot be i n t e g r a t e d i n t o the host economy. Because t h e i r o p e r a t i o n s are t r a n s n a t i o n a l i n scope they must be a b l e to move c a p i t a l , p r o d u c t i o n s i t e s and p e r s o n n e l around the 1 9See M a r t i n e l l i , A l b e r t o , "The P o l i t i c a l and S o c i a l Impact of T r a n s n a t i o n a l C o r p o r a t i o n s " , The New I n t e r n a t i o n a l Economy, M a k l e r , H., M a r t i n e l l i , A., and S m e l s e r , N., e d s . , Sage P u b l i c a t i o n s , B e v e r l y H i l l s , 1982, pp. 79-116. 29 globe to remain c o m p e t i t i v e . In t h i s sense they are a p a r t of a world p o l i t i c a l economy whose s t r u c t u r e i s g l o b a l r a t h e r than n a t i o n a l . An e x p r e s s i o n of MNC i n f l u e n c e on the g l o b a l i z a t i o n of the world economy i s the s o - c a l l e d New I n t e r n a t i o n a l D i v i s i o n of Labour (NIDL). The NIDL i s o n l y one component i n a matrix of i n t e r c o n n e c t e d c h a n g e s i n t h e o r g a n i z a t i o n o f the w o r l d economy, but s e r v e s t o f o c u s a t t e n t i o n s p e c i f i c a l l y on the m u l t i n a t i o n a l s . I t has been d e f i n e d as "a complex h i e r a r c h i c a l system which i n t e g r a t e s d i f f e r e n t t y pes of u s e f u l forms of l a b o r of i n d i v i d u a l p r o d u c e r s c a r r i e d on under the a e g i s of l a r g e , h i g h l y i n t e g r a t e d i n t e r n a t i o n a l companies." 2 0 T h i s may be c o n t r a s t e d w i t h t h e t r a d i t i o n a l c o n c e p t i o n o f an i n t e r n a t i o n a l d i v i s i o n of labour which was based on d i f f e r e n c e s i n t r a d e between f i r m s p r o d u c i n g goods i n d i f f e r e n t n a t i o n s . In the NIDL the v a l u e of i n t e r n a t i o n a l i n t e r - f i r m t r a d e i s d e c l i n i n g r e l a t i v e t o i n t r a - f i r m t r a d i n g o c c u r i n g between s u b s i d i a r i e s or j o i n t ventures of g l o b a l c o r p o r a t i o n s producing goods i n d i f f e r e n t p a r t s of the w o r l d . The most p r o f o u n d impact of t h i s v a s t and l a r g e l y uncharted i n c r e a s e i n i n t r a -f i r m trade i s the i n t e g r a t i o n of q u a l i t a t i v e l y d i f f e r e n t types o f l a b o u r e r s ( i . e . c u l t u r a l l y , h i s t o r i c a l l y , e c o n o m i c a l l y d i s t i n c t ) i n t o e i t h e r c o r p o r a t e o r g a n i z a t i o n s which operate on z uCohen, R.B., "The New I n t e r n a t i o n a l D i v i s i o n of Labour", i n Dear M. and S c o t t , A., eds., U r b a n i z a t i o n and Urban Pl a n n i n g  i n C a p i t a l i s t S o c i e t y , Sage P u b l i c a t i o n s , Beverly H i l l s , 1983, pg. 289. 3 0 a world l e v e l or i n t o firms which e x i s t to serve these MNCs. MNCs i n i t i a t e t h e s e changes by s e e k i n g new markets and more p r o f i t a b l e ways to org a n i z e p r o d u c t i o n on a world s c a l e . They a r e a l s o r e s p o n d i n g t o n a t i o n a l p o l i c i e s by d e v e l o p e d s t a t e s t o s t r e n g t h e n the f u t u r e i n t e r n a t i o n a l c o m p e t i t i v e p o s i t i o n o f s e l e c t e d i n d u s t r i e s and n a t i o n a l p o l i c i e s on the p a r t of d e v e l o p i n g s t a t e s to s t i m u l a t e the growth of e x p o r t s e c t o r s by a t t r a c t i n g MNCs. The combination of MNCs g l o b a l s t r a t e g i e s and t h e s e n a t i o n a l p o l i c i e s has r e s u l t e d i n a r e d u c t i o n o f p r o f i t a b i l i t y f o r many p r o d u c t i o n s i t e s i n the developed world and hence, t h e i r r e l o c a t i o n to the d e v e l o p i n g world, i n p a r t i c u l a r , to the newly i n d u s t r i a l i z e d c o u n t r i e s . On a n a t i o n a l l e v e l , s t a t e s respond to s h i f t s i n the NIDL by d e v i s i n g " n a t i o n a l i n d u s t r i a l s t r a t e g i e s " and " s t r u c t u r a l adjustment" p o l i c i e s . The urban impact can be p a r t i c u l a r l y s e v e r e . The economic f u t u r e o f i n d i v i d u a l c i t i e s may hi n g e s u b s t a n t i a l l y on the way i n which m u n i c i p a l governments choose to deal w i t h these important t r a n s n a t i o n a l a c t o r s . A f u l l d i s c u s s i o n of MNCs exceeds the b r i e f of t h i s paper. Two p o i n t s about them are germane. F i r s t , they should be g i v e n c o n s i d e r a b l e a n a l y t i c a l weight i n any a n a l y s i s of the g l o b a l p o l i t i c a l economy f o r the reasons d i s c u s s e d above. Second, t h e i r a c t i v i t i e s have an important r e l a t i o n s h i p with the c i t i e s i n which t h e y a r e l o c a t e d . C o m p e t i t i o n among c i t i e s f o r 31 r e g i o n a l o f f i c e s o f MNCs i s i n t e n s e . 2 1 As d i s c u s s e d above, MNCs are a l s o important agents of g l o b a l interdependence, but th e y a r e l i m i t e d i n t h e i r a c t i v i t i e s by the e x i g e n c i e s of p o l i t i c s : MNC assessments of i n t e r and i n t r a - s t a t e s t a b i l i t y , and i n t e r and i n t r a - s t a t e r e g u l a t i o n . E. C o n c l u s i o n : From I n t e r n a t i o n a l P o l i t i c a l Economy to WPE D i v i d i n g the i n t e r n a t i o n a l system i n t o the m i l i t a r y and t r a d i n g w o r l d s r e p r e s e n t s a v a l u a b l e e v o l u t i o n a r y s t e p i n m o d e l l i n g g l o b a l economic a c t i v i t y . However i t does not take us f a r enough away from p r e v a i l i n g n e o c l a s s i c a l t h e o r i e s of i n t e r n a t i o n a l t r a d e to analyze c o n s t r u c t i v e l y the r o l e c i t i e s p l a y i n the world p o l i t i c a l economy. A n a l y t i c a l concepts based on t h e t r a d i t i o n a l l y s t a t e c e n t r e d view o f i n t e r n a t i o n a l r e l a t i o n s do not address c e r t a i n q u e s t i o n s , e s p e c i a l l y those c o n c e r n i n g the r o l e of c i t i e s , posed by the new i n t e r n a t i o n a l environment which has evolved s i n c e the e a r l y 1970s. The f i e l d of i n t e r n a t i o n a l economics has been v i r t u a l l y d e f i n e d s i n c e Adam Smith as t h e e x p l a n a t i o n o f the f l o w o f i m p o r t s and exports on the b a s i s of i n t e r n a t i o n a l s p e c i a l i z a t i o n determined by the d i s t r i b u t i o n of p r o d u c t i o n f a c t o r s . T h i s model does not account f o r the i n t e r n a t i o n a l i z a t i o n of p r o d u c t i o n ( i . e . the i n t e r n a t i o n a l p u r c h a s e and s a l e o f v a r i o u s f a c t o r s o f p r o d u c t i o n which a r e consumed i n the c r e a t i o n o f one end Z 1D. Heenan and H. Perlmutter. M u l t i n a t i o n a l O r g a n i z a t i o n  Development, Addison-Wesley, Reading Mass., 1979, pp. 91-106. 32 p r o d u c t , o f t e n t a k i n g p l a c e w i t h i n one v e r t i c a l l y i n t e g r a t e d c onglomerate and thus remaining " i n v i s i b l e " f o r purposes of a v o i d i n g t a x a t i o n ) and the t r a n s n a t i o n a l i z a t i o n of monetary and f i n a n c i a l c i r c u l a t i o n on the s c a l e which now e x i s t s , nor does i t g i v e adequate a n a l y t i c a l weight to contemporary MNCs. T r a n s n a t i o n a l c a p i t a l flows, investment d e c i s i o n - m a k i n g and the l o c a t i o n of p r o d u c t i o n s i t e s are a l l c o n s t r a i n e d by the p o l i t i c a l ( i . e . n o n - r a t i o n a l i n p u r e l y economic terms) c h o i c e s made by s t a t e s . To assume that t h i s t h e r e f o r e makes n a t i o n s t a t e s the b a s i c u n i t f o r t h e o r e t i c a l a n a l y s i s of the WPE i s to do an i n j u s t i c e to the r e a l i t y of the s t r u c t u r e which i s now e m e r g i n g . The WPE w h i c h I have been d e s c r i b i n g d i f f e r s s u b s t a n t i a l l y from the s t a te-based " i n t e r n a t i o n a l economy" i n i t s complexity and i m p l i c a t i o n s . The problem l i e s i n the dual e x i s t e n c e of two types of economy. In the s t a t e - c e n t r i c view of the " i n t e r n a t i o n a l economy": I t i s the world economic system t h a t would determine the r e l a t i v e p o s i t i o n of the n a t i o n - s t a t e s . As a whole, i t i s d i f f e r e n t from the sum of i t s component p a r t s . T a k i n g n a t i o n a l u n i t s as as b a s i s does not allow f o r understanding the a c t u a l s t r u c t u r e that i s being developed. On the other hand, t a k i n g the world economy, which i s s t i l l a d e v e l o p i n g system, as a p o i n t of d e p a r t u r e makes what happens at the s t a t e l e v e l u n i n t e l l i g i b l e . To s t r e s s t h e g r o w i n g interdependence of the s t a t e s does not s u f f i c i e n t l y q u a l i f y the s p e c i a l f e a t u r e s of the world economy. I n t e r n a t i o n a l s p e c i a l i z a t i o n i s c l e a r l y accompanied by i n t e r d e p e n d e n c e . The p a r t s o f a whole a r e n e c e s s a r i l y i n t e r d e p e n d e n t as they take on meaning o n l y i n r e l a t i o n to one another. But the laws of " i nterdependence" a r e , i n the f i n a l a n a l y s i s , those o f the r e p r o d u c t i o n of the s y s t e m . The p r o b l e m t h e r e f o r e l i e s i n a b a s i c d i s p a r i t y i n the a n a l y s i s of the n a t i o n - s t a t e with regard to the economy. A f f i r m i n g t h e g r e a t e r i m p o r t a n c e o f t h e w o r l d 33 economic system over that of the n a t i o n - s t a t e s should not be i n t e r p r e t e d as showing t h a t the l a t t e r a r e e c l i p s e d : they continue to e x i s t , but t h e i r s t r u c t u r e and t h e i r r e l a t i o n s are determined by the whole of which they are p a r t . 2 2 The WPE, t h e n , i s a " n e s t o f s t r u c t u r e s 1 , 2 3 w h i c h i s d i s a g g r e g a b l e i n t o f u n c t i o n a l , s e c t o r a l or n a t i o n a l p a r t s . An a p p r o p r i a t e way to d i saggregate or "model" the world p o l i t i c a l economy i n a way which makes n a t i o n a l a c t i o n s i n t e l l i g i b l e w i t h o u t r e f e r e n c e t o t h e " i n t e r n a t i o n a l economy" a p p r o a c h s h o u l d b e g i n by i d e n t i f y i n g the b a s i c s o u r c e ( s ) of economic growth. This has been done i n Jane Jacobs' pathbreaking work C i t i e s and the Wealth of Nations, which i n t r o d u c e s a new a c t o r i n t o the WPE — c i t i e s . 2 2 M i c h i a l e t , C.A., "From I n t e r n a t i o n a l T r a d e t o W o r l d Economy: A New Paridigm", The New I n t e r n a t i o n a l Economy, Makler, M a r t i n e l l i and Smelser, eds., Sage P u b l i c a t i o n s , B e v e r l y H i l l s , 1982, p. 49. 2 3 T o o z e , R., " I m p l e m e n t a t i o n i n a C o m p l e x A r e n a : I n t e r n a t i o n a l Economic P o l i c y i n a World P o l i t i c a l Economy", Foreign P o l i c y Implementation, Smith, S., and C l a r k e , M. , eds., A l l e n & Unwin, London, 1985, pp. 95-122. 34 Chapter I I C i t i e s i n the World P o l i t i c a l Economy A. C i t i e s as Centres of Change U r b a n i z a t i o n i s a c r i t i c a l process i n the development o f t h e modern n a t i o n s t a t e . H i s t o r i c a l l y , a l l complex and advanced c i v i l i z a t i o n s have sprung from the c i t y , and i n the contemporary world, urban l i f e i s the dynamic b a s i s f o r most of the a c t i v i t i e s and p r o c e s s e s we a s s o c i a t e w i t h modernity and economic p r o g r e s s . — Lucien Pye 2 4 The importance of the m e t r o p o l i s as a c e n t r e of p o l i t i c a l , t e c h n o l o g i c a l and economic change t h r o u g h o u t h i s t o r y c a n s c a r c e l y be o v e r s t a t e d . The European I n d u s t r i a l R e v o l u t i o n of the l a t e 18th and e a r l y 19th c e n t u r i e s was e s s e n t i a l l y urban-based, as i s the Asian I n d u s t r i a l R e v o l u t i o n of our e r a . The c i t y a c t s as a mainspring f o r r e g i o n a l economic development, p r o v i d i n g a c c e s s p o i n t s through t r a n s p o r t a t i o n l i n k s with the o u t s i d e world, c a p i t a l markets f o r resource development of the h i n t e r l a n d , c e n t r e s f o r e d u c a t i o n a l and r e s e a r c h a c t i v i t i e s , new t e c h n o l o g i e s ( t h r o u g h c r e a t i o n , d i f f u s i o n , or both) and s k i l l e d l a b o u r . T e r r i t o r i a l s t a t e s may c o n s c i o u s l y e q u a l i z e the r a t e o f growth between the metropole and the h i n t e r l a n d through r e d i s t r i b u t i v e or m i g r a t i o n c o n t r o l p o l i c i e s (China d u r i n g t h e M a o i s t p e r i o d p r o v i d e s a good example) but the l e s s o n has not been l o s t on most developing c o u n t r i e s t h a t 2 4 L u c i e n Pye. "The P o l i t i c a l I m p l i c a t i o n s of U r b a n i z a t i o n and the Development P r o c e s s " , S o c i a l Problems of Development  and U r b a n i z a t i o n , V o l . 7, 1963, pg. 84. i n d u s t r i a l development on a n a t i o n a l s c a l e i s d e m o n s t r a b l y c o r r e l a t e d with u r b a n i z a t i o n . 2 5 The r e l a t i o n s h i p between u r b a n i z a t i o n and e c o n o m i c development has a d i f f e r e n t c h a r a c t e r i n the contemporary WPE than i t has had i n the p a s t . M a n u f a c t u r i n g has d e c l i n e d i n importance r e l a t i v e to the i n f o r m a t i o n and s e r v i c e s e c t o r s 2 6 . The h i s t o r i c a l f u n c t i o n of c i t i e s of p r o v i d i n g b e t t e r p h y s i c a l access to goods and s e r v i c e s remains important but of ascending r e l e v a n c e i s t h e i r r o l e as c o m m u n i c a t i o n c e n t r e s - and storehouses of i n f o r m a t i o n . The p r i n c i p a l t e c h n o l o g i e s of the emerging WPE are telecommunications and computing. I n d u s t r i a l growth based on mass p r o d u c t i o n , economics of s c a l e and low-cost resources are i n c r e a s i n g l y being supplanted by value added i n t r a n s f o r m i n g m a t e r i a l r e l a t e d to the c a p a c i t y to understand and use i n f o r m a t i o n i n v a r i o u s ways. Manufacturing s i t e s may be r e l o c a t e d to the h i n t e r l a n d , or i n c r e a s i n g l y to o f f s h o r e , low-c o s t l a b o u r s i t e s , but an i n f o r m a t i o n - d r i v e n economy r e q u i r e s that a host of s p e c i a l i z e d s e r v i c e s , such as those p r o v i d e d by h i g h l y e d u c a t e d communicators, a n a l y s t s and p r o c e s s o r s of i n f o r m a t i o n 2 7 , be c e n t r a l i z e d i n space. T h i s i s the r o l e of the modern world c i t y : i t generates c a p i t a l and i n f o r m a t i o n and " J o h n V. H e n d e r s o n . I n t e r n a t i o n a l E x p e r i e n c e i n  U r b a n i z a t i o n and I t s R e l e v a n c e f o r C h i n a , WorId Bank S t a f f Working Papers, No. 758, Washington D.C., 1986, pp. 3-5. 2 6Henderson, I b i d , pp 7-25. 2 7 M i c h a e l G o l d b e r g . The C h i n e s e C o n n e c t i o n , UBC P r e s s , Vancouver, 1985, p. 67. 36 i s the w e l l s p r i n g of l o c a l , and i n d i r e c t l y , n a t i o n a l growth. A u s e f u l n o t i o n which compresses these aspects of urban l i f e i s c o n t a i n e d i n the concept of the " t r a n s a c t i o n a l c i t y " w h i c h d e f i n e s u r b a n e c o n o m i c a c t i v i t i e s as i n c r e a s i n g l y "brainpower-driven, t h e r e f o r e renewable and s e l f - g e n e r a t i n g . " 2 8 Information s e r v i c e s , which concentrate i n c i t i e s , p r o v i d e the f o u n d a t i o n s t one of t r a n s a c t i o n a l d e c i s i o n making and urban c e n t r a l i t y . C i t i e s do not, indeed cannot, f u n c t i o n i n t h i s way i n i s o l a t i o n , but form the nodes of a m e t r o p o l i t a n network, w i t h i n n a t i o n a l t e r r i t o r i e s and a c r o s s i n t e r n a t i o n a l b o u n d a r i e s . C i t i e s a r e d i s t i n c t e n t i t i e s , h i g h l y i n d i v i d u a l i z e d groupings of i n t e r e s t s which cannot be s e p a r a t e d from t h e i r p o l i t i c a l , c u l t u r a l , and h i s t o r i c a l c o n t e x t s . 2 9 They c o o p e r a t e and compete wi t h one another. A l t h o u g h each c i t y belongs to a region and a n a t i o n i t a l s o "belongs i n other c i r c u i t s , i n c r e a s i n g l y of an i n t e r n a t i o n a l c o n f i g u r a t i o n . " 3 0 S t u d i e s of urban systems at the l e v e l of the WPE cannot i n c l u d e a n a l y s e s of r e l a t i o n s h i p s w i t h i n a s i n g l e c i t y . The focus i s r a t h e r on how s e t s of c i t i e s operate together to make i n t e r n a t i o n a l urban systems. The p o t e n t i a l range of growth and p r o s p e r i t y w i t h i n , and economic s t r u c t u r e o f , such a system i s 2 8 J e a n Gottman. The Coming of the T r a n s a c t i o n a l C i t y , U n i v e r s i t y of Maryland I n s t i t u t e f o r Urban S t u d i e s , 1983, pg. x i v . 29M. Goldberg and J . Mercer, The Myth of the North American  C i t y , UBC Press, Vancouver, 1986. 3 0Gottman, op. c i t • , pg. 14. : 37 l i m i t e d by the c h a r a c t e r i s t i c s of the n a t i o n a l economies which each c o n s t i t u e n t c i t y i s a pa r t of and i n turn by the WPE as a whole. The. hypothesized r e l a t i o n s h i p s among c i t i e s w i t h i n t h i s system g e n e r a l l y i n v o l v e a process of exchange v i a comparative a d v a n t a g e -- o r e x p l o i t a t i o n o f p e r i p h e r a l r e g i o n s by m e t r o p o l i t a n based monopolies. When combined, exchange and e x p l o i t a t i o n l a r g e l y d e t e r m i n e how the f r u i t s o f economic growth (or d e c l i n e ) are d i s t r i b u t e d s p a t i a l l y among r e g i o n s , as w e l l as s o c i a l l y . W i t h i n t h i s framework the concepts of the c i t y and i t s surrounding h i n t e r l a n d are j o i n e d t o g e t h e r . The f u n c t i o n a l or nodal r e g i o n , c e n t r e d on a c i t y , i s the b a s i c c o n s t i t u e n t u n i t of the system. The concern with d e v e l o p i n g an understanding of how c i t y networks are organized stems from an awareness of the i n c r e a s i n g r o l e of urban-centre a c t i v i t i e s — t e r t i a r y ( s e r v i c e s ) and q u a t e r n a r y ( s e r v i c e s t o s e r v i c e s ) — r e l a t i v e to primary a c t i v i t i e s i n the growth of l o c a l economies and t o t h e i n c r e a s i n g s i z e and power o f c o r p o r a t e and governmental e n t e r p r i s e s . Most r e s e a r c h e r s acknowledge that the presence of s t r o n g i n t e r a c t i o n s among a s e t of elements ( c i t i e s ) i n a bounded area ( s t a t e ) and the e x i s t e n c e of feedback e f f e c t s which r e g u l a t e growth and change i m p l i e s the e x i s t e n c e of some ki n d of system. The i n t e r a c t i o n s w i t h i n systems of c i t i e s a re of s u f f i c i e n t c o m p l e x i t y that they cannot be d e s c r i b e d i n s t r i c t l y economic or p o l i t i c a l terms because they i n c l u d e c u l t u r a l and geographic v a r i a t i o n , l i n g u i s t i c and r e l i g i o u s d i f f e r e n c e s and the l i k e . 38 They a r e t h e r e f o r e b e s t d e s c r i b e d as s o c i a l s y s t e m s . As complex s o c i a l systems, c i t i e s and systems of c i t i e s cannot be c o n v e n i e n t l y r e d u c e d f o r p u r p o s e s of a n a l y s i s to d i s c r e t e o p e r a t i n g p a r t s . Nor i s i t p o s s i b l e , as i n most n a t u r a l s y s t e m s , t o deduce the r e s p o n s e c o n d i t i o n e d by any g i v e n change. B. The Economy of C i t i e s In the l a s t address which Nobel p r i z e winning p o l i t i c a l economist B e r t i l O h l i n d e l i v e r e d b e f o r e h i s death i n 1979 he observed that no s e r i o u s attempt had yet been made to develop a t h e o r y o f i n t e r n a t i o n a l t r a d e which expressed the e x t e n t to which n a t i o n a l b o r d e r s m o d i f i e d the d i r e c t i o n and volume of trade flows. He commented that although mutual interdependence p r i c e t h e o r y , which e m p h a s i z e s the e f f e c t s of changes i n i n t e r n a l economic c i r c u m s t a n c e s on i n t e r n a t i o n a l economic r e l a t i o n s , i s g e n e r a l l y w e l l known and accepted by economists, "many o f i t s c o n s e q u e n c e s a r e g i v e n l i t t l e a t t e n t i o n i n i n t e r n a t i o n a l e c o n o m i c s . " 3 1 The p o i n t o f h i s c r i t i c i s m a p p a r e n t l y concerns the unquestioning assumption on the p a r t of most macro-economic t h e o r i s t s t h a t p o l i t i c a l b o r d e r s a r e n e c e s s a r i l y congruent with d i v i s i b l e economic u n i t s , i . e . s e l f -c o n t a i n e d "economies". F i v e years l a t e r t h i s assumption was J 1 B e r t i l O h l i n . "Some I n s u f f i c i e n c i e s i n the T h e o r i e s of I n t e r n a t i o n a l Economic R e l a t i o n s " , E s s a y s i n I n t e r n a t i o n a l  F i n a n c e , No. 134, Sept. 1979 , P r i n c e t o n U n i v e r s i t y Dept. o f Economics, I n t e r n a t i o n a l Finance S e c t i o n , P r i n c e t o n , N.J. pg. 2 39 c h a l l e n g e d by the work of Jane Jacobs. J a c o b s a r g u e s t h a t a b a s i c a s s u m p t i o n i s wrong i n macroeconomic theory: " I t i s the idea t h a t n a t i o n a l economies are u s e f u l and s a l i e n t e n t i t i e s f o r understanding how economic l i f e works and what i t s s t r u c t u r e may be: t h a t n a t i o n a l economies and not some other e n t i t y p r o v i d e the fundamental d a t a o f e c o n o m i c a n a l y s i s . 1 , 3 2 The p e r v a s i v e n e s s o f t h e acceptance of what she c a l l s the " m e r c a n t a l i s t t a u t o l o g y " must be seen i n an h i s t o r i c a l context to be a p p r e c i a t e d . The idea i s about four hundred years o l d , o r i g i n a l l y formulated by the e a r l y m e r c a n t a l i s t economists who were p r e o c c u p i e d w i t h the r i v a l r i e s of European i m p e r i a l powers f o r trade and t r e a s u r e . They propounded the t h e o r y t h a t wealth c o n s i s t s of g o l d and g o l d i s amassed when a n a t i o n s e l l s more goods than i t buys. "Of course i f wealth i s d e f i n e d i n t h i s way, n a t i o n a l economies a u t o m a t i c a l l y become the s a l i e n t u n i t s of economic l i f e ; that idea i s merely a t a u t o l o g y , the r e p e t i t i o n of another i d e a , i n t h i s case the idea of n a t i o n a l t r e a s u r e . " 3 3 In 1776 Adam Smiths's i n f l u e n t i a l work r e d e f i n e d wealth as p r o d u c t i o n ( s u p p l y ) f o r purpose of consumption (demand) and sought i t s s o u r c e s not i n mines or g o l d but i n c a p i t a l and labour, and i n domestic as w e l l as f o r e i g n t r a d e . What Smith f a i l e d to do i n h i s b r i l l i a n t r e f o r m u l a t i o n of economic thought 3 2 J a n e J a c o b s . C i t i e s and the Wealth of N a t i o n s , V i k i n g ess, New York, 1984, pg. 29. 33 I b i d . pg. 30 40 was q u e s t i o n the m e r c a n t a l i s t t a u t o l o g y , as i s i m p l i c i t i n the t i t l e of h i s great work, An Inquiry i n t o the Nature and Causes  of the Wealth of Nations, and h i s opening sentence "The annual labour of every n a t i o n . . . " . In s h o r t , as Jacobs says, "Smith began w i t h what we have come to know as the g r o s s n a t i o n a l product and proceeded from t h e r e . " 3 4 Although K a r l Marx based h i s a n a l y s i s on c l a s s s t r u c t u r e r a t h e r than n a t i o n s and p r e d i c t e d the w i t h e r i n g away of the s t a t e , i n p r a c t i c e M a r x i s t economists continued to base t h e i r r e s e a r c h on the p r e v a i l i n g assumption. For the most p a r t they continue to d e s c r i b e the economic s t r u c t u r e of a s o c i e t y i n a language of q u a n t i t a t i v e measurement (the GNP), an a b s t r a c t i o n which i s o f t e n taken f o r r e a l i t y . I f we dispense with the n o t i o n that p o l i t i c a l b orders have some s o r t o f n a t u r a l c o n g r u e n c e w i t h economies t h e n t h e i n t e l l e c t u a l f o u n d a t i o n upon which a l l s c h o o l s o f macro-economic theory r e s t becomes pr o b l e m a t i c . Jacobs p o i n t s to the case of s t a g f l a t i o n — the combination of r i s i n g unemployment and i n f l a t e d p r i c e s which appeared worldwide i n the 1970s — as e v i d e n c e of a phenomenon which sh o u l d not e x i s t a c c o r d i n g to any known macro-economic theory, but does. She p o i n t s out that s t a g f l a t i o n i s not o n l y p o s s i b l e but has always been common— i t i s the normal c o n d i t i o n of underdeveloped economies, where high unemployment and high p r i c e s go hand i n hand. One reason t h i s n e a r l y s e l f - e v i d e n t t r u t h has escaped economists i s that 3 4 I b i d . pg. 32. 41 t h e y have t a k e n the n a t i o n - s t a t e as t h e i r b a s i c u n i t f o r economic a n a l y s i s . What a l t e r n a t i v e c a n be o f f e r e d f o r m a c r o - e c o n o m i c a n a l y s i s ? Regional a n a l y s i s i s coming i n c r e a s i n g l y i n t o vogue and s e c t o r a l a n a l y s i s has i t s proponents. The l o g i c of these approaches i s not as c l e a r , though, as that o f f e r e d by Jacobs, who takes as her s t a r t i n g p o i n t the l o c u s of wealth g e n e r a t i o n . Once we remove the b l i n d e r s of the m e r c a n t a l i s t t a u t o l o g y and t r y l o o k i n g at the world i n i t s own r i g h t r a t h e r than as a dependent a r t i f a c t of p o l i t i c s , we c a n ' t a v o i d s e e i n g t h a t most n a t i o n s a r e composed o f c o l l e c t i o n s or grab bags of very d i f f e r e n t economies, r i c h regions and poor ones w i t h i n the same n a t i o n . 3 5 T h i s i s h a r d l y s u r p r i s i n g to a Canadian, who i s used to the i m p o r t a n c e o f t r a n s f e r p a y m e n t s , r e g i o n a l d e v e l o p m e n t i n i t i a t i v e s , and the l i k e as the sinews of c o n f e d e r a t i o n . A r e g i o n a l approach puts us on the r i g h t track but s t i l l does not address the i s s u e of how and where wealth i s c r e a t e d . J a c o b s i s q u i t e c l e a r on t h i s p o i n t . "Economic l i f e develops by grace of i n n o v a t i n g ; i t expands by grace of import-r e p l a c i n g . These two master economic p r o c e s s e s a r e c l o s e l y r e l a t e d , b o t h b e i n g f u n c t i o n s o f c i t y e c o n o m i e s . " 3 6 She provides d e t a i l e d h i s t o r i c a l and l o g i c a l arguments which accord f u l l y w i t h r e c e n t developments i n the g l o b a l economy. The dynamic growth of Japan i n r e c e n t y e a r s or the t r u n c a t e d I b i d . pg. 32. I b i d , pg 39. 42 development i n the PRC are e a s i l y e x p l a i n a b l e i n terms of t h i s a n a l y s i s . There i s a c l e a r c o r r e l a t i o n between u r b a n i z a t i o n and economic development, but c a u s a t i o n has been more d i f f i c u l t to p r o v e 3 7 . T h i s c a u s a l l i n k may now be e s t a b l i s h e d by p l a c i n g c i t y i m p o r t - s u b s t i t u t i o n a t the root of economic exp a n s i o n . This expansion c o n s i s t s s p e c i f i c a l l y of f i v e forms of growth 3 8: 1. A b r u p t l y e n l a r g e d c i t y m a r k e t s f o r new and d i f f e r e n t imports c o n s i s t i n g l a r g e l y of r u r a l goods and of i n n o v a t i o n s being produced i n other c i t i e s . 2. A b r u p t l y i n c r e a s e d numbers and kinds of jobs i n the i m p o r t - r e p l a c i n g c i t i e s . 3. Increased t r a n s p l a n t s of c i t y work i n t o non-urban l o c a t i o n s as o l d e r e n t e r p r i s e s are crowded out. 4. New uses f o r technology, p a r t i c u l a r l y to i n c r e a s e r u r a l p r o d u c t i o n and p r o d u c t i v i t y . 5. Growth of c i t y c a p i t a l . I t s h o u l d be added t h a t import s u b s t i t u t i o n i s as important d o m e s t i c a l l y (perhaps more so) as the s u b s t i t u t i o n of f o r e i g n imports. The s t r a t e g y of import s u b s t i t u t i o n i s a p r e s c r i p t i o n which can be c o n s t r u e d as r u n n i n g c o u n t e r to the growth of interdependence. The success of e x p o r t - l e d economic growth i n r e c e n t y e a r s would appear to i n d i c a t e t h a t , f o r the NICs a t l e a s t , encouraging interdependence i s a v i a b l e growth s t r a t e g y . Jacob's p r e f e r e n c e f o r an i m p o r t - s u b s t i t u t i o n p o l i c y may not be u n i v e r s a l l y a p p l i c a b l e . I t i s a complex q u e s t i o n which cannot be addressed here. I t does not imply, however, t h a t c i t i e s do not p r o v i d e the s a l i e n t u n i t s f o r economic a n a l y s i s , nor that the NICs might have been e q u a l l y , or more, s u c c e s s f u l had they See Henderson, op. c i t . , pp. 9-14. Jacobs, op. c i t . , pg. 42. 43 f o l l o w e d an i m p o r t - s u b s t i t u t i o n s t r a t e g y . The f a i l u r e t o a n a l y z e e c o n o m i c g r o w t h w i t h i n t h i s framework, r a t h e r than a n a t i o n a l one, i s the b a s i s of the f r e q u e n t l y a d v o c a t e d and i m p l e m e n t e d p o l i c y o f s e t t i n g c o m p l e t e l y developed e n t e r p r i s e s ("turnkey p r o j e c t s " ) i n any p l a c e that needs r e g i o n a l development — with almost u n i f o r m l y d i s a s t r o u s r e s u l t s . I g n o r i n g the r o o t of the f i v e f o r c e s u n l e a s h e d by c i t y i m p o r t - r e p l a c i n g -- m a r k e t s , j o b s , t r a n s p l a n t s , technology and c a p i t a l — has bankrupted c o u n t r i e s r a t h e r t h a n h e l p them t o p r o s p e r . "None o f t h i s can we comprehend a t a l l by d w e l l i n g on t h e o r i e s about a b s t r a c t e d supply and demand c h a s i n g themselves around i n the amorphous b l u r s known as n a t i o n a l economies." 3 9 The s c i e n c e of s t a t i s t i c s i s a l s o h a v i n g d i f f i c u l t i e s k e e p i n g up w i t h c h a n g e s i n t h e w o r l d economy. The most p r o b l e m a t i c a r e a c o n c e r n s i n t e r n a t i o n a l balance of payments f i g u r e s , which throughout the 1980s have o v e r s t a t e d s t a t e ' s n a t i o n a l d e f i c i t s and understated s u r p l u s e s 4 0 . The problems of monitoring flows of money i n and out of an economy, ownership of a s s e t s t h a t a r e c o n t i n u o u s l y c h a n g i n g hands, i n t r a - f i r m t r a d e a c r o s s b o r d e r s , and above a l l d e v e l o p i n g m e a n i n g f u l i n d i c a t o r s of trade i n s e r v i c e s , c a l l the u s e f u l n e s s of c u r r e n t methods of macro-economic s t a t i s t i c s g e n e r a t i o n i n t o q u e s t i o n . One p o p u l a r s u g g e s t i o n i s to e s t a b l i s h a new " i n f o r m a t i o n " 3 9 I b i d . pg. 44. 4 0The Economist, Aug. 20, 1988, pp. 61-62. 44 category which cuts across e x i s t i n g boundaries of manufacturing and s e r v i c e s , to i n c l u d e a l l those i n v o l v e d i n the p r o d u c t i o n , s t o r a g e , r e t r i e v a l and d i s t r i b u t i o n o f i n f o r m a t i o n f r o m computer e n g i n e e r s t o t e a c h e r s t o j o u r n a l i s t s . In some c o u n t r i e s t h i s s e c t o r may a l r e a d y account f o r one i n every two j o b s 4 1 . The importance of c i t i e s to the economic l i f e of n a t i o n s and the world i s w e l l recognized even by c r i t i c s of t h e i r r o l e i n c a p i t a l i s t accumulation. C i t i e s are "the c r u c i a l elements i n a c c u m u l a t i o n a t a l l l e v e l s , r e g i o n a l , n a t i o n a l a nd t r a n s n a t i o n a l . . . the l o c u s o p e r a n d i f o r t r a n s n a t i o n a l s , l o c a l o l i g o p o l y c a p i t a l and the modernizing n a t i o n a l s t a t e , 4 2 " w r i t e s one c r i t i c of T h i r d World urban development, c a l l i n g c i t i e s " t h e a t r e s of a c c u m u l a t i o n " which "the n a t u r e o f c a p i t a l i s t e x p a n s i o n p l a c e s . . . i n a c e n t r a l p o s i t i o n i n any p r e d i c t i v e m o dels o f s o c i a l and e c o n o m i c c h a n g e . " 4 3 The c o m p e t i n g a s s u m p t i o n s which u n d e r l a y the n e g a t i v e view o f c i t i e s as e x t r a c t i v e of the h i n t e r l a n d or the p o s i t i v e view which sees them as c r e a t i n g s u r p l u s f o r d i f f u s i o n t o t h e h i n t e r l a n d p r o v i d e s an i n t e r e s t i n g t o p i c f o r resea r c h which might go some way t o r e c o n c i l i n g the M a r x i a n and L i b e r a l v i e w p o i n t s 4 4 . 4 1 I b i d 4 2 T e r r y McGee and W. Armstrong. Theatres of Accumulation:  Studies i n Asian and L a t i n American U r b a n i z a t i o n , Methuen, London and New York, 1985, pg. 4. 4 3 I b i d . pg 224 . 4 4 E x p o s i t i o n on the myth of a g r i c u l t u r a l primacy... 45 Without e n t e r i n g i n t o a normative debate about t h i s f e a t u r e of c i t i e s , the p o i n t may s t i l l be made that the c i t y i s where the most important transformations and t r a n s a c t i o n s i n the WPE take p l a c e . In view of t h i s v i t a l f u n c t i o n , why i s i t that c i t i e s are almost u n i v e r s a l l y powerless i n p o l i t i c a l terms? C. The C o n s t i t u t i o n a l and F i s c a l Dependence of C i t i e s C i t i e s cannot be i s o l a t e d from the p o l i t i c a l context i n which t h e y have grown or the s o c i e t i e s i n w h i c h t h e y a r e i n t e g r a t e d . With t h i s caveat i n mind, however, i t may s t i l l be o b s e r v e d t h a t the p o l i t i c a l - e c o n o m i c s t r u c t u r e of the v a s t m a j o r i t y of s t a t e s assigns m u n i c i p a l government a p o s i t i o n of c o n s t i t u t i o n a l and f i s c a l dependency. The use of the word "government" t o d e s c r i b e m u n i c i p a l p o l i t i c a l s t r u c t u r e s i s arguably a misnomer; i n r e a l i t y they are o f t e n b e t t e r d e s c r i b e d as a d m i n i s t r a t i v e u n i t s w i t h i n a l a r g e r ( p r o v i n c i a l o r n a t i o n a l ) governmental s t r u c t u r e . A c r o s s - n a t i o n a l comparison o f two s t a t e s w h i c h a r e q u i t e d i s s i m i l a r i n most o t h e r r e s p e c t s , China and Canada, w i l l support the v a l i d i t y of t h i s c o n t e n t i o n . Canada i s t y p i c a l of f e d e r a l s t a t e s i n i t s c e s s i o n o f p o l i t i c a l power over m u n i c i p a l i t i e s to the p r o v i n c e s . S e c t i o n 92 o f t h e C o n s t i t u t i o n A c t o f 1867 a s s i g n s s p e c i f i c r e s p o n s i b i l i t y f o r m u n i c i p a l i n s t i t u t i o n s t o p r o v i n c i a l l e g i s l a t u r e s . Under S e c t i o n 92(C) the p r o v i n c e s a r e g i v e n powers to r a i s e revenue by d i r e c t t a x a t i o n , t h e r e f o r e the o n l y 46 sources of revenue a v a i l a b l e to the m u n i c i p a l i t i e s are those granted by the p r o v i n c e . ."In g e n e r a l terms, these have come to i n c l u d e r e a l p r o p e r t y t a x a t i o n , l i c e n s i n g f e e s , and t r a n s f e r payments from p r o v i n c i a l governments to the m u n i c i p a l l e v e l . " 4 5 The p r o g e n i t o r of the Canadian model of p r o v i n c i a l - m u n i c i p a l r e l a t i o n s was O n t a r i o , which i n 1849 e s t a b l i s h e d a b l u e p r i n t f o r the. p r e s e n t system i n which m u n i c i p a l i n s t i t u t i o n s were g i v e n an a d m i n i s t r a t i v e r a t h e r than a p o l i t i c a l c h a r a c t e r 4 6 . Conformity with t h i s model has i n p r a c t i c e l e d to "the d i v i s i o n of l o c a l government o r g a n i z a t i o n and assignment of important l o c a l r e s p o n s i b i l i t i e s to independent " n o n - p o l i t i c a l " a g e n c i e s , b o a r d s and c o m m i s s i o n s r e m o t e f r o m t h e l o c u s o f l o c a l government r e s p o n s i b i l i t y . 4 7 " S e n i o r government t r a n s f e r payments are c o n d i t i o n a l and p r o v i d e the m a j o r i t y of m u n i c i p a l r e v e n u e s . B e c a u s e f i n a n c i a l i n d e p e n d e n c e i s c r u c i a l t o m u n i c i p a l autonomy, l o c a l o p t i o n s are s e v e r e l y c i r c u m s c r i b e d . There i s a tendency at a l l l e v e l s of government to see i n t e r g o v e r n m e n t a l r e l a t i o n s i n h i e r a r c h i c a l terms. I t may be m i s l e a d i n g however, to u t i l i z e a " l a y e r cake" r a t h e r than a "marble cake" image 4 8. In many s e c t o r a l or f u n c t i o n a l i s s u e s 4 5 L . Feldman and K. Graham. B a r g a i n i n g F o r C i t i e s :  M u n i c i p a l i t i e s and Intergovernmental R e l a t i o n s , An Assessment, I n s t i t u t e f o r Research on P u b l i c P o l i c y , Montreal, 1979, pg. 5. 4 6 C . T i n d a l and S. T i n d a l . L o c a l Government i n Canada, McGraw-Hill Ryerson, Toronto, 1984, pp. 11-33. 4 7Feldman and Graham, op. c i t . , pg. 7. 4 8Morton G r o d z i n s . The American System, Rand McNally & Co., Chicago, 1966, pg 14. 47 c i v i c i n s t i t u t i o n s have a variety of channels of communication with the senior l e v e l s of government a v a i l a b l e to them. In practice, however, they usually act in concert with the senior orders and defer to their wishes. This willingness on the part of c i v i c p o l i t i c i a n s to define their role as one of d e l i v e r i n g services on behalf of the senior l e v e l s of government l i m i t s l o c a l autonomy even more completely than t h e i r s t r u c t u r a l dependency on p r o v i n c i a l governments. This has been described i n terms of the p o l i t i c a l " i m m a t u r i t y " of m u n i c i p a l governments. "The tendency of l o c a l p o l i t i c i a n s p u b l i c l y to divorce " p o l i t i c s " (a d i r t y word) from municipal government perpetuates the p o l i t i c a l immaturity of the system. 4 9" In e f f e c t , municipal governments take an administrative s e r v i c e d e l i v e r y approach rather than a p o l i t i c a l one. They seek e l e c t i o n on a "service" basis and l o c a l p o l i t i c a l platforms, which are not based on a f f i l i a t i o n s with p r o v i n c i a l or federal p a r t i e s , have very l i t t l e " p o l i t i c a l " content. As w e l l , because municipal p o l i t i c s i s often seen as a stepping stone to higher o f f i c e , muncipal p o l i t i c i a n s may be co-opted by their provincial or federal ambitions. In the l a t e 19th and e a r l y 20th c e n t u r i e s l o c a l governments were, by and large, l e f t alone to deal with l o c a l s o c i a l and economic problems. 5 0 Senior governments as a matter 4 9Feldman and Graham, op. c i t . , pg. 101. 5 0J.H. Taylor. "Urban Autonomy in Canada: Its Evolution and Decline", The Canadian City: Essays in Urban and Social History, A r t i b i s e and S t e l t e r , eds., Carleton Library Series, Carleton 48 o f p o l i c y were n o n - i n t e r v e n t i o n i s t . The e r o s i o n o f t h e p o l i t i c a l autonomy of m u n i c i p a l i t i e s has been a long and uneven p r o c e s s w h i c h began a r o u n d 1880. At t h i s t i m e c e r t a i n f u n c t i o n s and o f f i c e s were removed from d i r e c t c o n t r o l of c i t y c o u n c i l (e.g. the Vancouver Water and Drainage D i s t r i c t s ) and p l a c e d under the c o n t r o l of s p e c i a l i z e d boards and a g e n c i e s r e p r e s e n t i n g a number of j u r i s d i c t i o n s . A l t h o u g h t h i s was o f t e n done at the request of the m u n c i p a l i t i e s themselves, and had the e f f e c t of c o n c e n t r a t i n g c e r t a i n f u n c t i o n a l powers i n l a r g e r m u n i c i p a l a s s o c i a t i o n s (e.g. metro boards), i n the l o n g -term t h i s p r o c e s s p l a c e d more l o c a l matters under p r o v i n c i a l s u p e r v i s i o n and, i n e f f e c t , f r a g m e n t e d or d i l u t e d l o c a l a u t h o r i t y . T h i s process of fragmenting m u n i c i p a l j u r i s d i c t i o n s a c c e l e r a t e d a r o u n d World War I , d u r i n g w hich time s e n i o r governments assumed c o n t r o l over most funding and r e g u l a t i o n of s e r v i c e programs. By 1940 i t had become standard p r a c t i c e f o r p r o v i n c i a l governments t o d e c i d e which s e r v i c e s s h o u l d be undertaken on b e h a l f of i t s c i t i z e n s and to pass on w i t h o u t c o n s u l t a t i o n a p o r t i o n of these c o s t s to the m u n i c i p a l i t i e s . I n t h e p o s t w a r p e r i o d an o u t b u r s t o f p r o v i n c i a l l e g i s l a t i v e a c t i o n s , w h i l e not f o r m a l l y r e m o v i n g l o c a l government power, e f f e c t i v e l y c r e a t e d a d i v e r g e n c e between l e g a l and r e a l power, with the l a t t e r a c c r u i n g to the p r o v i n c e s and c e n t r e . A major v e h i c l e f o r t h i s e v o l u t i o n was the e r o s i o n of the l o c a l tax base, where p r o v i n c i a l a u t h o r i t i e s e l i m i n a t e d U n i v e r s i t y Press, 1984, pp. 478-495. 49 l o c a l income t a x e s , s a l e s taxes and p e r s o n a l p r o p e r t y taxes, e l i m i n a t e d or reduced the l o c a l s h a r e o f l i q u o r and motor v e h i c l e t a x e s , and p l a c e d r e s t r i c t i o n s on the e x p l o i t a t i o n of the p r o p e r t y t a x . 5 1 M u n i c i p a l i t i e s became dependent on the t r a n s f e r payment, u s u a l l y i n the form of the c o n d i t i o n a l g r a n t . Some a t t e m p t s have been made t o i n c r e a s e m u n i c i p a l b a r g a i n i n g power i n Canada. One such example was the " t r i -l e v e l " c o n f e r e n c e a p p r o a c h , i n i t i a t e d by the F e d e r a t i o n o f C a n a d i a n M u n i c i p a l i t i e s i n the 1970s i n o r d e r t o s e c u r e a b e t t e r a w a r e n e s s o f t h e i r i n t e r e s t s by s e n i o r l e v e l s o f government. I t ended i n f a i l u r e i n 1976 because no b e n e f i t to the p r o v i n c e s or the ce n t r e c o u l d be demonstrated 5 2. D e s p i t e having a f e d e r a l "champion" i n the M i n i s t r y of S t a t e f o r Urban A f f a i r s (MSUA) i n t h e i r quest f o r a decision-making forum on revenue s h a r i n g and more v i t a l c o n s u l t a t i v e p r o c e s s , they had i n s u f f i c i e n t support from the f e d e r a l government, e s p e c i a l l y w i t h i n t h e a l l i m p o r t a n t F i n a n c e m i n i s t r y , and fr o m t h e p r o v i n c e s . The f e d e r a l p e r c e p t i o n was that i t would add to the "chorus of v o i c e s " 5 3 from the pro v i n c e s and the p r o v i n c e s saw i t as a c h a l l e n g e t o t h e i r p r e r o g a t i v e s . The MSUA was d i s b a n d e d i n 1979. C o n s t i t u t i o n a l f a t a l i s m seems t o have i n s t i t u t i o n a l i z e d the "immaturity" of munici p a l governments and kept even the l a r g e c i t i e s from developing the o r g a n i z a t i o n a l 5 1 I b i d . 5 2Feldman and Graham, op. c i t . , pp. 29-46. 5 3 I b i d . pg. 51. 50 and r e s o u r c e r e q u i r e m e n t s s u f f i c i e n t t o compete i n t h e intergovernmental arena. The e f f e c t on m u n i c i p a l p o l i c y making i s c l e a r . The p l a n n i n g p r o c e s s , as m a n i f e s t e d i n the l a c k o f g e n e r a l or master p l a n s f o r the development of urban i n f r a s t r u c t u r e , tends to be ad hoc, without w e l l thought out statements of i n t e n t , l e a v i n g a p o l i c y vacuum f o r other l e v e l s of government to f i l l . C a n a d i a n m u n i c i p a l i t i e s "have t e n d e d t o a r t i c u l a t e p o l i c y through a s e r i e s of s p e c i f i c d e c i s i o n s , o f t e n made i n r e a c t i o n to events," and i n turn " u n i l a t e r a l a c t i o n by s e n i o r l e v e l s has been i n r e s p o n s e t o a l a c k o f l o c a l i n i t i a t i v e . " 5 4 The p r o v i n c e s and f e d e r a l g o v e r n m e n t have t h e r e s o u r c e s and s u f f i c i e n t p o l i t i c a l autonomy t o engage i n l o n g t erm o r s t r a t e g i c p l a n n i n g i n p r e p a r a t i o n f o r a n t i c i p a t e d f u t u r e change (e.g. see the 10-year p l a n f o r B r i t i s h Columbia d e s c r i b e d i n Ch a p t e r IV) . E l e c t e d p o l i t i c i a n s a t the s e n i o r l e v e l s o f government g e n e r a l l y s e r v e l o n g e r terms, have more e x t e n s i v e f i n a n c i a l and human r e s o u r c e s a t t h e i r command and, most i m p o r t a n t l y , have the c o n s t i t u t i o n a l autonomy to ensure the implementation of t h e i r long-range p l a n s . M u n i c i p a l i t i e s , on the other hand, react r a t h e r than i n i t i a t e . Feldman and Graham i s o l a t e f o u r s t r u c t u r a l r e a s o n s f o r urban i n t e r g o v e r n m e n t a l weakness 5 5: 1. No executive committee of c o u n c i l ; 5 4 I b i d . pg. 118. 5 5 I b i d . pp. 112-113. 5 1 2. A weak mayor system; 3. Absence of p o l i t i c a l parties; 4 . Fragmentation of l o c a l government with i t s reliance on special purpose bodies. 5 6 This l a s t weakness i s p a r t i c u l a r l y important because municipal relations with the senior levels of government are c a r r i e d out l a r g e l y at a f u n c t i o n a l r a t h e r a p o l i t i c a l l e v e l . T h i s f u n c t i o n a l s p e c i a l i z a t i o n f o s t e r s a l i m i t e d and p a r o c h i a l viewpoint which breeds a l i m i t e d i n t e r e s t i n the profound e f f e c t s intergovernmental d e c i s i o n s have on m u n i c i p a l i t i e s . The c i t y i s not organized as a bargaining u n i t . It has no sovereignty or independence. The perception of the p o l i t i c a l irrelevance of municipal governments i s r e f l e c t e d i n a c h a r a c t e r i s t i c a l l y low voter p a r t i c i p a t i o n in c i v i c elections. D. C i r c u i t s and Networks of Capital The notion of a world system of market relations or of a globalized marketplace which overrides national and regional differences must be handled c a r e f u l l y i f i t i s not to lead to a r i d a b s t r a c t i o n s . The theories put f o r t h by n e o - c l a s s i c a l economists often become problematic because of a tendency to extend the l o g i c of economic r e l a t i o n s , grounded s o l e l y i n references to c a p i t a l , p r i c e , exchange rates and rates of return, i n t o the WPE, ignoring the matrix of s p e c i f i c socio-5 6These are generally applicable in Canada but there are exceptions. Vancouver, for example, has a t y p i c a l l y extensive powers, granted through the vehicle of the Vancouver Charter. 52 c u l t u r a l and p o l i t i c a l r e l a t i o n s w h i c h c o - e x i s t s w i t h t r a n s n a t i o n a l c a p i t a l i s t expansion. Neo-Marxist s c h o l a r s have e q u a l l y s e r i o u s problems when they p r o j e c t c l a s s a n a l y s i s i n t o t h e WPE, when n a t i o n a l i s m h a s c l e a r l y t r i u m p h e d o v e r t r a n s n a t i o n a l c l a s s c o n s c i o u s n e s s and when human agency i s omi t t e d from t h e i r f o r m u l a t i o n s . "That M a r x i s t s continue to consider " i n t e r n a l " f a c t o r s as concrete and " e x t e r n a l " f a c t o r s as a b s t r a c t i s a c a p i t u l a t i o n to one of the most fundamental m y s t i f i c a t i o n s of the modern world-system. 1 , 5 7 Both l o c a l and world-economic s t r u c t u r e s a r e r e a l , but each obeys i t s own i n t e r n a l l o g i c . The world-system p e r s p e c t i v e developed by W a l l e r s t e i n 5 8 provides a p o i n t of departure from which i n t e r n a t i o n a l systems o f c i t i e s may be s t u d i e d . W a l l e r s t e i n 1 s model, however, i n c l u d e s t h e p r o b l e m a t i c t h e s i s o f s t r u c t u r a l dependency. Dependency r e l a t i o n s undoubtedly e x i s t among r a d i c a l l y unequal s t a t e a c t o r s but many r e l a t i o n s h i p s w i t h i n the world system, f o r example t h e Chin a - C a n a d a t r a d e r e l a t i o n s h i p , a r e not u s e f u l l y e x p l a i n e d by t h i s model. F u r t h e r , the i n t e n t i o n of the p r e s e n t a n a l y s i s i s t o a v o i d a s t a t e - c e n t r i c view f o r reasons d i s c u s s e d above. The problem may be avoided by u s i n g a "World C i t y " model which views the WPE as a s t r u c t u r a l r e a l i t y 5 7R. Chase-Dunn. " U r b a n i z a t i o n i n the World-System: New D i r e c t i o n s f o r Research," C i t i e s i n Transformation, ed. M. P e t e r , Sage P u b l i c a t i o n s , Beverly H i l l s , 1984, pg. 111. 5 8 S e e The Modern World System. V o l . I . , (1974) and The  Modern World System. V o l . I I , (1980), Academic Press, N.Y. A l s o The C a p i t a l i s t World Economy, Cambridge Press, N.Y., 1977. 53 w i t h i n which the process of c a p i t a l g e n e r a t i o n and accumulation takes p l a c e p r i m a r i l y i n c i t i e s . The World C i t y p e r s p e c t i v e assumes the e x i s t e n c e of a w o r l d e c o n o m i c s y s t e m w h i c h b r i n g s the v a s t m a j o r i t y o f p r o d u c t i o n , marketing and c a p i t a l accumulation a c t i v i t i e s i n t o i t s embrace. I t attempts to ground t h i s worldwide system of market r e l a t i o n s i n an h i s t o r i c a l l y and l o c a t i o n a l l y s p e c i f i c c o n t e x t . The major t r a n s a c t i o n s and e f f e c t s of t h i s system are m a n i f e s t e d i n the World C i t y , a c o l l e c t i v e name f o r a f i n i t e s e t o f l a r g e , i n t e n s i v e l y u r b a n i z e d r e g i o n s c l o s e l y i n t e r c o n n e c t e d t h r o u g h c o m m u n i c a t i o n s and f i n a n c e . These c i t i e s a r t i c u l a t e a world wide system of c o n t r o l over market expansion, w i t h i n which most of the world's a c t i v e c a p i t a l i n c o n c e n t r a t e d . T h i s i s a dynamic system, a f f e c t i n g and being a f f e c t e d by the f o r t u n e s of a c t o r s i n the s t a t e system and g l o b a l s h i f t s i n comparative advantage. The l i s t of c i t i e s i s s h o r t and v a r i a b l e but u s u a l l y i n c l u d e s : London, P a r i s , R a n d s t a a d , Moscow, New Y o r k , Tokyo, Hong K i n g and M e x i c o C i t y 5 9 . Some w r i t e r s i n c l u d e : San F r a n c i s c o , Sao P a u l o , Singapore, Bombay, Sydney, F r a n k f u r t , Miami and Houston 6 0. The p o p u l a t i o n s i z e of a world c i t y does not d i r e c t l y r e f l e c t i t s f u n c t i o n a l c e n t r a l i t y i n t h e w o r l d economy, but t h e r e i s b y H a l l , Peter, The World C i t y 6 0 J o h n Friedmann and Goetz W o l f f . Notes on the Future of  the World C i t y , School of A r c h i t e c t u r e and Urban P l a n n i n g , UCLA, Los Angeles, 1981. 54 p r o b a b l y a c o r r e l a t i o n between the two 6 1. To r e g a r d t h e s e c i t i e s as nothing more than " c o n t r o l p o i n t s " i n the WPE would be wrong because they have two a s p e c t s , being i n t e g r a t e d as w e l l i n t o e x i s t i n g p o l i t i c a l systems at h i s t o r i c a l l y s p e c i f i c p l a c e s i n which they c a r r y out a d m i n i s t r a t i v e r o l e s and c o n t a i n s i g n i f i c a n t p e r c e n t a g e s o f t h e n a t i o n a l p o p u l a t i o n and i n d u s t r i a l p l a n t . What l i t t l e l i t e r a t u r e e x i s t s which d e a l s with urban p o l i t i c a l economy from the world system p e r s p e c t i v e tends to focus on these c i t i e s . A second network, or c i r c u i t , upon which t h i s paper w i l l f o c u s , i s a system of n a t i o n a l or r e g i o n a l c e n t r e s (Secondary C i t i e s ) . Here a d i s t i n c t i o n must be made between s t a t e s which e x h i b i t a skewed p o p u l a t i o n d i s t r i b u t i o n i n which the l a r g e s t n a t i o n a l c i t y has more than twice the p o p u l a t i o n of any other c i t i e s i n the s t a t e (e.g. France, Taiwan, Thailand) and a more balanced d i s t r i b u t i o n (e.g. Canada, China, the US). In s t a t e s where u r b a n i z a t i o n i s l o c a l i z e d i n the former uneven manner ( e x h i b i t i n g what i s c a l l e d a " p r i m a t e " c i t y d i s t r i b u t i o n ) n a t i o n a l and r e g i o n a l c i t i e s would form a second and t h i r d l e v e l r e s p e c t i v e l y , w h i l e the market towns would become a f o u r t h l e v e l 6 2 . Because Canada and C h i n a do not e x h i b i t a p r i m a t e c i t y f o r m a t i o n we may s i m p l i f y the model to World C i t i e s , R e g i o n a l or Secondary C i t i e s , and Market Towns. b iChase-Dunn, op. c i t . , pg. 116. A l s o see Henderson, op. c i t . 6 2McGee, op. c i t . , pp. 55-60. 55 Determining whether a c i t y should be c a l l e d a world c i t y or secondary c i t y i s i n some cases q u i t e d i f f i c u l t . Vancouver o f f i c i a l s , f o r example, r e f e r to Vancouver as a world c i t y , but i t i s c l e a r l y not i n the f i r s t rank of c i t i e s l i s t e d above. No Canadian c i t i e s , i n f a c t , a r e i n c l u d e d i n the l i s t s i n the l i t e r a t u r e . L i t t l e a g g r e g a t e i n f o r m a t i o n o f t h i s t y p e e x i s t s 6 3 , thus a n a l y s t s are f o r c e d to f a l l back on a v a i l a b l e data and use p o p u l a t i o n s i z e as an i n i t i a l c r i t e r i o n . The l a c k of e m p i r i c a l data u s e f u l f o r d e l i m i t i n g c a t e g o r i e s w i t h i n t h i s framework i s a problem reco g n i z e d by a l l r e s e a r c h e r s , but the i n t u i t i v e c o r r e l a t i o n between p o p u l a t i o n and v a r i e t y of c i t y f u n c t i o n s would seem to j u s t i f y i t s use u n t i l f u r t h e r r e s e a r c h i s conducted. The c r i t i c a l v a r i a b l e which determines a c i t y ' s p l a c e i n the WPE, however, i s i t s mode of i n t e g r a t i o n w i t h the g l o b a l system of economic r e l a t i o n s 6 4 . The f o l l o w i n g s o r t s of q u e s t i o n s must be asked to l o c a t e c i t i e s w i t h i n a framework based on t h i s a n a l y s i s . Is a c i t y an i m p o r t a n t h e a d q u a r t e r s f o r m u l t i n a t i o n a l c o r p o r a t i o n s ( 1 s t c i r c u i t ) ? Does i t have r e g i o n a l MNC h e a d q u a r t e r s (2nd c i r c u i t ) , or no d i r e c t MNC r e p r e s e n t a t i o n (3rd c i r c u i t ) ? Does i t p r o d u c e f o r t h e w o r l d market or i s i t s c h i e f economic f u n c t i o n as a marketplace or a d m i n i s t r a t i v e c e n t r e ? Does i t r e l y on world trade ( e i t h e r as a major p o i n t of transshipment " D e n i s R o n d i r i e l l i . S e c o n d a r y C i t i e s i n D e v e l o p i n g  C o u n t r i e s , Sage P u b l i c a t i o n s , B e v e r l y H i l l s , 1983. 6 4Friedmann and Wolff, op. c i t . , pg. 5. 56 or i n i t s s a l e of goods and s e r v i c e s ) or does i t p r i m a r i l y serve a r e g i o n a l market? Does i t c o n t a i n s i g n i f i c a n t r e s e a r c h and d e v e l o p m e n t a c t i v i t i e s ? P e r h a p s t h e most i m p o r t a n t q u e s t i o n to ask i n a d e t e r m i n a t i o n of emerging world c i t i e s , ( i . e . whether a c i t y moving i n t o or away f r o m t h e g l o b a l c i r c u i t of c i t i e s ) , i s whether i t i s an i m p o r t - s u b s t i t u t i n g c i t y . Are the f i v e f o r c e s o f economic growth which Jacobs s p e c i f i e s (markets, jobs, t r a n s p l a n t s , technology and c a p i t a l ) e n l a r g i n g or c o n t r a c t i n g w i t h i n a given c i t y ' s l o c a l economy? E. C o n c l u s i o n Large urban centres have h i s t o r i c a l l y been hotbeds of new ideas and i n t e l l e c t u a l and p o l i t i c a l ferment. They are o f t e n t h e r e f o r e the a c t u a l or p o t e n t i a l h a r b i n g e r s o f s o c i a l and p o l i t i c a l change. In our era the t r a n s i t i o n from an i n d u s t r i a l t o p o s t - i n d u s t r i a l (or i n f o r m a t i o n ) economy i s most a c u t e l y m a n i f e s t e d i n t h e e c o n o m i e s o f c i t i e s . One t h i n g w h i c h d i f f e r e n t i a t e s t h i s t r a n s f o r m a t i o n from past socio-economic or p o l i t i c a l t r a n s f o r m a t i o n s i s the speed with which these changes a r e t r a n s m i t t e d t h r o u g h o u t systems of c i t i e s w h i c h c r o s s i n t e r n a t i o n a l boundaries. One reason t h a t the r e l a t i o n s h i p between c i t i e s and t h i s c o n s t e l l a t i o n o f i n t e r r e l a t e d changes has r e c e i v e d l i t t l e a t t e n t i o n has t o do w i t h t h e way e c o n o m i c a c t i v i t y has h i s t o r i c a l l y been analyzed. I f we accept Jane Jacob's argument that the n a t i o n - s t a t e does not p r o v i d e the fundamental u n i t f o r economic a n a l y s i s , t h e n we must q u e s t i o n the f u n d a m e n t a l 57 premise upon which modern macroeconomic theory r e s t s . I f she i s c o r r e c t , then many of the economic development s t r a t e g i e s employed by the w o r l d ' s s t a t e s a r e based on f a u l t y t h e o r y . Economic development s h o u l d no l o n g e r be seen as something which can be o r g a n i z e d on a n a t i o n a l s c a l e , but r a t h e r as a s m a l l - s c a l e , d o - i t - y o u r s e l f p r o c e s s of change c o n s i s t i n g of a c t i v i t i e s t h a t i n c r e a s e v e r s a t i l i t y and c r e a t e networks among s m a l l m a nufacturers which h e l p i n n o v a t i o n . In the same way th a t " s y m b i o t i c c o l l e c t i o n s of l i t t l e e n t e r p r i s e s " 6 5 are the touchstone of economic growth, r e g i o n a l systems of c i t i e s are capable of spreading economic development throughout the world economy. Because t h i s t h e o r y o f economic l i f e i s new, and not w i d e l y a c c e p t e d , t h e s t a t i s t i c a l d a t a a p p r o p r i a t e f o r understanding the c i t y ' s r e l a t i o n s h i p with the WPE does not yet e x i s t . T h i s c r e a t e s methodological problems f o r rese a r c h i n t o the urban systems under d i s c u s s i o n . The method of a n a l y s i s must t h e r e f o r e be based on l o g i c a l and h i s t o r i c a l arguments which p o i n t to the c e n t r a l i t y of urban economic a c t i v i t y i n the a r t i c u l a t i o n of the g l o b a l p o l i t i c a l economy. T h i s approach can take account of the importance of geography and h i s t o r y , which are o f t e n g i v e n too l i t t l e emphasis i n s t a t e - c e n t r i c t h e o r i e s o f b o t h p o l i t i c a l and. e c o n o m i c i n t e r n a t i o n a l r e l a t i o n s . The c o n s t i t u t i o n a l and f i s c a l dependence of c i t i e s w i t h i n 6 5Jacobs, op. c i t . , pg. 84. 58 v i r t u a l l y a l l s t a t e s d i s t o r t s the development of t h i s emerging network of c i t i e s . N a t i o n a l economies combine a l l t r a n s a c t i o n s i n t o a g i a n t s t e w -- t h e n a t i o n a l c u r r e n c y -- w h i c h " m i s i n f o r m s " c i t i e s a b o u t t h e i r s t a t u s i n the WPE. The economic success of the c i t y - s t a t e s of Hong Kong and Singapore underscore the importance of a c i t y ' s a b i l i t y to get a c c u r a t e feedback on i t s r e l a t i v e economic h e a l t h through a p p r o p r i a t e currency d e v a l u a t i o n s and r e v a l u a t i o n s and i n t e r e s t r a t e s which r e f l e c t l o c a l r e a l i t i e s . T h i s i s of course not p o s s i b l e i n s t a t e s s u c h as Canada where, f o r example, i f t h e T o r o n t o economy i s "overheated" i t d r i v e s up i n t e r e s t r a t e s i n other p a r t s of the country where such a c t i o n may be i n a p p r o p r i a t e and d e t r i m e n t a l . M u n i c i p a l i t i e s have no power t o r e s p o n d t o changes of t h i s nature. The p a r a l l e l developments of the i n f o r m a t i o n economy and the g l o b a l i z a t i o n of c a p i t a l markets have c r e a t e d m u l t i - l e v e l e d and complementary i n t e r n a t i o n a l " c i r c u i t s " through which these commodities flow. The nodal p o i n t s along these c i r c u i t s , where t r a n s a c t i o n s and t r a n s f o r m a t i o n s i n the w o r l d economy t a k e p l a c e , are overwhelmingly l o c a t e d i n c i t i e s which have s t a b l e and broad based economies, abundant e d u c a t i o n a l and r e s e a r c h r e s o u r c e s a n d p r o d u c e i n f o r m a t i o n a n d c a p i t a l . The r e l a t i o n s h i p s and l i n k a g e s between v a r i o u s l e v e l s of t h i s " c i r c u i t r y " w i l l r e q u i r e f u r t h e r research to uncover. The remaining chapters w i l l attempt to ground the a b s t r a c t notions d i s c u s s e d above i n s p e c i f i c r e l a t i o n s h i p s . The Canada-China r e l a t i o n s h i p was chosen i n part because the c o u n t r i e s are so d i s s i m i l a r . W h i l e c o m p a r a t i v e p e r s p e c t i v e s o b v i o u s l y examine d i f f e r e n c e s between s t a t e s , most assume t h a t c e r t a i n f e a t u r e s s h o u l d be s h a r e d , t h e r e b y a v o i d i n g the p roblem of "comparing a p p l e s and o r a n g e s . " One p o s s i b l e v a l u e of the W o r l d - C i t y p e r s p e c t i v e i s that i t may a l l o w comparisons to be made on a more u n i v e r s a l b a s i s . Chapter I I I , because i t takes a s t a t e - c e n t r i c view to provide background m a t e r i a l , s t r e s s e s the d i f f e r e n c e s . Chapter IV, which r e t u r n s to the m u n i c i p a l p e r s p e c t i v e , s t r e s s e s s i m i l a r i t i e s . 60 Chapter III Canada and the China Trade A. China's H i s t o r i c a l Impact On Canada In an i m p o r t a n t , a l b e i t l i m i t e d sense, the h i s t o r y of Canada has always been bound up w i t h the China t r a d e . The e a r l y e x p l o r e r s of the New World, Columbus, Cabot, Hudson, F r o b i s h e r and C a r t i e r , were a l l seeking a new route to Cathay. L a c h i n e ( C h i n a ) , now a suburb o f M o n t r e a l , i s an e n d u r i n g testament t o Jacques C a r t i e r ' s b e l i e f t h a t he was c l o s e to China as he e x p l o r e d the S t . Lawrence R i v e r . For 350 y e a r s a f t e r Columbus e x p e d i t i o n s were re p e a t e d l y mounted i n search of a northwest passage through A r c t i c waters to the O r i e n t . By t h e 1 7 t h c e n t u r y , however, i t had become e v i d e n t t h a t a commercially v i a b l e A r c t i c trade route was u n l i k e l y t o be found and the Hudson's Bay Company, which had been granted the r i g h t t o e x p l o r e and e x p l o i t the v a s t West of Canada, t u r n e d i t s a t t e n t i o n t o f u r s i n s t e a d of s i l k and s p i c e s . In t h e 1840s the new E n g l i s h i n v e n t i o n o f t h e steam r a i l w a y r e k i n d l e d the dream of a new commercial r o u t e from Europe to the O r i e n t . A Toronto promoter, lawyer and former c a v a l r y m a n , A l l a n M a c d o n e l l , was a p p a r e n t l y t h e f i r s t t o r e a l i z e the i m p l i c a t i o n s f o r t r a d e of a t r a n s c o n t i n e n t a l r a i l w a y . 6 6 He s o l i c i t e d the government of the p r o v i n c e of b bA. MacKay. The A s i a n Dream: The P a c i f i c Rim and Canada's  Na t i o n a l Railway, Douglas & Mclntyre, Vancouver, 1986, pg. 108. Canada f o r a c h a r t e r to b u i l d the Lake S u p e r i o r and P a c i f i c Railway, i n order to c r e a t e "the s h o r t e s t , cheapest and s a f e s t communication f o r Europe and a l l A s i a . " 6 7 The government of t h e day t u r n e d him down but the A m e r i c a n r e a c t i o n t o h i s p r o p o s a l i n d i c a t e d t h a t he was being taken s e r i o u s l y i n some q u a r t e r s . An e d i t o r i a l i n the New York T r i b u n e of 27 March 1851 expressed f e a r s that a route through B r i t i s h America might be more s e n s i b l e than one through the United S t a t e s : H aving i t s A t l a n t i c s e a p o r t a t H a l i f a x and i t s P a c i f i c depot near Vancouver's I s l a n d , i t would i n e v i t a b l y draw to i t the commerce of Europe, A s i a and the U n i t e d S t a t e s , so thus, B r i t i s h America, from a mere c o l o n i a l dependency, would assume a c o n t r o l l i n g rank i n the w o r l d . To her, ot h e r n a t i o n s would be t r i b u t a r y , and i n v a i n would the U n i t e d S t a t e s attempt to be her r i v a l ; f o r we c o u l d never d i s p u t e w i t h her the p o s s e s s i o n of the A s i a t i c commerce, or the power which that commerce c o n f e r s . 6 8 The d i s i n t e r e s t o f t h e Hudson's Bay Company, w h i c h c o n t r o l l e d v i r t u a l l y a l l of the t e r r i t o r y of B r i t i s h North America west of the Great Lakes, e f f e c t i v e l y kept Macdonnell's v i s i o n from becoming a r e a l i t y i n the short term. In the U.S. h o w e v e r , t h e t h r e a t was t a k e n s e r i o u s l y and a f t e r much prompting by wealthy New York t r a d e r s , the Congress f i n a l l y backed a scheme to outrace the Canadians to the P a c i f i c c o a s t , the Union P a c i f i c R a ilway (which succeeded i n c o m p l e t i n g a t r a n s c o n t i n e n t a l l i n k i n 1869, 16 years before the CPR). For the next t h r e e and a h a l f decades i n Canada, the p o l i t i c a l f i g h t to get the t r a n s c o n t i n e n t a l r a i l w a y b u i l t would i n v o l v e I b i d , pg. 42. 'Quoted i n I b i d • pg. 19. 62 p o l i t i c i a n s i n a s e r i e s of scandals and h e r o i c endeavors which represent the f a s c i n a t i n g formative years of Canadian h i s t o r y . The r o l e p l a y e d by the r a i l r o a d i n the u n i f i c a t i o n and development of the Canadian s t a t e i s widely h e l d to be of such i m p o r t a n c e t h a t i t has t a k e n a l m o s t m y t h i c p r o m i n e n c e i n Canadian h i s t o r y . The " n a t i o n a l dream" of a Canada extending from the A t l a n t i c t o the P a c i f i c was made p o s s i b l e , i t i s a l l e g e d , by the c o o p e r a t i v e e f f o r t s of the f l e d g l i n g Canadian s t a t e a n d t h e r a i l r o a d e n t r e p r e n e u r s t o c o n s t r u c t a t r a n s c o n t i n e n t a l i r o n r o a d l i n k i n g the d i s p a r a t e B r i t i s h t e r r i t o r i e s n o r t h of the 49th p a r a l l e l . T h i s c o n v e n t i o n a l r e a d i n g o f C a n a d i a n h i s t o r y e m p h a s i z e s t h e " d e f e n s i v e expansionism" of the v i s i o n a r y proto-Canadian p o l i t i c i a n s who f e a r e d a b s o r p t i o n by e x p a n s i o n i s t - m i n d e d Americans t o the south. What t h i s account does not acknowledge i s that i t was the l u r e of trade w i t h the O r i e n t , r a t h e r than the opening of the West, which p r o v i d e d t h e i n i t i a l impetus f o r b u i l d i n g the r a i l w a y . The o c e a n i c p o r t i o n o f t h i s r o u t e was always an i n t e g r a l p a r t of t h i s development s t r a t e g y . The CPR b u i l t a l a r g e f l e e t o f s h i p s t o s e r v i c e C h i n a and t h e O r i e n t immediately a f t e r the completion of the t r a n s c o n t i n e n t a l l i n k , s u p p l e m e n t i n g an a l r e a d y a c t i v e f l e e t which had p l i e d the P a c i f i c r o u tes between B r i t i s h Columbia and the O r i e n t s i n c e the 1860s. That the a c c e s s i o n of BC to Canada was c o n t i n g e n t on the r a i l w a y b e i n g b u i l t , and the r o l e i t p l a y e d i n the 63 settlement of the west i s w e l l known. But B r i t i s h Columbians a l s o saw the b e n e f i t s of expanding the P a c i f i c t r a d e . T h i s commerce h a d b e e n more o r l e s s c o n t i n u o u s s i n c e t h e i n t r o d u c t i o n of steamships i n the l a t e 1860s, which reduced t r a v e l time from V i c t o r i a to the China coast from the 120 days taken by the c l i p p e r s h i p s to 80 days. The B r i t i s h Columbia exports of lumber and s a l t e d salmon were r e l a t i v e l y minor u n t i l the coming of the CPR and founding of the c i t y of Vancouver i n 1886 but q u i c k l y expanded and d i v e r s i f i e d . S h o r t l y a f t e r , a l a n d boom o c c u r r e d i n Vancouver, p r e d i c a t e d i n p a r t on the o p e n i n g up of the v a s t C h i n a m a r k e t . 6 9 The government of Canada s u b s i d i z e d the sea p o r t i o n of the CPR r o u t e s t o the O r i e n t and i n the 1890s, under the Canada Trade and Commerce Act, the f i r s t f u l l - t i m e t r a d e o f f i c e r s were sent to the Far E a s t t o "remove one o f t h e p r i n c i p l e o b s t a c l e s [ l a c k o f r e p r e s e n t a t i o n ] i n the way of extended t r a f f i c w ith c o u n t r i e s w i t h w h i c h we now have r e g u l a r and f r e q u e n t s t e a m s h i p communication." 7 0 In 1891 China bought c o a l from Vancouver I s l a n d and a q u a n t i t y of p r a i r i e wheat the f o l l o w i n g year. L a u r i e r ' s b a t t l e s t o b u i l d t h e G r a n d T r u n k P a c i f i c Railway, with i t s terminus at P r i n c e Rupert, had been s u s t a i n e d by the prospects of trade with the O r i e n t and he spoke of the "market of four or f i v e hundred m i l l i o n s " which he assumed to 6 9P. K e l l e r . "How The Canadian Government Promotes China Business", The China Business Review, Jan-Feb, 1988. 7 0McKay, op. c i t . , pg. 111. be w a i t i n g e a g e r l y f o r P r a i r i e wheat and f l o u r and B r i t i s h Columbia lumber. He saw the t r a n s - P a c i f i c trade as a means of l e s s e n i n g dependence on the United S t a t e s . In the long view of h i s t o r y , L a u r i e r ' s b e l i e f that the markets of the P a c i f i c Rim were of i n e v i t a b l e importance t o Canada was c o r r e c t , but i t would take much lo n g e r than a n t i c i p a t e d . C o m p e t i t i o n among Canada's t h r e e r a i l w a y s (the CPR, Grand Trunk and Canadian Northern), the r e c e s s i o n of 1913 and the opening of the Panama Canal combined to c r e a t e a s i t u a t i o n i n which Canada was unable to compete e f f e c t i v e l y with the U.S. and others i n the P a c i f i c t r a d e . The s o l u t i o n o f f e r e d by the r o y a l commission appointed by Prime M i n i s t e r Borden i n 1916 to study the problem was to amalgamate and n a t i o n a l i z e the r a i l r o a d s . The new Canadian N a t i o n a l Railway became the l a r g e s t r a i l w a y system i n the world o u t s i d e o f R u s s i a , e m p l o y i n g 99,000 p e o p l e , making i t the l a r g e s t i n d u s t r i a l employer i n the country. Between 1913 and 1921 Canada's e x p o r t s t o China i n c r e a s e d t e n - f o l d , a l t h o u g h t h i s s t i l l r e p r esented a m i n i s c u l e p o r t i o n of Canadian t r a d e . The n a t i o n a l t r a n s p o r t a t i o n s y s t e m was an e n o r m o u s l y s i g n i f i c a n t p u b l i c e n t e r p r i s e and, a l o n g w i t h the n a t i o n a l t a r i f f p o l i c y , was a s t r o n g i n f l u e n c e i n shaping the c u r r e n t economic s t r u c t u r e and d i s t r i b u t i o n of wealth of the country. The c o n v i c t i o n of s u c c e s s i v e Canadian governments t h a t f r e e market f o r c e s a l o n e w i l l not s o l v e p e r v a s i v e and p e r s i s t e n t r e g i o n a l d i s p a r i t i e s stems from t h i s p e r i o d which h e l p e d to define Canada's " p u b l i c e n t e r p r i s e " p o l i t i c a l c u l t u r e . 65 B. Contemporary Canada-China Trade. P o l i t i c a l Dimensions Trade t i e s between China and the West, severed d u r i n g the Second World War, were j u s t beginning to be forged a g a i n when the communist f o r c e s of Mao Zedong swept i n t o power i n 1949. The r e t r e a t of the n a t i o n a l i s t Kuomintang under Chiang K a i Shek f r o m t h e m a i n l a n d t o Taiwan p r e s e n t e d t h e w o r l d w i t h a d i p l o m a t i c conundrum w h i c h has y e t t o be s a t i s f a c t o r i l y r e s o l v e d . D u r i n g t h e 1950s and 1960s t h e new communist government o f t e n took a s t r i d e n t l y a n t i - c a p i t a l i s t and a n t i -western s t a n c e , based on an i d e o l o g i c a l committment to s e l f -r e l i a n c e , non-material i n c e n t i v e s and e g a l i t a r i a n g o a l s . T h i s o f t e n c o n f r o n t a t i o n a l a t t i t u d e on the p a r t of B e i j i n g helped to prompt a committment from the western s e c u r i t y b l o c , l e d by the U n i t e d S t a t e s , to prop up Chiang's pro-western regime on the i s l a n d of Formosa, and to i s o l a t e the P e o p l e ' s R e p u b l i c of China from the developed world economy. While Canada d i d not j o i n the embargo promoted by the U.S., t h e v o l u m e o f b i l a t e r a l t r a d e was r e l a t i v e l y i n s i g n i f i c a n t from 1949-71. Western r e f u s a l t o r e c o g n i z e B e i j i n g as t h e de j u r e g o v e r n m e n t o f C h i n a d o u b t l e s s c o n t r i b u t e d to t h i s s t a t e of a f f a i r s . A few s t a t e s r e c o g n i z e d B e i j i n g f o r t h e i r own reasons, n o t a b l y the U.K. i n 1950 and F r a n c e i n 1964 , but i t was not u n t i l the 1970s t h a t the d i p l o m a t i c logjam began to break. Canada recognized B e i j i n g i n 66 1970 and most of the west followed d u r i n g the remainder of the decade with the U.S. f i n a l l y f o r m a l i z i n g r e c o g n i t i o n i n 1979. At t h i s w r i t i n g , o n l y 22 nations s t i l l r ecognize the R e p u b l i c of China on Taiwan as the l e g i t i m a t e government of China. The act of r e c o g n i t i o n i n 1970 p r o v i d e d the i n s t i t u t i o n a l u n d e r p i n n i n g f o r i n c r e a s e d b i l a t e r a l t r a d e and r a i s e d h i g h hopes i n Canadian business c i r c l e s f o r v a s t l y i n c r e a s e d l e v e l s of t r a d e , but the r e a l i t y was l e s s than had been hoped f o r . A l t h o u g h t h e t o t a l volume o f PRC t r a d e i n c r e a s e d t e n f o l d between 1970 and 1978, from about $4 b i l l i o n to $40 b i l l i o n , the Canadian component of t h i s t r a d e was h e a v i l y weighted i n favour of f o o d s t u f f s , p r i m a r i l y wheat. The o f t e n tumultuous i n t e r n a l p o l i t i c s of the PRC d u r i n g t h i s decade were more than once r e f l e c t e d by dogmatic adherence to a M a r x i s t economic ideology which kept China from s t r u c t u r i n g an economic s t r a t e g y which would a l l o w f o r a more v a r i e g a t e d and g r e a t l y expanded t r a d e . China, as a great c o n t i n e n t a l power, has h i s t o r i c a l l y never been g r e a t l y r e l i a n t on trade i n any case. The ascendance of the reformers under Deng X i o p i n g i n 1978 began a r a d i c a l t r a n s f o r m a t i o n of Chinese p o l i c y toward the o u t s i d e w o r l d w h i c h i s no l e s s r e v o l u t i o n a r y i n i t s i m p l i c a t i o n s than t h e M a o i s t i n t e r r e g n u m . The p r o c e s s of p o l i t i c a l reform and economic r e s t r u c t u r i n g now appears to be b u i l t upon an i n c r e a s i n g l y f i r m f o u n d a t i o n , and a l t h o u g h a r e v e r s a l t o a d o c t r i n a i r e i d e o l o g i c a l a p p r o a c h i s s t i l l p o s s i b l e , i t s l i k e l i h o o d d i m i n i s h e s w i t h each p a s s i n g y e a r . 6 7 B e c a u s e C h i n a i s now i n p o l i t i c a l f l u x , u n d e r g o i n g a t r u e r e v o l u t i o n i n p r o d u c t i o n r e l a t i o n s , p r e d i c t i o n s about the scope a n d d i r e c t i o n o f i t s t r a d i n g a c t i v i t i e s a r e e x t r e m e l y h a z a r d o u s . There a r e many i n d i c a t i o n s however, such as i t s r e c e n t i n t e r e s t i n j o i n i n g the G e n e r a l Agreement on Trade and T a r i f f s (GATT) , t h e a p p a r e n t rapprochement w i t h T aiwan, t h e "Open Door" p o l i c y , and above a l l t h e s t r u c t u r a l need f o r f o r e i g n t e c h n o l o g y and c a p i t a l , t h a t the PRC i s c a u t i o u s l y but i n e x o r a b l y moving i n t h e d i r e c t i o n o f i n t e g r a t i o n w i t h t h e c a p i t a l i s t dominated g l o b a l economy. W i t h the c a v e a t t h a t i t i s p o s s i b l e ( b u t i n c r e a s i n g l y u n l i k e l y ) t h a t t h e PRC may r e v e r s e t h e p o l i c y d i r e c t i o n o f t h e l a s t d e c a d e , t h i s paper examines the p r o c e s s of t h i s i n t e g r a t i o n from t h e p o i n t o f view of a medium s i z e t r a d i n g n a t i o n , Canada, which would p r e f e r t o d o w n p l a y g e o p o l i t i c a l p r o b l e m s w i t h C h i n a and f o c u s i t s a t t e n t i o n on t h e development o f b i l a t e r a l t r a d e . The Taiwan Problem The p o l i t i c a l d i m e n s i o n s o f t h e PRC's f o r e i g n economic r e l a t i o n s a r e o f t e n l i n k e d w i t h t h e Taiwan-PRC r e c o g n i t i o n i s s u e . The PRC has not renounced f o r m a l l y i t s c l a i m t o Taiwan as a p r o v i n c e o f C h i n a and the o f f i c i a l p o s i t i o n i n B e i j i n g i s t h a t any means, i n c l u d i n g f o r c e , a r e s t i l l r e s e r v e d f o r t h e u n i f i c a t i o n o f the homeland. The R e p u b l i c of C h i n a (ROC) a l s o has n e v e r r e n o u n c e d i t s c l a i m t o be t h e s o l e l e g i t i m a t e government o f the m a i n l a n d . Even i n the c o n t e x t of p o l i t i c a l 68 l i b e r a l i z a t i o n and d e m o c r a t i z a t i o n ushered i n under Taiwan's new p r e s i d e n t , Lee Teng-hui, T a i p e i ' s o f f i c i a l p o s i t i o n v i s - a -v i s B e i j i n g i s u n e q u i v o c a l . N e i t h e r the "one c o u n t r y , two sy s t e m s " d o c t r i n e p r o p o s e d by the communist regime on the mainland nor making Taiwan an independent s t a t e as advocated by the ( p r e s e n t l y ) small group of s e c e s s i o n i s t s i s a c c e p t a b l e t o the r u l i n g KMT as an a l t e r n a t i v e to the system being c r e a t e d by the KMT as a model f o r the f u t u r e of a l l C h i n a . 7 1 Some progress has been made to r e c o n c i l e these a p p a r e n t l y i r r e c o n c i l a b l e views. The Olympic formula of 1979 (the "Nagoya R e s o l u t i o n " ) which a l l o w e d the PRC and the ROC to compete i n the 1984 O l y p i c s a t Los A n g e l e s under the r u b r i c s "Chinese T a i p e i " and PRC, has been extended somewhat p r e c a r i o u s l y i n t o other i n t e r n a t i o n a l forums. 7 2 In 1983 the PRC was a member of 423 i n t e r n a t i o n a l o r g a n i z a t i o n s while the ROC was i n 499. They have co-memberships i n 132 o r g a n i z a t i o n s , a l l NGO's. Of these 132 o r g a n i z a t i o n s , 32 were s p o r t s and r e c r e a t i o n o r i e n t e d , but the remaining 100 encompassed as v a r i e t y of f i e l d s : s c i e n c e , t e c h n o l o g y , e c o n o m i c s , p o l i t i c s , e t c . 7 3 P r o b l e m s r e m a i n however. At the 21st meeting of the A s i a n Development Bank i n May 1988, Taiwanese delegates broke a two-year boycott of the ^See f o r example A s i a n Outlook, a monthly p u b l i c a t i o n which r e f l e c t s the o f f i c i a l T a i p e i p o s i t i o n on these i s s u e s , esp. A p r i l 1988 and June 1988. 7 2 G . Chan. "The T w o - C h i n a s P r o b l e m and t h e O l y m p i c Formula", P a c i f i c A f f a i r s , V o l . 58, No. 3, F a l l 1985. I b i d , pg. 69 a n n u a l meetings, prompted by the PRC's a c c e s s i o n to the 47-member r e g i o n a l development o r g a n i z a t i o n i n 1986, but r e f u s e d t o wear t h e i r o f f i c i a l b a dges, which r e a d " T a i p e i - C h i n a " i n s t e a d of "Taiwan". 7 4 O f f i c i a l s from the mainland r e g i s t e r e d t h e i r p r o t e s t over Taiwan's p r o t e s t s . The r e c o g n i t i o n i s s u e a p p e a r s t o be o f d e c l i n i n g importance i n b i l a t e r a l t r a d e matters. Canada, through the e x p e d i e n t o f the C a n a d i a n Chamber o f Commerce, m a i n t a i n s " u n o f f i c i a l " r e l a t i o n s w i t h T a i p e i as does the U.S. While T a i p e i would c e r t a i n l y l i k e to be recognized as the l e g i t i m a t e government of a l l China, the p r e s e n t arrangements seem to be accepted by a l l concerned as the best p o s s i b l e s o l u t i o n t o a bad s i t u a t i o n . M i x e d m e s s a g e s emanate f r o m T a i p e i . I n J u l y 1988 P r e s i d e n t Lee, u s u a l l y c h a r a c t e r i z e d as as n o n - e x t r e m i s t who p u t s r e a s o n b e f o r e p a s s i o n , f e l t i t n e c e s s a r y i n h i s c o n f i r m a t i o n address to the 13th n a t i o n a l congress to speak of the " e v i l nature of communism" with i t s " t r i c k s of d e c e p t i o n and s u b v e r s i o n " and warned t h a t "we must not s l a c k e n our preparedness f o r war." 7 5 At the same time Taiwan i s undergoing r a p i d d e m o c r a t i z a t i o n and the r u l i n g KMT's g r i p on power i s s l a c k e n i n g markedly. A week a f t e r Lee made these comments the f i r s t member of Taiwan's Parliament to v i s i t China a r r i v e d i n / 4The Globe & M a i l , "Asian Development Bank faces d e c l i n i n g relevance as a l e n d e r . " May 4,1988. 7 5 A s i a n Outlook, June 1988, T a i p e i . 70 B e i j i n g i n d e f i a n c e of government o r d e r s . 7 6 While Taiwan-PRC t r a d e t h r o u g h i n t e r m e d i a r i e s , p r i m a r i l y Hong Kong, has been going on f o r y e a r s , the PRC i s now openly c o u r t i n g Taiwanese i n v e s t m e n t , which tends t o go t o g e o g r a p h i c a l l y p r o x i m a t e F u j i a n P r o v i n c e . New r e g u l a t i o n s p r o m u l g a t e d i n J u l y 1988 impose fewer r e s t r i c t i o n s on i n v e s t o r s from Taiwan ( c a l l e d " c o m p a t r i o t s " by B e i j i n g ) t h a n t h o s e p l a c e d on Hong Kong Chinese or other f o r e i g n e r s who i n v e s t on the mainland. The PRC w i l l a l s o g u a r a n t e e t o keep s e c r e t t h e i d e n t i t i e s o f Taiwanese businessmen who re q u e s t anonymity to p r o t e c t t h e i r i n t e r e s t s a t home. 7 7 T a i p e i ' s attempts t o c o n t r o l b u s i n e s s a c t i v i t i e s w i l l be extremely d i f f i c u l t i n l i g h t of the f a c t that v i s i t s to the mainland are now per m i t t e d f o r Taiwanese of Chinese o r i g i n . Economic Dimensions The People's Republic of China i s Canada's s i x t h l a r g e s t t r a d i n g p a r t n e r , b e h i n d t h e U.S., J a p a n , U n i t e d Kingdom, F e d e r a l R e p u b l i c o f Germany and the USSR. Because o f t h e o v e r w h e l m i n g d o m i n a n c e o f t h e U.S. i n C a n a d a ' s t r a d e a c t i v i t i e s , t h i s p o s i t i o n i s i n e v i t a b l y one of r e l a t i v e l y minor consequence t o Canada as a whole. A l t h o u g h the p r o s p e c t o f su p p l y i n g the vast p o p u l a t i o n of China with Canadian goods has 7 6 G l o b e and M a i l , "Taiwanese MP v i s i t s C h i n a . " J u l y 19, 1988. 7 7 G l o b e and M a i l , " C h i n a U n v e i l s Measures t o A t t r a c t Taiwanese." J u l y 7, 1988. 71 been as symbol of great hopes f o r over a century, the r e a l i t y o f t r a d e l i n k a g e s has been c h a r a c t e r i z e d by f r u s t r a t i o n , d i s a p p o i n t m e n t and p e r i o d i c r e v i s i o n o f o v e r o p t i m i s t i c e x p e c t a t i o n s . From t h e t i m e o f Canada's f o r m a l r e c o g n i t i o n o f t h e B e i j i n g regime i n 1971, t r a d e volume i n c r e a s e d s t e a d i l y , i f u n s p e c t a c u l a r l y , u n t i l 1983 (See Table I ) . From $160 m i l l i o n i n 1970, two-way trade rose to over $1 b i l l i o n i n 1980, a s i x -f o l d i n c r e a s e , and to s l i g h t l y under $2 b i l l i o n i n 1983, each ye a r showing a marked i m b a l a n c e o f the terms o f t r a d e i n Canada's f a v o u r . 7 8 During the 1970s however, Canada's share of the China t r a d e d e c l i n e d from 4.5% i n the f i r s t h a l f of the decade t o about 2.5% i n the l a t t e r h a l f . I f n a t i o n a l t r a d e f i g u r e s suggest a p e r i p h e r a l importance of Canada-China l i n k s f o r Canada i t i s of even l e s s importance t o C h i n a , Canada accounting f o r l e s s than 1% of China's t o t a l e x p o r t s . 7 9 The p a t t e r n o f Canada's C h i n a t r a d e changed, and i s c o n t i n u i n g t o change i n the 1980s. Canadian e x p o r t s were i n i t i a l l y dominated by food products. During the 1970s wheat accounted f o r up to 80% of Canada's exports to China. Modest d i v e r s i f i c a t i o n d u r i n g t h a t decade has expanded d u r i n g the 1980s i n t o a trade p i c t u r e marked by great i n c r e a s e s i n s a l e s of f a b r i c a t e d m a t e r i a l s such as newsprint, s y n t h e t i c rubber and metal c o n c e n t r a t e s and h i g h l y manufactured t e c h n o l o g y - i n t e n s i v e 7 8Cheh, op. c i t . , and C u r t i s , op. c i t . 7 9Ho and Huenemann, op. c i t . , pg. 14. 72 products ("end p r o d u c t s " ) such as d r i l l i n g equipment, mining t r u c k s , a i r c r a f t , s a t e l l i t e e a r t h s t a t i o n s and t e l e p h o n e s w i t c h i n g equipment. While wheat i s s t i l l the l a r g e s t s i n g l e export item the major growth a r e a f o r Canadian exports i s i n the end p r o d u c t s e c t o r . S a l e s i n t h i s s e c t o r rose from o n l y $13 m i l l i o n i n 1983 to $305 m i l l i o n i n 1986, a 2 3 - f o l d i n c r e a s e i n j u s t t h r e e y e a r s . 8 0 T h i s d i v e r s i f i c a t i o n of p r o d u c t mix however, was accompanied by a d e c l i n e i n aggregate trade l e v e l s between 1983 and 1986, although trade l e v e l s rebounded i n 1987 t o $2.2 b i l l i o n , t h e b e s t y e a r e v e r ( e x c l u d i n g 1983) i n a b s o l u t e terms, but more i m p o r t a n t l y w i t h a more b a l a n c e d category mix than i n the past (See Table I ) . M a n u f a c t u r e d p r o d u c t s now make up about 75% of C h i n a ' s e x p o r t s t o Canada, i n c l u d i n g t e x t i l e s and c l o t h i n g , w hich t h e m s e l v e s a c c o u n t f o r a b o u t h a l f o f t h e s e e x p o r t s . 8 1 U n f o r t u n a t e l y , from China's p o i n t of view, these products are not e l i g i b l e f o r exemption or r e d u c t i o n of d u t i e s which a p p l y under the General P r e f e r e n t i a l T a r i f f (GPT) treatment extended b i l a t e r a l l y by Canada i n 1980. Food and b e v e r a g e s , t o y s , h o u s e h o l d goods and l i g h t i n d u s t r i a l wares are u n r e s t r a i n e d under the GPT and China's exports of f i n i s h e d goods to Canada i s t h e r e f o r e i n c r e a s i n g l y composed of t h i s c l a s s of goods. The main l i m i t i n g f a c t o r i n the expansion of b i l a t e r a l t r a d e i s Canada's c o n t i n u i n g t r a d e s u r p l u s with China. T h i s 8 0Cheh, op. c i t .  8 1Cheh, op. c i t . 73 may be c o n t r a s t e d with the much l a r g e r PRC-US tra d e , i n which China m a i n t a i n s a s u r p l u s , a f a r more s a t i s f a c t o r y s t a t e of a f f a i r s i n the Chinese view. T e x t i l e s and c l o t h i n g a r e the p r i n c i p a l means of ea r n i n g f o r e i g n exchange and b i l a t e r a l t r a d e p o s s i b i l i t i e s are t h e r e f o r e c o n s t r a i n e d by the Canadian p o l i c y on the p r o t e c t i o n of Canada's indigenous t e x t i l e and c l o t h i n g i n d u s t r y . Chinese n e g o t i a t o r s have r e p e a t e d l y s t r e s s e d that trade i s a two-way s t r e e t and that Canada must make adjustments i n order to expand the l e v e l of t h i s b i l a t e r a l t r a d e . C. Complementarity and Comparative Advantage T r a d e has a l w a y s been a c e n t r a l f e a t u r e i n Canada's h i s t o r i c a l development. Canada remains a t r a d i n g n a t i o n , with an "open economy" which exports one t h i r d of a l l i t produces and i m p o r t s one t h i r d o f a l l i t consumes. T h r e e m i l l i o n Canadians owe t h e i r jobs d i r e c t l y to i n t e r n a t i o n a l t r a d e . 8 2 C h i n a , i n c o n t r a s t , has not been a g r e a t t r a d i n g n a t i o n s i n c e the 18th century. Europe's commercial expansion i n t h a t c entury l e f t China f a r behind f o r numerous h i s t o r i c a l reasons which cannot be f u l l y c o n s i d e r e d here. A few p o i n t s may be adduced however. A g r i c u l t u r e formed the core of the Chinese economy. I t was p r o p o r t i o n a t e l y more p r o d u c t i v e than i n Europe and revenue from trade was l e s s necessary. Thus, Peking thus d i d not need the merchants as the King had needed them i n Europe to f i n a n c e the ascendency 8 2Vancouver Sun, "Look to A s i a n t r a d e , Carney says." J u l y 9, 1988": ~~ 74 of the n a t i o n a l s t a t e , to pay f o r i t s wars with r i v a l s t a t e s , or to meet i t s normal b i l l s . No concessions were necessary; the merchants c o u l d be squeezed dry, and were, with no harm to the s t a t e . 8 3 The l a r g e l y u r b a n - b a s e d KMT was the f i r s t p o l i t i c a l e x p r e s s i o n of an independent e n t r e p r e n e u r i a l c l a s s which had formed and p r o s p e r e d under the t r e a t y - p o r t system imposed by European i m p e r i a l t r a d e r s i n the 19th c e n t u r y . The merchant c a p i t a l i s t s of Shanghai and the o t h e r t r e a t y p o r t s were the focus of the r u r a l - b a s e d communists' wrath and Mao rode i n t o power i n p a r t as a c r u s a d e a g a i n s t them. T h i s d i s t r u s t of i n t e r n a t i o n a l t r a d e was u n d e r s t a n d a b l e , of c o u r s e , as the unequal terms under which China was f o r c e d to trade had made i t an i n s t i t u t i o n of f o r e i g n e x p l o i t a t i o n . The tendency of the PRC toward i s o l a t i o n from the c a p i t a l i s t world economy between 1949 and 1978 may be u n d e r s t o o d i n t h i s l i g h t . A c t u a l f l u c t u a t i o n s i n trade p o l i c y during t h i s p e r i o d were f a r more complex than t h i s b r i e f c h a r a c t e r i z a t i o n suggests. At v a r i o u s p o i n t s d u r i n g t h i s p e r i o d trade with the west was expanded and c o n t r a c t e d i n response to changes i n i n t e r n a l c o n d i t i o n s . The T h i r d Plenum of the 11th C e n t r a l Committee of the CCP i n 1979 i s n o r m a l l y a c c e p t e d as the p o i n t at which o f f i c i a l s a n c t i o n was given to the Open Door s t r a t e g y . Under t h i s new p o l i c y C h i n e s e o f f i c i a l s announced they would be " a c t i v e l y expanding economic c o o p e r a t i o n on terms of e q u a l i t y and mutual S JMurphey, R. , "The C i t y as a Center of Change: Western Europe and China," Annals, A s s o c i a t i o n of American Geographers, Pennsylvania, V o l . 7, No. 4, 1953. 75 b e n e f i t with other c o u n t r i e s , and would be " s t r i v i n g to adopt the world's advanced t e c h n o l o g i e s and equipment." 8 4 L e v e l s of t r a d e w i t h t h e West w i l l s t i l l have t o be s u b s t a n t i a l l y expanded b e f o r e t r u e i n t e r d e p e n d e n c e can d e v e l o p . To the extent that the t o t a l s i z e of a country's f o r e i g n trade tends to be p o s i t i v e l y r e l a t e d to income per c a p i t a and n e g a t i v e l y r e l a t e d (on a perc e n t a g e b a s i s ) t o the s i z e of the economy, measured e i t h e r by GNP or by p o p u l a t i o n , China should not be expec t e d to t r a d e v e r y much. Perhaps most important i s the a p p l i c a b i l i t y t o t h e C h i n e s e economy o f t h e d o c t r i n e o f c o m p a r a t i v e advantage which underpins the l i b e r a l t h e o r y of mutual b e n e f i t through t r a d e . According to the n e o - c l a s s i c a l v e r s i o n o f t h i s i d e a , u s u a l l y a t t r i b u t e d t o R i c a r d o , the f o l l o w i n g f i v e b e n e f i t s should accrue to any domestic economy ( i n c l u d i n g a s t a t e - t r a d i n g one): 1. T e c h n o l o g i c a l d i f f u s i o n , which c o n t r i b u t e s t o the economic welfa r e of a l l peoples. 2. A demand or K e y n e s i a n e f f e c t on the economy t h a t , t h r o u g h t h e o p e r a t i o n of the " m u l t i p l i e r " , s t i m u l a t e s economic growth and the o v e r a l l e f f i c i e n c y of the economy. 3. B e n e f i t s f o r i n d i v i d u a l f i r m s as trade i n c r e a s e s the s i z e o f t h e m a r k e t , promotes economies o f s c a l e and i n c r e a s e s the r e t u r n on investment while a l s o s t i m u l a t i n g the o v e r a l l l e v e l of economic a c t i v i t y i n the economy as a whole. 4. An i n c r e a s e d range of consumer c h o i c e s . 5. Reduction i n the c o s t s of inputs such as raw m a t e r i a l s and manufactured components, which then lowers the o v e r a l l c o s t of p r o d u c t i o n . S e r i o u s t h e o r e t i c a l c o n s i d e r a t i o n f o l l o w e d i n a 1980 a r t i c l e i n a Chinese s o c i a l s c i e n c e j o u r n a l which was the f i r s t Ho and Huenemann, op. c i t . , pg. 14. 76 t o a s s e r t t h a t R i c a r d o ' s t h e o r y , " l o n g regarded as bourgeous a p o l o g e t i c s has a " r a t i o n a l k e r n e l " because i t p r o v i d e s an i n s i g h t f u l e x p l a n a t i o n o f the p o s s i b i l i t y o f s a v i n g s o c i a l l a b o u r t h r o u g h i n t e r n a t i o n a l d i v i s i o n of l a b o u r . " 8 5 What remained was t o adapt t h i s k e r n e l t o a M a r x i a n t h e o r y of i n t e r n a t i o n a l v a l u e through d i a l e c t i c a l d i s c o u r s e . The C h i n e s e have experimented c a u t i o u s l y w i t h l i b e r a l economics i n the trade arena with mixed r e s u l t s . F o r e i g n trade has grown f a s t e r than domestic p r o d u c t i o n . The p e r c e n t a g e share of t o t a l trade and exports r e l a t i v e to the gross output value of a g r i c u l t u r e and i n d u s t r y rose from 8.05% and 3.83% i n 1980 to 11.2% and 5.38% r e s p e c t i v e l y i n 1984. R i c a r d i a n theory p r e d i c t s a comparative advantage f o r China i n the manufacture and e x p o r t o f h e a v y i n d u s t r i a l e x p o r t s s u c h as s i m p l e s t a n d a r d i z e d machinery and t o o l s such as sewing machines. As a share of manufactured products i n t o t a l exports these products rose from 10.4% i n 1978 to 22% i n 1983 8 6. Problems developed i n 1984-85, however, which cast doubt i n many Chinese p l a n n e r s ' minds as to the e f f i c a c y of t r a d e l i b e r a l i z a t i o n based on the law of comparative advantage. The i s s u e i s c o m p l i c a t e d by many f a c t o r s such as the p r e s e n t i n t e r n a t i o n a l regime of f l o a t i n g exchange r a t e s , a p r o d u c t i v i t y gap between domestic p r o d u c t i o n of manufactured products and 85Woo Tunoy and Tsang Shuki, "Comparative Advantage and Trade L i b e r a l i z a t i o n i n China," Economy and S o c i e t y , V o l . 17, No. 1, February 1988, Routeledge, Great B r i t a i n , pg. 22. 8 6 I b i d , pp. 24-25. 77 imports, and a r a p i d l y r i s i n g aggregate demand. I t was more p r o f i t a b l e f o r Chinese t r a d i n g e n t e r p r i s e s to i n c r e a s e imports than to i n c r e a s e p r o d u c t i o n of e x p o r t s , c a u s i n g the value of i m p o r t s t o r i s e r a p i d l y w h i l e t h a t of e x p o r t s d e c l i n e d i n 1985. 8 7 The debate i s s t i l l heated i n China. The p o s s i b i l i t y of C h i n a b e i n g e x p l o i t e d and becoming dependent on d e v e l o p e d economies, as i s p r e d i c t e d by t h e o r i s t s of unequal exchange, has p o w e r f u l p o l i t i c a l i m p l i c a t i o n s . P u r s u i n g the a l l e g e d a d v a n t a g e s of l i b e r a l i z e d t r a d e on the R i c a r d i a n model i s p r e d i c a t e d on a l l o w i n g a degree of market freedom to operate which i n e v i t a b l y c r e a t e s i n e q u a l i t i e s i n the d i s t r i b u t i o n and consumption of wealth. T h i s i s p r e c i s e l y the case i n China, where the p o p u l a t i o n s of the S p e c i a l Economic Zones i n which trade and manufacturing f o r export i s p r i m a r i l y conducted, are enjoying a s u b s t a n t i a l l y higher per c a p i t a income than the r e s t of the c o u n t r y . 8 8 The c o a s t a l regions are becoming i n t e g r a t e d i n t o t h e w o r l d economy t h r o u g h c e n t r a l government p o l i c y . Provinces i n the l e s s developed i n t e r i o r are r e c i p i e n t s of a i d from the c e n t r a l government and i n t e r n a t i o n a l a g e n c i e s while the SEZ 1s compete, thus c r e a t i n g a dual economy. Canada d e a l s w i t h C h i n a on b o t h l e v e l s . A i d i s e x t e n d e d t h r o u g h t h e C a n a d i a n I n t e r n a t i o n a l D e v e l o p m e n t A g e n c y ( C I D A ) and B / I b i d , pg. 2 5 . 8 8 G l o b e & M a i l , June 2 4 , 1988, " D i s p a r i t i e s a S t r a i n on kChinese Body P o l i t i c . " 78 nongovernmental a i d o r g a n i z a t i o n s w h i l e t r a d e i s pursued a t both the governmental and p r i v a t e l e v e l s . The n o t i o n of c o m p l e m e n t a r i t y between the economies of China and Canada may be addressed i n two d i f f e r e n t ways. The f i r s t approach i s based on the complementarity of product mix. Canada's h i s t o r i c a l and g e o g r a p h i c a l imperatives have e l e v a t e d the need f o r , and t h e r e f o r e e x p e r t i s e i n , t r a n s p o r t a t i o n and communication t e c h n o l o g i e s to a prominent p o s i t i o n . C h i n a s t i l l f a c e s s e v e r e b o t t l e n e c k s i n t h e s e s e c t o r s as w e l l as shortages of t r a i n e d managerial and t e c h n i c a l p e r s o n n e l . The p h y s i c a l i n f r a s t r u c t u r e and personnel t r a i n i n g requirements of China's proposed development p r o j e c t s match Canada's s t r e n g t h s w e l l . To reach even the modest development g o a l which China has s e t of a n a t i o n a l annual per c a p i t a income of 3000 yuan ($1000 CDN) f o r i t s 1.1 b i l l i o n people w i l l probably r e q u i r e a m a s s i v e i n f r a s t r u c t u r e development program t o s e r v i c e an i n d u s t r i a l base capable of c r e a t i n g t h i s amount of wealth. The second approach assesses the p l a c e of the two s t a t e s i n the w o r l d p o l i t i c a l economy. The i n s i g h t s of the w o r l d system t h e o r i s t s o f f e r a v a l u a b l e framework i n the form of the c o r e , s e m i - p e r i p h e r y and p e r i p h e r y c o n c e p t s . As d i s c u s s e d above, a m o d i f i e d v e r s i o n of t h i s framework i s s t i l l u s e f u l a f t e r d e t a c h i n g the t h e s i s of s t r u c t u r a l dependency and adding the World C i t y p e r s p e c t i v e . Within t h i s framework Canada, f o r example, may be u s e f u l l y c o n c e p t u a l i z e d as a g e o g r a p h i c a l l y 79 l a r g e z o n e w i t h i n t h e U.S. e c o n o m y . 8 9 C h i n a , a l s o t e r r i t o r i a l l y l a r g e , occupies a r e l a t i v e l y s m a l l economic space on the s e m i - p e r i p h e r y of the E a s t A s i a n economy c e n t r e d i n Tokyo. C h i n a ' s enormous economic p o t e n t i a l and p o l i t i c a l p u r s u i t o f a u t a r c h i c p o l i c i e s have k e p t i t f r o m b e i n g economically absorbed or dependent on any other power as Canada has been. N e v e r t h e l e s s , they are both roughly e q u i v a l e n t i n economic d i s t a n c e from the c o r e s of economic a c t i v i t y : the U.S., J a p a n a n d W e s t e r n E u r o p e . B o t h s t a t e s may be c o n c e p t u a l i z e d as b e i n g on the s e m i - p e r i p h e r y of the w o r l d economy. E. C o n c l u s i o n Although the emerging WPE d i f f e r s i n many ways from o l d e r forms of the c a p i t a l i s t world economy t h i s should not be taken to mean t h a t t r a n s n a t i o n a l c a p i t a l has not had a p r o f o u n d impact i n the p a s t on g l o b a l economic o r g a n i z a t i o n . The h i s t o r i c a l d e v e l o p m e n t o f b o t h C h i n a and Canada were s u b s t a n t i a l l y a l t e r e d by 19th c e n t r u r y B r i t i s h MNCs attempts t o e n l a r g e t h e s c o p e o f t h e i r t r a d i n g a c t i v i t i e s . The e x p a n s i o n o f the c a p i t a l i s t w o r l d economy i n the p e r i o d of B r i t i s h i m p e r i a l dominance acted as a connective f o r c e between China and what i s now Canada. The mythology of the n a t i o n -s t a t e promotes the idea that s t a t e s are expressions of c u l t u r a l 8 9 G l e n W i l l i a m s , "Canada's P l a c e i n the I n t e r n a t i o n a l P o l i t i c a l Economy", S t u d i e s i n P o l i t i c a l Economy, No. 25, Spring 1988, pg. 109. 80 u n i t y and communitarian i d e a l s . T h i s view should be tempered w i t h an a p p r e c i a t i o n o f t h e i m p a c t o f c a p i t a l on t h e i r formation and subsequent p o l i t i c a l development. In China's case the complex h i s t o r i c a l d i v i s i o n s which l e d to the c r e a t i o n of the ROC may be at l e a s t p a r t i a l l y a t t r i b u t e d to the c o n f l i c t between competing i d e o l o g i e s , based on the c o n f l i c t between c a p i t a l and l a b o u r , a l t h o u g h t h i s g r e a t l y s i m p l i f i e s a complicated h i s t o r y . Hong Kong was detached from China by n a t i o n a l might i n order to f a c i l i t a t e i n t e r n a t i o n a l trade. These " p o l i t i c a l " d i v i s i o n s are of d e c l i n i n g r e l e v a n c e i n P a c i f i c B asin t r a d e . What i s more important, from Canada's p o i n t o f view, i s how the i n t e r d e p e n d e n c e among the t h r e e economies w i l l a f f e c t t r a d e . Hong Kong i s a s u b s t a n t i a l component of Canada's P a c i f i c t r a d e (See T a b l e II) a l t h o u g h a b s o l u t e t r a d e f i g u r e s do not r e f l e c t i t s importance as a "gateway" to the PRC. While Canada has a d e s i r a b l e t r a d e surp l u s with the PRC, we have trade d e f i c i t s with Hong Kong and Taiwan. What w i l l the t r a d e p i c t u r e look l i k e i n 1997 when Hong Kong r e t u r n s t o C h i n e s e j u r i s d i c t i o n ? W h i l e s i m p l y a g g r e g a t i n g t r a d e f i g u r e s f o r Hong Kong and t h e PRC i s o b v i o u s l y i n s u f f i c i e n t to account f o r the c o m p l e x i t i e s of the mode of i n t e g r a t i o n which w i l l occur i n 1997, i t i s i n t e r e s t i n g to note t h a t i t roughly b a l a n c e s out the terms of trade with Canada, t h e o r e t i c a l l y an optimal s o l u t i o n . I f Taiwan c o n t i n u e s to expand i t s investment i n the PRC how w i l l t h i s dynamic r e l a t i o n s h i p a l t e r the equation i n the P a c i f i c Basin? 81 The d i f f e r e n c e s between the s t r u c t u r e of Canada's economy and t h a t o f t h e PRC i l l u s t r a t e t h e r e l a t i o n s h i p between "openness" i n the world economy and high u t i l i z a t i o n of modern modes of p r o d u c t i o n . I n d u s t r i a l i z a t i o n and u r b a n i z a t i o n are c o m p l e m e n t a r y a s p e c t s o f an open t r a d i n g p o l i c y . W h i l e complementarity i n trade can be based on n a t i o n a l d i f f e r e n c e s such as t h e s e , i t i s not a t a l l c l e a r t h a t r e p l i c a t i o n of w e s t e r n - s t y l e i n d u s t r i a l i z a t i o n and an open t r a d i n g p o l i c y w i l l best serve China's i n t e r e s t s . The Chinese are s t i l l c a u t i o u s l y experimenting with these ideas and g e t t i n g mixed r e s u l t s . How, and i n d e e d i f , they choose to i n t e g r a t e themselves i n t o the w o r l d t r a d i n g system w i l l d e t e r m i n e the s t r u c t u r e o f t h e i r r e l a t i o n s h i p with Canada. 82 Chapter IV The P o l i t i c s of Trade and Investment Promotion Before moving on to d e s c r i b e m u n i c i p a l programs aimed at promoting t r a d e and investment, r e l a t e d a c t i v i t i e s undertaken at the s e n i o r l e v e l s of government w i l l be o u t l i n e d . The aim i s t w o f o l d : t o d e m o n s t r a t e t h e h i g h l e v e l o f government i n v o l v e m e n t i n i n t e r n a t i o n a l t r a d e , and t o i l l u s t r a t e the r a d i c a l i n e q u a l i t y of means to promote l o c a l i z e d development among the d i f f e r e n t orders of government. A. F e d e r a l Trade I n i t i a t i v e s The C a n a d i a n n a t i o n a l government promotes t r a d e and investment i n a mul t i t u d e of ways. T h i s s e c t i o n of the paper a d d r e s s e s one s p e c i f i c a r e a o f i t s t r a d e and i n v e s t m e n t promotion a c t i v i t i e s , t h a t r e l a t e d to the China t r a d e . T h i s i s not only of n a t i o n a l import but of s i n g u l a r i n t e r e s t to B r i t i s h Columbia and Vancouver. These a c t i v i t i e s may be d i v i d e d i n t o three broad c a t e g o r i e s : s e r v i c e s , d i p l o m a t i c and f i n a n c i a l . S e r v i c e s which Ottawa p r o v i d e s f o r the p r i v a t e s e c t o r and j u n i o r l e v e l s of government i n c l u d e : the p u b l i c a t i o n of trade j o u r n a l s a n d s e c t o r r e p o r t s , s t a t i s t i c a l i n f o r m a t i o n , p a r t i c i p a t i o n i n trade missions and f a i r s , and p r e p a r a t i o n of p r o j e c t t e n d e r b i d s . These s e r v i c e s a r e u s u a l l y f r e e and 83 a v a i l a b l e to v i r t u a l l y any Canadian who requests them. D i p l o m a t i c a c t i v i t i e s i n c l u d e : e s t a b l i s h m e n t o f r e p r e s e n t a t i v e o f f i c e s a t the c o n s u l a r or embassy l e v e l (the embassy i n China, as i n most other c o u n t r i e s , has an a c t i v e commercial s e c t i o n ) , n e g o t i a t i o n i n m u l t i l a t e r a l economic f o r a w i t h the i n t e r e s t s of C a n a d i a n t r a d e r s i n mind, c o n d u c t i n g b i l a t e r a l n e g o t i a t i o n s and s i g n i n g agreements which s t i m u l a t e t r a d e , and u s i n g a i d programs to enhance Canadian commercial p o s s i b i l i t i e s . The " t y i n g " of a i d to trade has been f o r m a l i z e d w i t h i n the Canadian I n t e r n a t i o n a l Development Agency (CIDA) by CIDA's req u i r e m e n t t h a t m a t e r i a l s and s e r v i c e s r e q u i r e d f o r a s s i s t a n c e p r o j e c t s i n China come p r i m a r i l y from Canada, and the e s t a b l i s h m e n t of the Business Cooperation Branch i n 1984, w h i c h p r o m o t e s C a n a d i a n b u s i n e s s a c t i v i t y i n d e v e l o p i n g c o u n t r i e s , p r i n c i p a l l y through long-term c o o p e r a t i o n with l o c a l p a r t n e r s . 9 0 T h i s p o l i c y i s i m p l e m e n t e d by the b r a n c h ' s I n d u s t r i a l C o o p e r a t i o n D i v i s i o n (CIDA INC.) and p r o j e c t s must be shown to b e n e f i t Canadian b u s i n e s s as w e l l as meet CIDA's economic development c r i t e r i a . F i n a n c i a l a c t i v i t i e s with a view to promoting trade take on a v a s t v a r i e t y of forms and c o n s t i t u t e the most important type of governmental a s s i s t a n c e . In terms of funding, export f i n a n c i n g i s the major component of f e d e r a l e xport promotion e f f o r t s i n C h i n a . The E x p o r t Development C o r p o r a t i o n (EDC) a u G l o b e & M a i l , September 13, 1988, "CIDA Changes I t s Asian Programs So They A i d Canadian Business." 84 p r o v i d e s f i n a n c i n g f o r most types of Canadian exports to China ( i n c l u d i n g t u r n k e y p r o j e c t s , c a p i t a l e q u i p m e n t s a l e s , technology t r a n s f e r s , t r a i n i n g programs, and management s e r v i c e c o n t r a c t s ) , u s u a l l y i n t h e f o r m of s u p p l i e r c r e d i t s , o r sometimes i n buyer c r e d i t s , i n which EDC funds a s e p a r a t e agreement between exporter and buyer. The terms which EDC s e t s i n i t s f i n a n c i n g agreements are c o n s t r a i n e d by arrangements which Ottawa has n e g o t i a t e d w i t h the major OECD c o u n t r i e s , which a l l agree to o f f e r f i n a n c i n g at "consensus r a t e s " . These and r e l a t e d a c t i v i t i e s aimed a t n a t i o n a l economic development a r e g u i d e d i n p a r t by p r i n c i p l e s o f r e g i o n a l economic development which have emerged from n e g o t i a t i o n s w i t h the p r o v i n c e s . These p r i n c i p l e s were e x p l i c i t l y s t a t e d i n an intergovernmental p o s i t i o n paper of June 1985. The " f i r s t and most important p r i n c i p l e " s t a t e s t h a t : The g o a l o f more e q u a l e c o n o m i c o p p o r t u n i t y i s c o n s i s t e n t w i t h s t r o n g e r economic growth f o r the c o u n t r y as a whole. E f f o r t s to reduce ( r e g i o n a l ) d i s p a r i t i e s through sound economic development are an investment f o r f u t u r e p r o s p e r i t y and i n c r e a s e d s e l f -r e l i a n c e f o r each r e g i o n . They strengthen the u n i t y of the c o u n t r y . 9 1 Soth o r d e r s o f government p l e d g e , i n t h i s document, t o cooperate, c o n s u l t and d i s c u s s economic development p o l i c i e s with one another and to recognize the need f o r complementarity in t h e i r a p p r o a c h e s . W i t h i n the f e d e r a l government, t h e Cabinet Committee on Economic and Regional Development i s the Government of Canada, "Intergovernmental A f f a i r s P o s i t i o n Paper: On the P r i n c i p l e s and Framework For R e g i o n a l Economic Development." June 1985. 85 f o c a l p o i n t f o r f e d e r a l r e g i o n a l development p o l i c i e s . T h i s body and "every department and agency w i t h i n both o r d e r s of government" i n theory must judge a l l major n a t i o n a l p o l i c i e s i n terms of t h e i r r e g i o n a l impact and aim a t f a i r and b a l a n c e d r e g i o n a l development. To t h i s end. m i n i s t e r s meet r e g u l a r l y , both on a m u l t i l a t e r a l and b i l a t e r a l b a s i s to review r e g i o n a l economic concerns. B. P r o v i n c i a l A c t i v i t i e s L i k e t h e n a t i o n a l g o v e r n m e n t , b u t u n l i k e t h e m u n i c i p a l i t i e s , p r o v i n c e s are ab l e to p l a n long-term economic and t r a d i n g s t r a t e g i e s . In the most recent Throne Speech to the B r i t i s h Columbia L e g i s l a t u r e , L i e u t e n a n t - G o v e r n o r Rogers made the f o l l o w i n g p o i n t s : that h i s government w i l l c o n t i n u e to pursue the development of " t r a d i n g zones" to encourage e x p o r t -o r i e n t e d i n d u s t r i a l d e v e l o p m e n t ; t h a t l e g i s l a t i o n w i l l be i n t r o d u c e d t o s t r e n g t h e n development of V a n c o u v e r as an I n t e r n a t i o n a l F i n a n c i a l Centre; and that p r i v a t e s e c t o r t r a d i n g house a c t i v i t y w i l l be encouraged to h e l p market and s e l l BC p r o d u c t s and s e r v i c e s around the world. Toward these ends a d r a f t White Paper w i l l be produced i n 1988 o u t l i n i n g a l o n g -term s t r a t e g i c p l a n f o r the p r o v i n c e which w i l l " l a y out government's economic and s o c i a l o b j e c t i v e s f o r the decade," and which w i l l be "comprehensive — yet f l e x i b l e enough so BC 86 can respond to e x t e r n a l f o r c e s . 9 2 " T h i s outward l o o k i n g posture i s complemented i n the same speech w i t h a l i s t of c o m p l a i n t s about BC's p l a c e w i t h i n the f e d e r a l s t r u c t u r e . BC's- " s h a r e o f f e d e r a l r e s o u r c e s and spending remains d i s p r o p o r t i o n a t e l y low" and we have "seen too many i n e q u i t i e s , " "BC's e f f o r t s have been given minimal support by the F e d e r a l Government," and the p r o v i n c e w i l l t h e r e f o r e "monitor and evaluate BC's standing w i t h i n the f e d e r a l system," " i d e n t i f y shortcomings i n the F e d e r a l - P r o v i n c i a l system" and "make p u b l i c . . . a n e v a l u a t i o n of our s t a t u s and treatment w i t h i n C o n f e d e r a t i o n . " 9 3 Fed-bashing i s very much the s t y l e of the present p r o v i n c i a l l e a d e r s . These two elements of BC p o l i c y , an i n c r e a s i n g l y g l o b a l p e r s p e c t i v e on t r a d e and i n v e s t m e n t m a t t e r s and o n g o i n g h o s t i l i t y t o a p e r c e i v e d b i a s i n favour of C e n t r a l Canada on t h e p a r t o f t h e f e d e r a l government, r e f l e c t much o f t h e m o t i v a t i o n behind the s t y l e of BC's i n t e r n a t i o n a l r e l a t i o n s . While p r o v i n c i a l p u r s u i t o f an a t t e n u a t e d form o f " f o r e i g n p o l i c y " i s prompted, and indeed made p o s s i b l e by the f a c t of world-wide complex i n t e r d e p e n d e n c e , the p a r t i c u l a r form of "pa r a d i p l o m a c y " which V i c t o r i a p r a c t i c e s i s determined t o a g r e a t e x t e n t by the n a t u r e o f BC's p l a c e i n t h e C a n a d i a n f e d e r a t i o n . 9 2 0 p e n i n g Speech of the second s e s s i o n of the 34th BC P a r l i a m e n t , by L t . G o v e r n o r R.G. R o g e r s , March 15, 1988. Mimeo. 9 3 I b i d . 87 By t r a d i t i o n Canada, l i k e most f e d e r a l s t a t e s , r e s e r v e s f i n a l a u t h o r i t y o v e r f o r e i g n r e l a t i o n s t o t h e c e n t r a l government. T h i s does not mean t h a t the p r o v i n c e s have not always been f r e e to pursue c e r t a i n of t h e i r i n t e r e s t s abroad. S e c t i o n 92 o f t h e C o n s t i t u t i o n A c t o f 1867 g r a n t e d t h e pr o v i n c e s powers to borrow money, manage p r o v i n c i a l lands (and thus r e s o u r c e s ) , c r e a t e m u n i c i p a l i t i e s , l i c e n s e a c t i v i t i e s , i n c o r p o r a t e l o c a l f i r m s , and have a u t h o r i t y over a l l matters of a " l o c a l nature". The 1982 C o n s t i t u t i o n A c t d i d not s i g n i f i c a n t l y a l t e r the s t a t u s quo i n f e d e r a l - p r o v i n c i a l power s h a r i n g i n the realm of f o r e i g n r e l a t i o n s . With t h i s l a c k of c l e a r c o n s t i t u t i o n a l a u t h o r i t y and the e x t e n s i v e range of powers which have de f a c t o a c c r u e d t o the p r o v i n c e s , an a d v e r s a r i a l r e l a t i o n s h i p between the c e n t r e and p r o v i n c e s was bound to develop. Kim N o s s a l l i s t s f o u r " d i s t i n c t , b u t not u n r e l a t e d i n t e r e s t s " w h i c h may p r o p e l p r o v i n c i a l g o v e r n m e n t s i n t o i n t e r n a t i o n a l a c t i v i t i e s . 9 4 T h e s e a r e c o n s t i t u t i o n a l , f u n c t i o n a l , b u r e a u c r a t i c , and socio-economic i n t e r e s t s . These p r o v i n c i a l i n t e r e s t s must be defended a g a i n s t the " n a t i o n a l i n t e r e s t " which i n f e d e r a l theory as p r a c t i c e d by Canada i s d e f i n e d p r i m a r i l y by Ottawa, but wit h p r o v i n c i a l a s s i s t a n c e . As a r e s u l t , c o n s u l t a t i o n with the p r o v i n c e s , i f not d i r e c t i n p u t on the l a t t e r s ' s p a r t i n t o p o l i c y f o r m a t i o n , becomes a y 4K. N o s s a l , The P o l i t i c s of Canadian F o r e i g n P o l i c y , P r e n t i c e - H a l l , Scarborough, 1985. pg. 192. 88 p r e r e q u i s i t e f o r the maintenance of harmony i n the f e d e r a l s t r u c t u r e . I f O t t a w a p u r s u e s a c o n f r o n t a t i o n a l l i n e w i t h t h e p r o v i n c e s , as was sometimes the case d u r i n g the Trudeau e r a ( f o r example, w i t h A l b e r t a over energy p r i c i n g , or with the western p r o v i n c e s over the F e d e r a l Investment Review Agency), i t puts the f e d e r a l arrangements under a great d e a l of s t r a i n . " Western a l i e n a t i o n , " w h i c h p l a y s a s i g n i f i c a n t r o l e i n d e f i n i n g BC i n t e r g o v e r n m e n t a l p o l i t i c s , i s u s u a l l y blamed on a l l e g e d f e d e r a l i n t r a n s i g e n c e . On t h e o t h e r hand, t o o accommodating a p o s i t i o n , such as c r i t i c s of the Meech Lake a c c o r d accuse Ottawa of a d o p t i n g , g i v e s r i s e t o f e a r s t h a t c o h e r e n t n a t i o n a l p o l i c i e s c a n n o t be f o r m u l a t e d a n d implemented. The c o n s t i t u t i o n a l i n t e r e s t i s thus present i n the p o t e n t i a l f o r c o n f l i c t which i s a s t r u c t u r a l component of the "Canadian compromise," based on c o n s t i t u t i o n a l i m p r e c i s i o n and shared s o v e r e i g n t y . The second of Nossal's c a t e g o r i e s concerns the f u n c t i o n a l i n t e r e s t s of the p r o v i n c e s . These a c t i v i t i e s a r i s e i n l a r g e p a r t because of the g e o g r a p h i c a l l o c a t i o n and the "mundane but f u n c t i o n a l needs of c o n s u l t a t i o n and c o o r d i n a t i o n with other governments" t h a t p r o x i m i t y to o t h e r j u r i s d i c t i o n s e n t a i l s . Most of the a c t u a l , day-to-day i n t e r n a t i o n a l a c t i v i t i e s of BC are of t h i s type. T h e r e f o r e the overwhelming m a j o r i t y of these t r a n s g o v e r n m e n t a l l i n k a g e s a r e b i l a t e r a l c o n t a c t s w i t h US s t a t e s w h i c h b o r d e r on B r i t i s h C o l u m b i a . F u n c t i o n a l 89 arrangements take three forms. Agreements, the most formal and t h e r e f o r e c o n s t i t u t i o n a l l y s i g n i f i c a n t type, are concluded by premiers and u p p e r - l e v e l p r o v i n c i a l o f f i c i a l s . Understandings r e f e r t o " c o r r e s p o n d e n c e , r e s o l u t i o n s , communiques and memoranda that are not j o i n t l y signed but nonetheless set f o r t h r e g u l a r i z e d p r ocedures" between p r o v i n c e s and s t a t e s and are n o r m a l l y n e g o t i a t e d , or a t l e a s t c o n c l u d e d , by m i n i s t e r i a l -l e v e l o f f i c i a l s . I n f o r m a l p r o c e d u r e s i n v o l v e p e r i o d i c c o n s u l t a t i o n s without anything being put i n t o w r i t i n g and a r e normally n e g o t i a t e d by l o w e r - l e v e l o f f i c i a l s , b u r e a u c r a t s or t e c h n i c a l s p e c i a l i s t s . The t h i r d category of p r o v i n c i a l m o t i v a t i o n , b u r e a u c r a t i c i n t e r e s t , i s p a r t i c u l a r l y d i f f i c u l t t o a s s e s s because t h e q u e s t i o n o f w h i c h comes f i r s t -- t h e b u r e a u c r a c y o r g o v e r n m e n t a l i n t e r e s t -- a p p e a r s t o t a k e t h e f o r m o f a syndrome. I n c r e a s e d governmental i n t e r e s t i n i n t e r n a t i o n a l m a t t e r s g e n e r a t e s t h e need f o r a b u r e a u c r a c y t o p e r f o r m t r a n s g o v e r n m e n t a l f u n c t i o n s ; a t the same time b u r e a u c r a t i c c a p a b i l i t y and e x p e r t i s e prompt more e x t e n s i v e e x t e r n a l a c t i v i t i e s . There i s evidence which l i n k s b u r e a u c r a t i c growth w i t h i n c r e a s e d i n t e r n a t i o n a l a c t i v i t y o f t h e p r o v i n c e s . P r o v i n c i a l b u r e a u c r a c i e s have grown s t e a d i l y over the l a s t 25 years and the more h i g h l y developed of these ( i n c l u d i n g BC' s) i n many ways approach t h e i r f e d e r a l c o u n t e r p a r t s i n e x p e r t i s e and s o p h i s t i c a t i o n . BC government o f f i c i a l s comment that the s t r u c t u r e of the 90 bureaucracy tends to develop s i m i l a r p a t t e r n s to the f e d e r a l model. 9 5 While i t would be going too f a r to suggest that the BC e x t e r n a l r e l a t i o n s e s t a b l i s h m e n t merely i m i t a t e s , or i s a m i r r o r - i m a g e o f t h e f e d e r a l b u r e a u c r a c y , t h e f e d e r a l r e o r g a n i z a t i o n o f E x t e r n a l A f f a i r s i n 1982 has c e r t a i n resonances i n the BC r e s t r u c t u r i n g s of 1985-87. Both were responses to the heightened r o l e of f o r e i g n economic r e l a t i o n s i n world a f f a i r s , i . e . to e x t e r n a l s t i m u l i , as w e l l as a need to i n c r e a s e the e f f i c i e n c y of communications i n an i n c r e a s i n g l y competitive, complex and interdependent environment. The f i n a l category of p r o v i n c i a l i n t e r e s t s , socio-economic imperatives, e x p l a i n s the g r e a t e r p a r t of BC's n o n - r e g u l a r i z e d i n t e r n a t i o n a l a c t i v i t y . I t was demonstrated above t h a t the m a j o r i t y of t r a n s g o v e r n m e n t a l l i n k a g e s were f u n c t i o n a l i n n a t u r e , a r i s i n g f r o m g e o g r a p h i c a l p r o x i m i t y t o a n d interdependence w i t h , the US. While t h i s i s a r e f l e c t i o n of the d i v e r s i t y o f f u n c t i o n a l i n t e r e s t s and the q u a n t i t y of t r a n s g o v e r n m e n t a l t r a n s a c t i o n s , i t does not s t r u c t u r e them a c c o r d i n g t o t h e i r r e l a t i v e i m p o r t a n c e t o o v e r a r c h i n g p r o v i n c i a l i n t e r e s t s . In Canada the p r o v i n c e s s h a r e r e s p o n s i b i l i t y w i t h t h e c e n t r e f o r e c o n o m i c d e v e l o p m e n t ; t h a t j u r i s d i c t i o n has v i r t u a l l y demanded t r a n s g o v e r n m e n t a l r e l a t i o n s i n a c o u n t r y Based on i n t e r v i e w s w i t h B.C. government o f f i c i a l s , e s p e c i a l l y Kimberly Cooke, lawyer and p o l i c y a n a l y s t f o r the Trade P o l i c y Branch, B.C. M i n i s t r y of Economic Development, A p r i l 10, 1988. 91 profoundly dependent on exports and t r a d e . Ottawa's h i s t o r i c a l r e l e g a t i o n of such i n t e r n a t i o n a l economic a c t i v i t y to secondary importance i n f o r e i g n a f f a i r s allowed p r o v i n c i a l c a p a b i l i t i e s to develop to the p o i n t where the c e n t r a l a u t h o r i t i e s now have a l e g i t i m a t e cause f o r c o n c e r n . I t i s , however, very l i k e l y t o o l a t e f o r the f e d e r a l government t o r e v e r s e t h i s t r e n d without going to e x t r a o r d i n a r y l e n g t h s . Ottawa t h e r e f o r e seeks to cooperate with, co-opt and sometimes a s s i s t the p r o v i n c e s i n t h e i r economic endeavors, w h i l e at the same time working t o ensure that Canada speaks "with one v o i c e " abroad. C. M u n i c i p a l A c t i v i t i e s Expo 86 f i r m l y e s t a b l i s h e d Vancouver as a c i t y ready to assume a primary r o l e i n the emerging network of the G l o b a l C i t i e s that w i l l decide the economy of the f u t u r e . -Gordon Campbell The l a r g e r m u n i c i p a l governments a c r o s s Canada have had economic development o f f i c e s f o r decades, but the nature and scope of t h e i r a c t i v i t i e s i s u n d e r g o i n g something of a sea change. Three of these changes are worthy of note. F i r s t , the t r a d i t i o n a l emphasis on a t t r a c t i n g o u t s i d e investment i s being i n c r e a s i n g l y supplemented by attempts to b u i l d on the economic bases they a l r e a d y have by a s s i s t i n g growth from w i t h i n the c o m m u n i t y . T h i s a c t i v i t y u s u a l l y t a k e s t h e f o r m o f " i n c u b a t o r s " , i n which l o c a l e n t r e p r e n e u r s have t h e i r r e n t s p a r t i a l l y s u b s i d i z e d by the c i t y . They are a l s o p r o v i d e d w i t h 92 l o w - c o s t c o n s u l t a n t s , e x p e r i e n c e d b u s i n e s s e x e c u t i v e s and p r o f e s s i o n a l s p a i d by the c i t y . Canadian c i t i e s g e n e r a l l y do not provide f i n a n c i a l inducements i n the form of f r e e l a n d or tax breaks, methods which are common i n the US, but i n Canada these are p r a c t i c e d only by the se n i o r l e v e l s of government. Secondly, m u n i c i p a l o f f i c i a l s make a p o i n t o f a t t e n d i n g t r a d e shows and other business f u n c t i o n s to make c o n t a c t with firms which might i n v e s t i n , or buy products produced by, the l o c a l i t y . T h i r d l y , these o f f i c i a l s work through and e x p l o i t the advantages of the s i s t e r c i t y (or Twin C i t y ) programs which have been developed. The Vancouver Economic Development O f f i c e (EDO) i s a municipal agency, s t a f f e d by p r o f e s s i o n a l economic development o f f i c e r s , and charged with r e a l i z i n g the o b j e c t i v e s of economic development a c c o r d i n g to p r i n c i p l e s and s t r a t e g i e s d e v i s e d by m u n i c i p a l c o u n c i l . The economic development o b j e c t i v e s o f c o u n c i l ( c i r c a A p r i l 1986) are to "strengthen" Vancouver as: a domestic and i n t e r n a t i o n a l s e r v i c e , i n d u s t r i a l and t o u r i s m c e n t r e ; c e n t r e f o r resea r c h and development and the knowledge i n d u s t r i e s ; and as a major r e g i o n a l , n a t i o n a l and i n t e r n a t i o n a l gateway f o r transportation/communication and t r a d e . The f i r s t p r i n c i p l e o f the c i t y ' s economic s t r a t e g y i s t o ' b u i l d on Vancouver's comparative advantage i n the r e g i o n a l , n a t i o n a l and i n t e r n a t i o n a l s e t t i n g ( i . e . l o c a t i o n , major f a c i l i t i e s and 93 i n f r a s t r u c t u r e , embodied e x p e r t i s e , e t c . ) * 9 6 P o l i c i e s and programmes a r e aimed a t e n h a n c i n g V a n c o u v e r 1 s image as a t r a d i n g , b u s i n e s s and t o u r i s m c e n t r e and are o r i e n t e d toward areas "where th e r e i s a c l e a r " n i c h e " f o r C i t y a c t i o n ( i . e . a v o i d c o s t l y o v e r l a p , s t r i v e f o r complementarity with p r i v a t e s e c t o r , community and s e n i o r government a g e n c i e s ) . " 9 7 To these ends the "good o f f i c e s " of the Mayor and C o u n c i l and the c i t y i t s e l f a r e used as a c a t a l y s t f o r d e v e l o p m e n t , a c t i n g on p e r c e i v e d commonalities of i n t e r e s t s , e.g. i n Port and A i r p o r t development, b r i n g i n g management and labour together, and the l i k e . E c o n o m i c and t r a d e m i s s i o n s have been a f e a t u r e o f Vancouver's economic s t r a t e g y f o r a number of years and a r e n o r m a l l y c o o r d i n a t e d by t h e EDO. On S e p t . 1, 1987 t h e s e a c t i v i t i e s were amalgamated with the S i s t e r C i t y Program, which " t w i n s " V a n c o u v e r w i t h O d e s s a ( 1 9 4 4 ) , Yokohama ( 1 9 6 5 ) , Edinburgh (1977), Guangzhou (1984) and Los Angeles (1986). The " f r i e n d s h i p " r e l a t i o n s h i p upon which the s i s t e r c i t i e s program was founded has e x p l i c i t l y been enlarged to encompass economic r e l a t i o n s h i p s . These t r a n s n a t i o n a l l i n k s a r e now subsumed under the S t r a t e g i c C i t y Program, a program which " i d e n t i f i e s s e v e r a l key c i t i e s i n t h e P a c i f i c R e g i o n and e n v i s a g e s a y°Report to Vancouver C i t y C o u n c i l , Standing Committe of C o u n c i l on Economic Development, October 31, 1985, Appendix 2, " C i t y of Vancouver Economic Goals, O b j e c t i v e s and P r i n c i p l e s . " Mimeo, Economic Develpment O f f i c e , C i t y of Vancouver. 9 7 I b i d . 94 combination of economic m i s s i o n s , trade m i s s i o n s , and c u l t u r a l m i s s i o n s t o , from and through them." A l t h o u g h Odessa and Edinburgh are not P a c i f i c c i t i e s , they have been r e t a i n e d on the b a s i s of l o n g s t a n d i n g r e l a t i o n s h i p s e s t a b l i s h e d under the o l d s i s t e r c i t y program. The S t r a t e g i c C i t y program a l s o i n c l u d e s e i g h t c i t i e s o u t s i d e Canada which Vancouver i s not twinned w i t h , a l l l o c a t e d on the P a c i f i c Rim: Tokyo, Osaka, Shanghai, Chongqing, Hong Kong, Kuala Lumpur, Singapore and Bangkok. D u r i n g 1985 a n d 1986 i n t e g r a t i o n o f t h e E c o n o m i c Development Str a t e g y and the S i s t e r C i t y program began on an ad  hoc b a s i s through the development of t h e i r r e l a t i o n s h i p s with Guangzhou and Los A n g e l e s and q u i c k l y p r o d u c e d p o s i t i v e r e s u l t s . They are the top p r i o r i t y c i t i e s f o r the EDO, because they b e s t f u l f i l l c r i t e r i a f o r s e l e c t i n g s t r a t e g i c c i t i e s . These c r i t e r i a are that they: 1. C o m p l e m e n t t h e p r i o r i t i e s o f t h e f e d e r a l government's trade development program, i . e . m a i n t a i n m a r k e t s h a r e , i n c r e a s e v a l u e a d d e d , e n c o u r a g e investment and enhance Canadian technology growth. 2. P r o v i d e a d i s c e r n i b l e and s i g n i f i c a n t niche f o r the Vancouver business community. 3. Have p o t e n t i a l as gateways to o t h e r c i t i e s and n a t i o n a l and r e g i o n a l economies, w i t h p a r t i c u l a r emphasis on the A s i a - P a c i f i c area. 4. P o s s e s s o r g a n i z a t i o n s w i t h a d e s i r e to f o s t e r c u l t u r a l and commercial r e l a t i o n s , and 5. Have t h e p o t e n t i a l f o r g e n e r a t i n g f r e q u e n t p e r s o n a l c o n t a c t between a c o n s i d e r a b l e number of. Vancouver and overseas business p e o p l e . 9 8 For a d e t a i l e d assessment of a l l s t r a t e g i c c i t i e s see T a b l e 9 8 I b i d . 95 I I I . In a c i t y manager's r e p o r t t o c o u n c i l recommending a d o p t i o n of the S t r a t e g i c C i t y program the c i t y manager based h i s arguments on the need f o r the program by saying t h a t , i t i s g e n e r a l l y a c k n o w l e d g e d t h a t most o f t h e i m p o r t a n t d e c i s i o n s c o n c e r n i n g w o r l d t r a d e and investment are made through a network of c i t i e s with i n t e r n a t i o n a l s t a t u r e . Vancouver i s a j u n i o r member of t h a t i m p o r t a n t network and a s p i r e s t o become Canada's gateway f o r the A s i a - P a c i f i c Region and a bridge between A s i a , North America and Europe." M u n i c i p a l o f f i c i a l s have i d e n t i f i e d Vancouver b e i n g on the secondary l e v e l o f world c i t i e s d i s c u s s e d above, and pursue economic development s t r a t e g i e s based on the i d e n t i f i c a t i o n of c o m p a r a t i v e a d v a n t a g e s w i t h i n an i n t e g r a t e d t r a n s n a t i o n a l f r a m e w o r k . The i d e n t i f i c a t i o n o f e c o n o m i c s e c t o r s and c h a r a c t e r i s t i c s i n which Vancouver has a comparative advantage forms the b a s i s f o r p o l i c y i n i t i a t i v e s . Data f o r stu d y i n g m e t r o p o l i t a n comparative advantages are n o t o r i o u s l y d i f f i c u l t to f i n d . An example of t h i s i s Port of Vancouver commodity shipment data which p e r t a i n to the export o f goods through the p o r t without s p e c i f y i n g where the goods were p r o d u c e d a n d w h i c h e n t i r e l y i g n o r e s h i p m e n t s o f commodities from m e t r o p o l i t a n Vancouver to the r e s t of Canada. Estimates must t h e r e f o r e be c o n s t r u c t e d l a r g e l y on the b a s i s of l o c a t i o n a n a l y s i s , s u p p l e m e n t e d by b r o a d e r , q u a l i t a t i v e c o n s i d e r a t i o n s of the Vancouver economy, i n c l u d i n g an a p p r a i s a l of s e l e c t e d non-economic l o c a t i o n f a c t o r s . " i b i d . 96 As an important p o r t i n an open t r a d i n g economy, Vancouver would be e x p e c t e d t o d e r i v e s u b s t a n t i a l revenue from t r a d e a c t i v i t i e s . T h i s i s i n d e e d the c a s e as an e x a m i n a t i o n o f employment f i g u r e s disaggregated by s e c t o r s shows that over 20% of CMA Vancouver workers are i n the trade s e c t o r , second on l y to s e r v i c e s . The e s t i m a t e d v a l u e o f e x p o r t s o r i g i n a t i n g i n B r i t i s h Columbia amounted to 12.7 b i l l i o n d o l l a r s i n 1986, many of which were t r a n s h i p p e d t h r o u g h V a n c o u v e r . T h e r e i s a r e c o g n i z e d need i n the EDO f o r p o l i c i e s t h a t modernize and enhance the c o m p e t i t i v e n e s s of the s e a p o r t and i t s o p e r a t i n g procedures. The r a p i d l y growing r o l e of a i r cargo i s a l s o seen t o r e q u i r e t h e e x p a n s i o n and m o d e r n i z a t i o n o f t h e c a r g o handling f a c i l i t i e s at the Vancouver I n t e r n a t i o n a l A i r p o r t . Vancouver m u n i c i p a l o f f i c i a l s are attempting to promote a number of p r o j e c t s which b u i l d upon the c i t y ' s c o m p a r a t i v e advantage i n the emerging P a c i f i c Rim economy. A comparative l o c a t i o n q u o t i e n t a n a l y s i s of e i g h t c i t i e s i n c l u d i n g Vancouver concluded that V a n c o u v e r ' s c o m p a r a t i v e a d v a n t a g e s ( a r e ) o v e r w h e l m i n g l y e s t a b l i s h e d i n the s e r v i c e s e c t o r s . In p a r t i c u l a r , the c i t y has d e v e l o p e d s i g n i f i c a n t a d v a n t a g e s i n t r a n s p o r t a t i o n and c o m m u n i c a t i o n a c t i v i t i e s , a phenomenon undoubtedly a t t r i b u t a b l e i n l a r g e p a r t to the c i t y ' s s t r a t e g i c l o c a t i o n on the P a c i f i c Rim. The c i t y ' s advantages extend as w e l l i n t o the a c t i v i t i e s of trade, f i n a n c e , insurance and r e a l e s t a t e , w h i c h f u r t h e r enhance V a n c o u v e r ' s p o t e n t i a l major r o l e i n the p o s t - i n d u s t r i a l f u t u r e of 97 the. A s i a P a c i f i c B a s i n . 1 0 0 In the emerging i n f o r m a t i o n (or " t r a n s a c t i o n a l " ) w o r l d economy V a n c o u v e r ' s t i m e - z o n e l o c a t i o n , w h i c h e n a b l e s communication to take p l a c e s i m i l a t a n e o u s l y with Tokyo and New Y o r k d u r i n g w o r k i n g h o u r s , i s a l s o c o n s i d e r e d t o be an a d v a n t a g e w o r t h y o f e x p l o i t a t i o n . T h i s " t i m e - b r i d g e " phenomenon i s a l s o being s u c c e s s f u l l y touted by Los Angeles as "a b i g advantage i n an era of 24-hour f i n i a n c i a l markets." 1 0 1 Vancouver's l o c a t i o n on the Great C i r c l e Route to A s i a p l a c e s the c i t y s t r a t e g i c a l l y on a l l major a i r and sea r o u t e s from North America to Tokyo, Seoul, Hong Kong, Taiwan, Shanhai and Singapore. C u l t u r a l , h i s t o r i c a l and economic l i n k a g e s with the A s i a P a c i f i c r e g ion are e x p l o i t e d through a network of i n s t i t u t i o n s which are expected to act s y n e r g i s t i c a l l y to c r e a t e advantages i n understanding and f u n c t i o n i n g w i t h i n the P a c i f i c B a s i n . The A s i a P a c i f i c F o u n d a t i o n , UBC I n s t i t u t e of A s i a n Research and c o m p l e m e n t a r y u n i t s a t Simon F r a s e r U n i v e r s i t y and t h e U n i v e r s i t y of V i c t o r i a c o n s t i t u t e a s i g n i f i c a n t c o n c e n t r a t i o n of r e s e a r c h and t e a c h i n g f a c i l i t i e s s p e c i a l i z i n g i n c r o s s -d i s c i p l i n a r y A s i a n P a c i f i c r e s e a r c h . The g l o b a l c i t y l i t e r a t u r e makes fequent mention of the i U U M i c h a e l Goldberg and C r a i g Davis, "Determination of the Comparative Advantages of Vancouver as an I n t e r n a t i o n a l C i t y . " Unpublished paper. J u l y 1988, UBC. 1 0 1Globe & M a i l , August 9, 1988, "L.A. : Shrugging Off the Smog." 98 " q u a l i t y of l i f e " c r i t e r i o n , both f o r c o r p o r a t e l o c a t i o n and investment purposes. T h i s i s the ar e a which c i v i c o f f i c i a l s have the g r e a t e s t r o l e . C u l t u r a l a c t i v i t i e s such as the A s i a -P a c i f i c F e s t i v a l , the Sun Yat-sen C l a s s i c a l Garden, museums, the performing a r t s and the l i k e , are b e l i e v e d to enhance the a t t r a c t i v e n e s s of Vancouver f o r commercial i n v e s t o r s . They a l s o s e r v e the s e c o n d a r y p u r p o s e o f p r o m o t i n g an o u t w a r d l o o k i n g g l o b a l view w i t h i n the community i t s e l f . Programs i n J a p a n e s e and C h i n e s e l a n g u a g e and c u l t u r e a r e t h e r e f o r e enncouraged by the m u n i c i p a l government, although t h e i r a b i l i t y t o p r o v i d e i n c e n t i v e s i s l i m i t e d t o the a c t i v i t i e s o f l o c a l s c h o o l b o a r d s w h i c h must c o n f o r m t o c e r t a i n p r o v i n c i a l requirements. Broadly based community support f o r the c r e a t i o n of an i n t e r n a t i o n a l c i t y i s another important c o n s i d e r a t i o n . The e x t e n t t o which any human s e t t l e m e n t becomes g l o b a l i n s c o p e d e p e n d s , i n l a r g e p a r t , on i t s c i t i z e n r y . T h i s g l o b a l i z a t i o n occurs only when the permanent r e s i d e n t s of the community are c o n v i n c e d t h a t a t t r a c t i n g r e g i o n a l o f f i c e s and c o r p o r a t e h e a d q u a r t e r s i s e s s e n t i a l f o r t h e c i t y ' s f u t u r e s u r v i v a l and growth. Communities t h a t attempt t o g l o b a l i z e without c o - o p t i n g the p a r t i c i p a t i o n of i t s permanent c i t i z e n r y c o u r t t r o u b l e . 1 0 2 Modern m e d i c a l and h e a l t h f a c i l i t i e s p r o vide s i g n i f i c a n t p o t e n t i a l f o r f u t u r e e x p l o i t a t i o n i n promoting Vancouver as an i n t e r n a t i o n a l c i t y . T h i s has been e s p e c i a l l y i m p o r t a n t i n r e l a t i o n to China. An agreement between a Vancouver h o s p i t a l and a Guangzhou h o s p i t a l , c o n c l u d e d by c i v i c o f f i c i a l s , exchanges personnel and t e c h n o l o g i e s thereby s t r e n g t h e n i n g t i e s Heenan and Perlmutter, op. c i t . , pg. 112. 99 between the two c i t i e s . The g r e a t e s t l o c a l success s t o r y i n the China trade i s a h e a l t h s e c t o r manufacturer, Quadra L o g i c , w h i c h has e n j o y e d p h e n o m e n a l g r o w t h b a s e d on s a l e s o f p r e g n a n c y - t e s t i n g equipment i n Guangzhou. The d e a l was put t o g e t h e r w i t h the h e l p of the EDO, which a c t e d as a s e l f -d e s c r i b e d " m a r r i a g e - b r o k e r " . EDO o f f i c i a l s accompanied the p r e s i d e n t of Quadra Log i c to Guangzhou on s e v e r a l o c c a s i o n s . M u n i c i p a l t r a d e m i s s i o n s have a s o l i d i n s t i t u t i o n a l foundation i n the s t r a t e g i c c i t y program. C o n s i d e r a t i o n i s now b e i n g g i v e n to j o i n t t r a d e f a i r s w i t h o t h e r c i t i e s i n t h e program ( i n p a r t i c u l a r Los A n g e l e s ) , and other j o i n t a c t i v i t i e s such as t o u r i s t promotion packages are being d i s c u s s e d . While the s h o r t - t e r m b e n e f i t s are obvious, they a l s o have a l o n g e r -term g o a l of e s t a b l i s h i n g on-going working r e l a t i o n s h i p s w i t h o f f i c i a l s i n the network. C u l t u r a l l i n k a g e s are of fundamental importance to d i r e c t c i t y - t o - c i t y n e g o t i a t i o n across n a t i o n a l borders. Vancouver has a s p e c i a l a d v a n t a g e i n t h i s way w i t h i t s l o n g h i s t o r y o f contact with China. One of the o r i g i n a l l i n k s , the i m p o r t a t i o n of Chinese l a b o u r f o r b u i l d i n g the t r a n s c o n t i n e n t a l r a i l r o a d , w i t h a l l i t s o v e r t o n e s o f r a c i a l d i s c r i m i n a t i o n , h a s f o r t u n a t e l y been l a r g e l y f o r g o t t e n , or a t l e a s t i s n o t d i s c u s s e d . I t marked the b e g i n n i n g of c o n t i n u e d C h i n e s e emigration to Vancouver, however, and the c i t y ' s p o p u l a t i o n of Chinese descent i s now s u b s t a n t i a l . While i t may be premature to t a l k of the " A s i a n i z a t i o n " of Vancouver, the c u r r e n t l e v e l s 100 of investment by overseas Chinese i n v e s t o r s , e x t e n s i v e b u s i n e s s c o n t a c t s with the l a r g e numbers of Hong Kong alumni of B r i t i s h C o l u m b i a u n i v e r s i t i e s , and t h e r e c e n t " t w i n n i n g " w i t h Guangzhou, a l l p o i n t ot s u b s t a n t i a l c u l t u r a l l i n k a g e s w i t h China. In October of 1985 c i v i c involvement w i t h Guangzhou was g i v e n a boost when a p r o v i n c i a l crown c o r p o r a t i o n r e q u e s t e d m u n i c i p a l a s s i s t a n c e . During a c o u n c i l meeting The M ayor a d v i s e d t h a t o f f i c i a l s o f t h e B.C. T e l e p h o n e Company have r e q u e s t e d A l d e r m a n Yee accompany them to Guangzhou as the Company i s hoping to be awarded a c o n t r a c t of two m i l l i o n d o l l a r s f o r a t e l e c o m m u n i c a t i o n s s y s t e m i n a new s u b u r b o f Guangzhou. CARRIED UNANIMOUSLY.103 T h i s l e d to a mayoral v i s i t the f o l l o w i n g year, d e s c r i b e d as b e i n g " q u i t e i m p o r t a n t " by EDO o f f i c i a l s 1 0 4 because of the C h i n e s e p e r c e p t i o n t h a t o f f i c i a l a p p r o v a l o f c o m m e r c i a l t r a n s a c t i o n s e n s u r e s t h a t the terms of as c o n t r a c t w i l l be f u l f i l l e d . W h i l e d i s c u s s i o n s w i t h e n t e r p r i s e chairmen a r e important, as they enjoy s u b s t a n t i a l power these days, mayor-to-mayor c o n t a c t a l s o m a t t e r s , i n g r e a t measure because "we share many common problems; i n t h a t sense we speak the same l a n g u a g e . " 1 0 5 I t s h o u l d be noted t h a t these events do not r e q u i r e l i a i s o n with p r o v i n c i a l a u t h o r i t i e s . The approach of i U J M i n u t e s of C i t y of Vancouver Regular C o u n c i l Meeting, October 22, 1985, pg. 3. 1 0 4 I n t e r v i e w with C. McGuiness, development o f f i c e r , J u l y 16, 1988. 1 0 5 I n t e r v i e w with Gordon Campbell Sept. 12, 1988. 101 p r o v i n c i a l and m u n i c i p a l o f f i c i a l s t o economic development d i f f e r s s u b s t a n t i a l l y and r e l a t i o n s between r e s p o n s i b l e o f f i c i a l s at the two l e v e l s have o f t e n bordered on h o s t i l i t y . C i v i c o f f i c i a l s t a k e a s u p p l y - s i d e a p p r o a c h i n t h e i r e f f o r t s t o a t t r a c t t h e c o r p o r a t e t e n a n t s n e c e s s a r y f o r i n t e g r a t i o n i n t o the g l o b a l network o f c i t i e s . The most important demand of t r a n s n a t i o n a l c a p i t a l , p o l i t i c a l s t a b i l i t y , can best be addressed d i r e c t l y by the f e d e r a l government and t h u s e s c a p e s the m u n i c i p a l purview. An e x a m i n a t i o n o f 16 f a c t o r s a f f e c t i n g c o r p o r a t e choice of r e g i o n a l o f f i c e l o c a t i o n s however (See Table IV), shows that a c l o s e second to p o l i t i c a l s t a b i l i t y i s the q u a l i t y of supporting s e r v i c e s . In the p u b l i c s e c t o r t h i s r e f e r s t o h i g h l y d e v e l o p e d t r a n s p o r t a t i o n and communication i n f r a s t r u c t u r e and h i g h q u a l i t y e d u c a t i o n and h e a l t h s e r v i c e s . In the p r i v a t e s e c t o r , s u p p o r t i n g s e r v i c e s r e f e r s to l e g a l , a c c o u n t i n g , marketing and f i n a n c e r e s o u r c e s and e x p e r t i s e . I n t e r e s t i n g l y , tax and r e l a t e d i n c e n t i v e s were ranked 15th out of the 16 c a t e g o r i e s by MNC e x e c u t i v e s . 1 0 6 S e v e r a l s t u d i e s c l e a r l y i n d i c a t e that l o c a t i o n i n c e n t i v e s : tax h o l i d a y s , suBsidies and low i n t e r e s t loans have at best o n l y a s l i g h t influence over p l a n t l o c a t i o n d e c i s i o n , and even l e s s i n f l u e n c e over a move of h e a d q u a r t e r s . 1 0 7 The p r o p e n s i t y of p r o v i n c i a l governments to engage i n the "buying" of c o r p o r a t e tenants i n t h i s manner i s not n e c e s s a r i l y a p p r e c i a t e d by c i v i c 1 0 6Heenan and Perlmutter, op. c i t . , pg 111. 1 0 7 I b i d . 102 governments. E. C o n c l u s i o n C h a n g e s i n t h e s t r u c t u r e o f t h e w o r l d e c o n o m y : " g l o b a l i z a t i o n " of markets, i n c r e a s e d interdependence, and the l i k e , have e l e v a t e d the need f o r c i t i e s , t o u n d e r s t a n d t h a t t h e i r economic f u t u r e s are co n t i n g e n t on i n t e r n a t i o n a l events to an unprecedented degree. Because i n t e r n a t i o n a l r e l a t i o n s have t r a d i t i o n a l l y been the pr e s e r v e of n a t i o n a l governments, the n e a r l y u n i v e r s a l tendency has been f o r c i t i z e n s and j u n i o r l e v e l s of government t o assume t h a t t h e i r i n t e r e s t s are best s e r v e d by s u b o r d i n a t o n o f l o c a l c o n c e r n s t o the n a t i o n a l i n t e r e s t as d e f i n e d by the c e n t r e . (In the ease of Canada, t h i s s t a t e m e n t must be m o d i f i e d t o read t h a t the n a t i o n a l i n t e r e s t i s d e f i n e d by the f e d e r a l government i n c o n s u l t a t i o n with the p r o v i n c e s . ) In order to maintain n a t i o n a l u n i t y , of cour s e , the s t a t e implements d i s t r i b u t i v e and r e d i s t r i b u t i v e economic p o l i c i e s l e a v i n g l o c a l government o f f i c i a l s i n the p o s i t i o n o f e x p e n d i n g much o f t h e i r p o l i t i c a l e n e r g i e s p e t i t i o n i n g f o r t h e i r " f a i r share" of n a t i o n a l wealth. T h i s p o l i t i c a l s t r u c t u r e p r o f o u n d l y d i s t o r t s t h e geogr a p h i c a l and economic determinants of trade. I f we perform the mental e x e r c i s e of t e m p o r a r i l y e r a s i n g n a t i o n a l p o l i t i c a l boundaries from the globe and observe the network of commodity exchanges among the towns and c i t i e s of the world we can see that s t a t e borders do i n f l u e n c e the p a t t e r n of trade f l o w s . In 10 3 terms o f economic e f f i c i e n c y the p a t t e r n s would appear to make very l i t t l e sense. I f we r e i n t r o d u c e the dimension of m i l i t a r y power to t h i s mental map the world system would no longer have a network of c i t i e s as i t s n o d a l p o i n t s but r a t h e r n a t i o n -s t a t e s . P o l i t i c a l boundary-making i s almost u n i v e r s a l l y a m i l i t a r y or l e g a l - d i p l o m a t i c event. The d i s c o n t i n u i t y between t h e s e two f o r m s o f human o r g a n i z a t i o n may be p u l l i n g c i v i c governments i n two d i f f e r e n t d i r e c t i o n s . The hegemony of s e c u r i t y i s s u e s i n i n t e r n a t i o n a l r e l a t i o n s has ensured t h a t the c i t y cannot bargain e f f e c t i v e l y with e i t h e r the s t a t e or the c o r p o r a t i o n . Thus c i v i c o f f i c i a l s and c i t i z e n s a l i k e l a c k a s e l f - c o n s c i o u s n e s s of themselves as par t of a l o c a l p o l i t i c a l community which i s a nodal p o i n t i n a world network of l o c a l , p o l i t i c a l l y o r g a n i z e d communities. On the o t h e r hand, the e x i g e n c i e s o f g l o b a l economic change r e q u i r e t h a t c i t i e s t a k e an i n c r e a s i n g l y i n t e r n a t i o n a l p e r s p e c t i v e i f they wish to f l o u r i s h . T h i s p e r s p e c t i v e may e n g e n d e r a c o n s c i o u s n e s s o f t h e i r l a r g e l y u n e x p l o i t e d b a r g a i n i n g power, b a s e d on ur b a n c e n t r a l i t y i n t h e w o r l d economic system. 104 Conclusion The time when m u n i c i p a l o f f i c i a l s c o u l d f u l f i l l t h e i r r e s p o n s i b i l i t i e s f o r l o c a l economic development by b e i n g p a s s i v e r e c i p i e n t s of f e d e r a l and p r o v i n c i a l programs may be drawing to a c l o s e . i f they wish to prosper by j o i n i n g the g l o b a l network of c i t i e s they must a c t i v e l y pursue economic s t r a t e g i e s , l a n d use p o l i c i e s and m a r k e t i n g programs which a l l o w them t o t a k e a d v a n t a g e o f e m e r g i n g t r e n d s a n d o p p o r t u n i t i e s i n the g l o b a l economic system. Although they are the most a p p r o p r i a t e a c t o r s to perform t h i s r o l e i n the the emerging WPE they a r e i n s t i t u t i o n a l l y i n c a p a b l e becuase o f t h e i r c o n s t i t u t i o n a l and f i s c a l dependence on s e n i o r l e v e l s of government. The l i m i t e d scope of the programs d e s c r i b e d i n C h a p t e r IV i l l u s t r a t e s t h e d i r e c t i o n t h a t t h e c h a n g i n g s t r u c t u r e of the world economy f o r c e s to c i t i e s to move i n , as w e l l as the c o n s t r a i n t s on t h e i r a b i l i t y to respond to these changes imposed by the nature of the s t a t e system. The d i s c o n t i n u i t y between the l o g i c s of the two systems has c r e a t e d an i n c i p i e n t vacuum f o r p o l i t i c a l power. The s t a t e has the i n s t i t u t i o n a l c a p a c i t y to a c t i n t e r n a t i o n a l l y , but n a t i o n a l i m p e r a t i v e s , f o r example r e g i o n a l development or m i l i t a r y committments, may f o r c e n a t i o n a l governments to adopt p o l i c i e s d e t r i m e n t a l to the welfare of c i t i e s , and t h e r e f o r e , 105 u l t i m a t e l y , of the s t a t e . By d e p r i v i n g c i t i e s of the p o l i t i c a l power t o o p t i m i z e t h e i r e c o n o m i c d e v e l o p m e n t w i t h i n an i n t e r n a t i o n a l context they reserve to themselves the r i g h t to perform f u n c t i o n s f o r which they are i n s t i t u t i o n a l l y u n s u i t e d . The Westphalian s t a t e i s a "square peg i n a round h o l e " when i t comes to the n u r t u r i n g of l c o a l economic development. As a method of human o r g a n i z a t i o n i t was d e s i g n e d f o r d i f f e r e n t purposes. I f the h i s t o r i c a l development of the WPE continues i n the d i r e c t i o n d e s c r i b e d i n e a r l i e r c h a p t e r s , t h i s c o n t r a d i c t i o n between the i n a p p r o p r i a t e n e s s of the p r e s e n t i n s t i t u t i o n a l s t r u c t u r e and the u n i v e r s a l need f o r economic growth c o u l d l e a d to demands f o r p o l i t i c a l a c t o r s b e t t e r s u i t e d to the l a t t e r task. Many would say that the s t a t e w i l l never r e l i n q u i s h i t s h o l d on any form o f power. The d e c o n c e n t r a t i o n o f power o c c u r r i n g i n China at the present time i n d i c a t e s that t h i s i s not n e c e s s a r i l y the c a s e . While the C h i n e s e r e f o r m e r s a r e c l e a r l y responding to domestic needs, some of the r e s t r u c t u r i n g i s e q u a l l y c l e a r l y a r e s p o n s e t o t h e e x i g e n c i e s o f t h e i n t e r n a t i o n a l economy. I t may not o n l y be p o s s i b l e , but n e c e s s a r y f o r the n a t i o n a l good f o r the s t a t e to withdraw somewhat from the sphere of i n t e r n a t i o n a l economic r e l a t i o n s . Thus a p o l i t i c a l vacuum would be c r e a t e d which cannot be f i l l e d by t r a n s n a t i o n a l c a p i t a l , nor by i n t e r n a t i o n a l labour. Nor i s the prospect of world government very l i k e l y . Devolving power t o p r o v i n c i a l - l e v e l u n i t s i s p o l i t i c a l l y d a n g e r o u s as 106 s e c e s s i o n i s t movements ar e not f a r below the s u r f a c e i n as number of s t a t e s . W i t h i n the p r e s e n t s t a t e system the o n l y p o l i t i c a l a s s o c i a t i o n which o f f e r s a v i a b l e and a p p r o p r i a t e a l t e r n a t i v e i s the c i t y . The major c i t i e s of the world have become nodal p o i n t s i n an emerging economic system. T h i s system, based on a complex matrix of socio-economic t r a n s f o r m a t i o n s which may be subsumed by the phrase " g l o b a l i z a t i o n of the world p o l i t i c a l economy," i s superimposed over a r e l a t i v e l y s t a t i c system of t e r r i t o r i a l s t a t e s . T h i s paper has argued that a d i a l e c t i c a l r e l a t i o n s h i p e x i s t s between these competing forms of huan o r g a n i z a t i o n , and that the " s t r e s s " p o i n t s i n t h e i r i n t e r a c t i o n are l o c a t i o n a l l y grounded i n the system(s) of world c i t i e s . Thus these world c i t i e s have a dual but c o n t r a d i c t o r y aspect, being i n t e g r a t e d along both f u n c t i o n a l and t e r r i t o r i a l l i n e s . The i n t e r e s t s o f those c i t i e s whose mode of p r o d u c t i o n t e n d s t o i n t e g r a t e them i n t o t h e w o r l d economy, and t h e i n t e r e s t s of the n a t i o n - s t a t e s i n which they are s i t u a t e d , are s i m u l t a n e o u s l y u n i t e d w i t h and opposed to the i n t e r e s t s of m u l t i n a t i o n a l c o r p o r a t i o n s that are the p r i n c i p a l a c t o r s i n the world economy. The i n t e r e s t s of c i t y and s t a t e , i t has been a r g u e d , a r e s i m i l a r l y b o t h u n i t e d and o p posed. Thus t h e s t r u c t u r e of the WPE i s determined by the r e l a t i o n s of these t h r e e h i g h l y i n t e r d e p e n d e n t a c t o r s who must c o - e x i s t i n an uneasy and dynamic e q u i l i b r i u m . The p o l i t i c s of t r a d e and economic development p e c u l i a r to t h i s WPE would be o b l i t e r a t e d 107 of. c o u r s e i f n a t i o n - s t a t e s r e a s s e r t e d t h e p r i m a c y o f " c o n v e n t i o n a l " i n t e r n a t i o n a l r e l a t i o n s t h r o u g h i n t e r s t a t e economic or m i l i t a r y w a rfare. I f the trends of the l a s t few decades continue, however, t h i s model may pr o v i d e some i n s i g h t i n t o the t e c t o n i c s of h i s t o r y - i n - t h e - m a k i n g . The t r a n s b o u n d a r y a c t i o n s o f m u n i c i p a l o f f i c i a l s w i t h f o r e i g n governments and MNCs o b v i o u s l y cannot yet be construed as h a v i n g more t h a n a v e r y minor impact on i n t e r n a t i o n a l economic r e l a t i o n s . What I have proposed, a l t e r n a t i v e l y , i s t h a t t h e s e t r a n s n a t i o n a l c o n t a c t s , were t h e y t o e x p a n d s u b s t a n t i a l l y i n t h e c o m i n g y e a r s ( a n d t h e r e i s e v e r y i n d i c a t i o n t h at they w i l l ) , c o u l d have very i n t e r e s t i n g e f f e c t s i n the realm of intergovernmental and i n t e r n a t i o n a l r e l a t i o n s . The p r e c i s e form of p o l i t i c a l consequences consonant with the l o g i c o f the framework d e v e l o p e d here w i l l r e q u i r e f u r t h e r research to uncover. 108 Bibl iography BOOKS Bla k e , D., and W a l t e r s , R.S., The P o l i t i c s of G l o b a l Economic  R e l a t i o n s , P r e n t i c e - H a l l Inc., New Jersey, 1976. Bourne, L.S., and Simmons, J . , Systems of C i t i e s : Readings on  S t r u c t u r e , Growth and P o l i c y , Oxford U n i v e r s i t y P r e s s , New York, 1978. 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G i l p i n , R., The P o l i t i c a l Economy of I n t e r n a t i o n a l R e l a t i o n s , P r i n c e t o n U n i v e r s i t y Press, New J e r s e y , 1987. Goldberg, M.A., The Chinese C o n n e c t i o n , UBC P r e s s , Vancouver, 1986. and Mercer, J . , The Myth of the North American C i t y , UBC Press, Vancouver, 1986. Gottman, J . , Coming of the T r a n s a c t i o n a l C i t y , U n i v e r s i t y of Maryland I n s t i t u t e f o r Urban S t u d i e s , 1983. Grodzins, M., The American System, Rand McNally & Co., Chicago, 1966. H a r d i n g , H., C h i n a ' s Second R e v o l u t i o n : Reform A f t e r Mao, 109 Brookings I n s t i t u t i o n , Washington D.C, 1987. Heenan and Perlmutter, M u l t i n a t i o n a l O r g a n i z a t i o n a l Development, Addison-Wesley P u b l i s h i n g Co., Reading, Mass., 1979. H e i n , J . , F r o m Summit t o Summit: P o l i c y m a k i n g I n An  Interdependent World, Conference Board of Canada, Ottawa, 1980. 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Mackay, A, The A s i a n Dream: The P a c i f i c Rim and Canada's  N a t i o n a l Railway, Douglas & Mc l n t y r e , Vancouver, 1986. McGee, T., and Armstrong W., Theatres of Accumulation: S t u d i e s  i n A s i a n and L a t i n American U r b a n i z a t i o n , Metheun, London and New York, 1985. McGee, T., Canada and the Changing Economy of the P a c i f i c B a s i n :  An I n t r o d u c t o r y Overview, I n s t i t u t e of A s i a n Research, UBC, Vancouver, 1983. Province of B r i t i s h Columbia, B r i t i s h Columbia's Trade P r o s p e c t s  i n A s i a , M i n i s t r y o f I n d u s t r y a n d S m a l l B u s i n e s s Development, V i c t o r i a , 1981. 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W i l l i a m s , G l e n . , "On Determining Canada's L o c a t i o n W i t h i n the I n t e r n a t i o n a l P o l i t i c a l Economy," S t u d i e s i n P o l i t i c a l  Economy, No. 25, Spring 1988. Woo Tunoy and Tsang S h u k i , "Comparative Advantage and Trade L i b e r a l i z a t i o n i n China," Economy and S o c i e t y , V o l 17, No. 1, Routledge, Great B r i t a i n , February 1988. Zheng Tuobin "The Problem of Reforming China's F o r e i g n Trade System" C h i n e s e Economic S t u d i e s , M.E. Sharpe Inc., New York, V o l . 20, No. 4, Summer 198987. PROPOSED 1987 - 1989 STRATEGIC CITY INITIATIVE PROGRAM AND COST EST IMATES* 1 ) Vancouver As Host 1 9 8 7 Vancouver As V i s i t o r Vancouver As Host 1 9 8 8 Vancouver As V i s i t o r 1 9 8 9 Vancouver As Host Vancouver As V i s i t o r 1. Los A n g e l e s 2. Yokohama/ T o k y o / Osaka 3. Guangzhou 4. Hong Kong 5. S i n g a p o r e 6. Odessa 7. E d i n b u r g h 8 . M i s c e l l a n -eous TOTALS NOTES: 1) 2) 3) May B u s i n e s s / C u l t u r a l M i s s i o n $1 ,000 S e p t . r e : 1988 m i s s i o n O c t . r e : C a l t e c h Forum $1 ,000 e a . ( 2 ) B u s i n e s s / C u l t u r a l M i s s i o n $2,000 B u s i n e s s / C u l t u r a l M i s s i o n $5 ,000(3) VIPs (5) Nov. E c o n o m i c / T r a d e VIPs (5) E c o n o m i c / T r a d e Trade M1ss1on(5) M 1 s s 1 o n $ 2 0 , 0 0 0 ( 3 ) Trade M i s s i o n (5) M i s s i o n $20 ,000(3) VIPs (5) Nov. F r i e n d s h i p VIPs (5) Trade M1ss1on(5) d e l e g a t i o n & t r a d e Trade M1ss1on(5) VIPs (5) Trade M1ss1on(5) m i s s i o n $?5 .OO0v3) (4 ) M a y o r ' s v i s i t In a s s o c . w i t h #3 ($ I n c l . In #3)13) VIPs (5) Trade M1ss1on(5) VIPs (5) Trade M1ss1on(5) VIPs Trade M i s s i o n s $ 15,000  $ 16.000  VIPs (5) Trade M i s s i o n ( 5 ) $ 46 ,000 VIPs Trade M i s s i o n s $15,000  $ 17,000 P r i v a t e s e c t o r members pay a l l t h e i r own expenses EDO s t a f f members c o s t s o n l y C o s t s f o r Mayor and one EDO s t a f f member, p l u s r e c e p t i o n s , g i f t s and m i s c e l l a n e o u s Trade M i s s i o n $15,000(3) B u s i n e s s m i s s i o n a s s o c . w i t h HKCBA o f Vancouver In a s s o c . w i th #5 $10,000(3) Trade m i s s i o n to I n c l . e i t h e r Bangkok or Kuala Lumpur $15,000(3) $ 66,000 B u s i n e s s / C u l t u r a l B u s i n e s s / C u l t u r a l M i s s i o n M i s s i o n $2,000 $5 ,000(3) VIPs (5) E c o n o m i c / T r a d e Trade M1ss1on(5) M i s s i o n $ 2 0 , 0 0 0 ( 3 ) VIPs (5) Trade M i s s i o n Trade M1ss1on(5) $15 ,000(3) VIPs (5) M a y o r ' s v i s i t In Trade M1ss1on(5) a s s o c . w i th #3 ($ i n c l . i n 13) VIPs (5) Trade m i s s i o n to Trade M iss1on(5 ) I n c l . e i t h e r Bangkok or Kuala Lumpur $15,000(3) VIPs Trade M i s s i o n s $ 15,000  $ 17,000 $ 65,000 4) P l u s three o t h e r c i t y r e p r e s e n t a t i v e s to be guest o f Guangzhou w h i l e i n Ch ina 5) C o s t s i n c l u d e d In #8 113 Table II Canada Canada Country Imports Exports (000's) (000's) Hong Kong 1984 $966,199 218,823 1985 886,820 334,012 1986 1040,967 315,167 PRC 1984 $333,502 1,236,477 1985 403,475 1,278,477 1986 566,594 1,100,278 S o u r c e : S t a t i s t i c s Canada, Imports by Country- and E x p o r t s by  Country, June-Dec. 1984, June-Dec. 1985, June-Dec. 1986. 114 TABLE III ASSESSMENT OF VANCOUVER'S RELATIONSHIP.WITH SELECTED CITIES Accords with Federal Priorities Potential Niche for Vancouver Businesses Potential niche as Keen Organl-As1a-Pac1f1c zatlons Gateway Exist Frequent Personal Contact Potential Guangzhou* Yokohama* Tokyo Osaka Los Angeles* Odessa* Edinburgh* Shanghai Chongqing Hong Kong Kuala Lumpur Singapore Bangkok • 0 0 • • e o o e 0 o 0 e o 0 0 0 0 I 0 e 0 0 0 0 • 0 0 e • 0 0 0 0 • 0 0 0 LEGEND • " Strong 0 * Emerging 0 • None at this time * Denotes Vancouver Sister Cities TABLE 1 OVERVIEW OF VANCOUVER'S SISTER CITY RELATIONSHIPS Broad Private Sister Alder- Frequent Commercial Cultural EDO Based Sector City manic Contact Ties Ties Support Society Commlt- Keen Support Growing Growing ment (comm & cult) Guangzhou • • 1 |1 I I • •2 Los Angeles 1 0 I I 1 0 02 Yokohama 0 • • e • 0 0 9 Odessa 0 . * • 0 * * 0 0 Edinburgh 0 * 0 0 * * 0 0 Legend: I in place/yes 0 uncertain 9 growing * lacking 0 emerging 1. In place during formative stage 2. EDO resources are stretched to the limit, especially regarding following-up. Overv iew o f 1985 and 1986 S i s t e r C i t y / E c o n o m i c and Trade M i s s i o n Programs Degree of I n t e r e s t Remarks •Guangzhou •Yokohama •Osaka Tokyo * L o s Ange les •Odessa • E d i n b u r g h Shanghai Chongqlnq Hongkong Kuala Lumpur S i n g a p o r e Bangkok 1985 . 1986 V i s i t R e s u l t s V a n e ' r V a n e 1 r V a n e 1 r V a n e ' r Commercial C u l t u r a l As As As As P r o j e c t s P r o j e c t s Vancouver O t h e r Host Guest Host Guest ( 1 n c l . Community C i t y m e d i c a l ) S E T t S T S SE S S S S T T G TTT ETT 6 0 0 9 0 I 0 0 e o o o o o o o i 9 0 I I 9 0 9 0 ( 0 9 I Good P r o s p e c t s I Good P r o s p e c t s 9 Good P r o s p e c t s 0 Good P r o s p e c t s / I m -por tan t I n t ' l . HQ 1 Good P r o s p e c t s 9 Unknown P r o s p e c t s 9 Unknown P r o s p e c t s 0 Montreal L i n k 0 Toronto L i n k 1 S p e c i a l r e l a t i o n -s h i p / g o o d p r o s p e c t s 0 Long Term P r o s p e c t s 9 Good P r o p s e c t s / K e y to ASEAN B u s i n e s s 0 Long Term P r o s p e c t s H H H CO LEGEND S = S i s t e r C i t y D e l e g a t i o n T = Trade M i s s i o n " E = Economic M i s s i o n t = T e c h n i c a l M i s s i o n G = Government M i s s i o n LEGEND LEGEND t = many t = s t r o n g 0 = s e v e r a l 9 = some 0 = u n c e r t a i n 0 = weak • denotes Vancouver S i s t e r C i t i e s • • (company to company f o c u s ) Utility score* Utility factors Fig. 6.2 Factors affecting the choice of regional office cities. (From David A. Heenan, "Global Cities of Tomorrow," Harvard Busi-ness Review, May-June 1977, p. 85. Copyright © 1977 by the President and Fellows of Harvard College.) 

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