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From Mining Enclave to Economic Catalyst Mining Enclave to Economic Catalyst: Large Mineral Projects in Developing Countries Richard Auty Professor Emeritus of Economic Geography Lancaster University The much-maligned multinational mining enclave is evolving the potential to become a vital catalyst for welfare-enhancing reform of the distorted political economy of mineral-rich developing countries. Concerns about Large Mining Projects in Low-Income Countries In recent years, multinational mining companies have faced mounting criticism of their operations in developing countries. The criticisms are rooted in the perception of a political imbalance between large global corporations and weakened political states, which confers dubious long-term economic benefits on host countries. More specifically, large mineral investments are perceived to have an adverse impact on sovereignty, government ethics, local communities, and macroeconomic performance in the host countries. Critics of mining rallied around a recent internal review of World Bank policy toward mine lending that argued both for tighter regulation of mining companies’ activities in order to protect “the weak” and for the cessation of lending for hydrocarbon projects due to their impact on global warming.1 This paper begins by evaluating these criticisms in the context of major shifts in post-war policies in developing countries and the emerging evidence of a resource curse. It argues that mining’s alleged adverse impact is in fact rooted in misguided postwar policies that led developing countries’ governments to overextend their economic interventions. Despite perceptions to the contrary, the potential benefits from mining Richard Auty is Emeritus Professor of Economic Geography at Lancaster University. He also taught at Dartmouth College and was a visiting fellow at the Institute of Development Studies (Sussex), Harvard Institute for International Development, Resources for the Future, and the Woodrow Wilson School, Princeton. He has acted as a consultant for the World Bank, UNCTAD, HIID, National Bureau of Asian Research and the U.S. Department of State. His research interests include mineral-driven development, industrial policy and rent-driven models of the political economy of developing countries. Copyright © 2006 by the Brown Journal of World Affairs Fall/Winter 2006 • volume xiii, issue 1 135 Richard Auty projects are substantial, although their capital-intensive nature does strongly skew their economic contribution. The next section identifies ongoing pressures for corporate policy to add the social sustainability of mineral projects as a third criterion for mineral investment in developing countries, along with economic return and environmental sustainability. The following section argues that current trends can transform multinational mineral companies into catalysts for much-needed welfare-enhancing reform of the political economies of developing countries, many of which remain badly distorted by past domestic policy errors. The final section summarizes the argument and briefly notes potential obstacles to its successful implementation. Renewed Concern about Multinational Mineral Enclaves 136 Mineral projects present different socioeconomic impacts (or linkages) on the host economy compared to most agricultural, manufacturing, and service projects. This is because mining projects operate with unusually strong economies of scale, which dictate large investments that employ a small, skilled workforce over a finite period of time, determined by the mineral reserves. As a result, the revenue flow from mining, compared with most economic activity, is heavily skewed toward the return on capital and the taxation of this return. The three other domestic linkages (local purchase of mine inputs, further processing of the mineral, and expenditure by workers) are much less significant: Mineral extraction requires specialized inputs, which are often most efficiently imported from established mining regions in developed countries where their production benefits from concentrated expertise. Similarly, downstream processing of minerals is frequently market-oriented so that the higher value-added stages generated by mining, such as metal fabrication, occur abroad. Furthermore, as a capital-intensive activity, mining employs small numbers, so although workers are usually well-paid, their domestic expenditure stimulates little economic activity. The return on capital and its taxation therefore dominate the revenue from mineral projects. The capital return largely accrues to foreign shareholders and banks, while taxation of the profits usually flows to the host government. The domestic economic impact of mining is therefore narrowly channeled and also acutely sensitive to the manner in which the government deploys the tax revenue, which can make up a fifth of GDP annually in the case of oil-exporting countries and some ore exporters. This marked skew of mining linkages toward capital servicing and taxation has four important consequences for the perceived and actual impacts of mineral projects. First, mining may appear to diminish the host nation’s sovereignty because of companies’ historical response to heightened government intervention and perceived investment risk. After the nationalizations of the 1960s and 1970s, when privatization the brown journal of world affairs From Mining Enclave to Economic Catalyst programs and reformed mining codes drew international mineral companies to invest in developing countries again, companies sought both high returns to compensate for the perceived risk and tight safeguards against contract renegotiation. However, looking beyond perception, Vernon’s obsolescing bargain identifies a radical shift that occurs in the relative bargaining strength of corporations and governments over the course of a mineral project, which places heavy risk upon the companies in the long-run.2 The corporations are initially advantaged because they have technical information from the mine feasibility studies and the ability to assemble finance, technology, skills, and market access. Governments eager to attract inward investment may concede conditions that they, or their successors, subsequently regret. But after investing, companies require five to ten years or more to recoup their large sunk capital and to earn the target rate of return, so their bargaining strength weakens vis-à-vis the host government. This is especially so if unexpectedly high tax revenues from mineral exports reduce the government’s need for further multinational investment or bank loans. Beyond their aggressively hedging investment risk, companies create additional sovereignty concerns where they provide their own physical security due to the extreme remoteness of mines or government failure, as in Iryan Jaya and the Niger delta, respectively. Second, mining’s characteristically skewed linkages lend to its portrayal as extracting a finite resource to benefit shareholders, downstream processing plants, and consumers, all located overseas. For example, Girvan argued that the Jamaican bauxite mines of the aluminum majors conferred a mere 4 percent of the total value added along the aluminum production chain on the host country, and alumina refineries barely conferred 16 percent.3 Such arguments provided the rationale for the wave of mine nationalizations in the 1960s and 1970s and the formation of producer cartels like the International Bauxite Association, which aimed to increase the share of the value-added chain retained within host economies. The experiment with state ownership was part of a broader fashion in development The policies failed, partly because economics during the first three post-war decades to encourage increased state inter- proponents of increased state intervention in the economy. Intervention was vention overestimated the integrity of meant to limit the adverse effects of global commodity price volatility and to regulate developing countries’ governments. malfunctioning domestic markets. The policies failed, partly because proponents of increased state intervention overestimated the integrity of developing countries’ governments, which invariably used state firms (along with other forms of government intervention) as sources of political patronage and personal revenue at the expense of broad-based, long-term economic development.4 In addition, the use of production controls and stabilization funds to manage commodity prices foundered in the face of Fall/Winter 2006 • volume xiii, issue 1 137 Richard Auty 138 quota-breaking and unforeseen shifts in demand.5 Third, mineral projects dwarf and strongly influence the adjacent local economy because of the size of the investments they make: a typical ore mine invests hundreds of millions of dollars, and hydrocarbon extraction invests billions. If local governments are politically weak and the central government is negligent, it is all too easy for local communities to bear substantial environmental, economic, and social costs for which they are inadequately remunerated. For example, mine construction assembles a large and relatively well-paid workforce that creates transient local business opportunities; but this workforce also bids up the price of local labor and housing and requires expanded infrastructure, while creating social problems associated with an all-male migrant workforce, as well as major changes to the environment. The mine operating stage requires a smaller, albeit more stable, workforce, and while companies give preference to locals, the skills required may draw workers from other regions whose higher incomes may be met with resentment among local non-mine workers. At the end of a project, mine closure depresses the local economy. In a final blow to local communities, environmental clean-up operations seldom restore land to its pre-mine condition. Fourth, according to research into the disappointing performance of resource-rich developing countries in recent decades, large revenue streams from natural resource exports can adversely affect both government incentives and the trajectory of the economy.6 Mining revenue has proved especially difficult to manage, most notably with hydrocarbon extraction, because the revenue is often high relative to domestic GDP and also volatile (with the notable exception of diamonds, where a cartel has smoothed price trends). High revenues trigger political contests for their capture and political pressure to rapidly channel revenue into the domestic economy, a temptation many governments find difficult to resist.7 Redistribution of mineral revenue on a per capita basis has not appealed to governments: they prefer indirect means, notably over-expanding the bureaucracy and promoting inefficient “infant” industries, whose protection against imports confers little incentive on the recipient factories to mature and become globally competitive. The fourth impact, the indirect allocation of mine revenue, has given rise to two adverse consequences. First, the distribution of revenue feeds patronage and graft that can corrode the quality of government. Mineral-driven economies, and especially the oil-exporters, tend to exhibit unusually low quality of governance for countries at their level of per capita income (Table 1). Second, the transfer of revenue from an efficient primary sector (mining) to subsidize the expansion of inefficient manufacturing and bureaucracy reverses the competitive diversification of the economy required to build economic resilience and sustain GDP growth. Instead, it increases reliance on the primary sector and depresses the economy-wide efficiency of capital investment, the brown journal of world affairs From Mining Enclave to Economic Catalyst causing GDP growth to decelerate. The economy becomes locked into a staple trap of dependence in which a burgeoning subsidized sector increasingly relies on revenue from one over-taxed, weakening commodity and is vulnerable to price shocks for that commodity that can trigger a collapse in growth. Many resource-rich countries experienced such growth collapses during the period of unusually volatile commodity prices between 1974 and 1988 and under-performed compared with resource-poor countries. Among the resource-rich countries, the mineral economies found recovery particularly elusive prior to the transient windfall of the mid-2000s commodity boom.8 After a growth collapse, recovery is protracted because the preceding cumulative distortion of the political economy runs down all forms of capital (produced, human, and social) and entrenches powerful vested interests that oppose reform because they benefit from unreformed revenue distribution. Collapsed economies also risk spiraling into civil strife as governments, now with less largesse to distribute, resort to repression to maintain their power as rivals seek to take power by force. For example, the oil-driven economies are strongly associated with autocratic governments and abrupt regime change.9 Lootable commodities, like high-value minerals, alluvial diamonds, and coltan can fund local militias and perpetuate civil strife.10 It is therefore not surprising that the association of mineral projects with diminished sovereignty, large flows of revenue overseas, double-edged local impacts, and poor economic performance has caused the benefits of mining investment in developing countries to be questioned; the appropriate response, however, may not be to cease investment. There are developing countries that have managed their mineral resources well, including Botswana, Chile, Malaysia, and Indonesia, whose oil-driven development achieved remarkable reductions in poverty during the period between 1967 and 1997.11 However, many resource-rich countries did experience growth collapses, after which opposition from elites who have much to lose from change has stymied IMF-backed reforms aimed at restructuring the distorted economies and reigniting sustainable GDP growth. Within this context, recent changes in corporate investment criteria have the potential to transform large mineral investments from economic enclaves into catalysts for much-needed welfare-enhancing reform. Pressures for Change in Mineral-Driven Development Corporate policy has evolved in response to the checkered post-war experience of mining investment in developing economies so that an initial concern with the rate of return was broadened through the 1980s to include minimizing environmental damage, and, subsequently, to embrace social sustainability.12 This expansion of investment criteria is rooted in self-interest rather than altruism: the returns on large, sunk mining investments Fall/Winter 2006 • volume xiii, issue 1 139 Richard Auty 140 are threatened by both government failure to manage the mineral revenues effectively and local opposition to mine activity. The large capital investment that strongly skews mineral revenue toward profits and taxation now motivates corporations to generate sustained welfare improvements in both the national economy and the local economy to safeguard the large sums at risk. Corporations can further reduce their risk by undertaking mineral projects as joint ventures with other international mining firms and by deploying loan capital both from commercial banks and from regional development banks like the African Development Bank, Inter-American Development Bank, and European Bank for Reconstruction and Development, along with the International Finance Corporation, a subsidiary of the World Bank. The development banks facilitate high-risk investment projects because even relatively small loans from them mean that governments that renege on mining contracts jeopardize foreign aid as well as alternative sources of capital. However, development bank lenders in turn limit their own risk by making their loans conditional on best environmental and social practice by mineral corporations, as monitored by independent auditors. These banks are also seeking effective measures to strengthen the social sustainability of projects. Goldman Sachs has identified a substantial gap in best practice among oil corporations between the leading companies (BP, Shell, Statoil, and ExxonMobil) and lagging companies, such as Lukoil and Petro-China, which are based in “emerging markets.”13 The leading mining companies and development banks increasingly lobby for improved transparency in public finances in mineral-driven economies. One response is the Extractive Industries Transparency Initiative, a voluntary agreement whereby corporate, government, and civil society representatives meet to scrutinize independent audits to ensure the sums the companies claim to have paid to the government match the sums that the government claims to have received. A second measure to limit maladroit deployment of mineral revenue is the establishment of mineral funds, which perform useful functions in addition to tracking mineral revenue. Mineral funds can also be used to match the rate of domestic absorption of revenue to the capacity of the economy to use it effectively. This limits Dutch disease effects, whereby overly rapid domestic expenditure triggers inflation and causes labor-intensive agriculture and manufacturing, which face foreign competition, to become less viable than domestic service activity. However, these recent checks upon politically expedient expenditure of mineral fund revenues are weakened by the fact that recipient governments usually retain considerable discretion over revenue dispersal or may cite unforeseen threats (from neighboring states in the recent case of Chad) to renege on agreements once the mineral revenue starts to flow. Mineral companies are evolving a third response to deficient host country insti- the brown journal of world affairs From Mining Enclave to Economic Catalyst tutions that draws upon the fact that the strict conditions negotiated for their large investments create, in effect, early reform zones (ERZs). Basically, ERZs circumvent the opposition of vested interests to top-down reform by providing “post-reform” conditions of effective infrastructure and competitive incentives (not subsidies) as well as enabling public services in specific sub-regions. As such, large mineral projects can spearhead a dual track strategy to reform a distorted political economy. This emulates the development strategies of successful developing countries, including resource-rich Malaysia (by design) and Indonesia (by chance), and also China and Mauritius among the resource-poor countries. The ERZ nurtures a dynamic market sector (track one) along side the distorted sector (track two), which is reformed more slowly in recognition of the political risk to the survival of reforming governments if they tackle vested interests head-on. The dynamic sector rapidly expands employment, foreign exchange, and taxes, while also building a pro-reform political lobby to neutralize the vested interests. It achieves a size that can absorb workers and capital from the distorted sector, which undergoes a relative decline. In this way, the dual track strategy allows gainers from reform to compensate losers in inefficient industries, to provide a politically practical means of managing opposition to reform.14 The next section explains more specifically how large mineral projects can boost the dynamic market track within a dual track strategy. Large Mineral Enclaves as Catalysts for Economic Reform The initial response of mining companies to pressure for increased social sustainability was to allocate revenue, typically 0.6–0.8 percent of capital expenditure, to provide local medical care, educational facilities, and other infrastructure that normally lies within the remit of governments.15 This policy is open to criticism because local communities are not always consulted about their requirements, facilities aresometimes built without adequate provision for their maintenance, and governments can take advantage of these facilities to evade their basic social responsibilities to local communities. Moreover, corporate social expenditure increases the dependence of the local economy on the mineral, whose life is finite, rather than promoting self-sustaining welfare improvements. The leading mineral companies have responded to these criticisms by drawing upon their expertise to promote private business formation in areas both linked and unrelated to the mine activity. This policy creates economic activity to expand the dynamic market track and thereby expands economic growth, employment, and skills, while building the tax base required to improve and maintain social services after mineral extraction ceases. Business formation is impeded in distorted developing economies not only by weak Fall/Winter 2006 • volume xiii, issue 1 141 Richard Auty financial systems and lack of skills but also by deficient institutions that undermine the rule of law and facilitate rent seeking at all levels of government. Rent seeking allows underpaid civil servants to abuse the authority of the state by either directly siphoning The leading mineral companies have away public revenue or else skimming it from businesses in ways that depress responded to these criticisms by draw- incentives and deter long-term investing upon their expertise to promote ment in competitive activity. Under private business formation in areas both these conditions, trading and real estate, often reliant upon favors from linked and unrelated to the mine activity. well-connected government and party officials, hold fewer risks than investment in agriculture and manufacturing, which face foreign competition. Small and medium enterprises (SMEs) seek to escape rent seeking imposts by operating in the grey economy, which is estimated in some former Soviet countries to range from one-quarter to two-thirds of official GDP.16 Rent seeking is an important reason why mining firms negotiate strict conditions regarding their operating environment. For example, the terms negotiated by the Azeri International Oil Corporation allow it to operate efficiently and achieve its targeted 17 percent risk-related rate of return, whereas firms without stringent safeguards fail, even with rates of return that double this. A successful Azeri manufacturer estimates he 142 needs a 70 percent return to generate sufficient revenue and meet the targeted rate if he were forced to cover illicit imposts. If correct, this suggests that outside the mineral enclave, the absence of an enabling business environment depresses investment efficiency to one-quarter of that within the enclave. This implies a massive welfare loss, as rent seekers at the highest levels of government block economic reform. Mining agreements in developing economies create an ERZ in which efficient investment can thrive. These conditions can be extended to linked businesses such as mine input suppliers, as well as to unlinked firms adjacent to the mine, to help diversify the economy and sustain long-term welfare gains. The participation in the dual track strategy by development banks, NGOs, and donor governments can strengthen the capacity of local communities, and through them their local governments, to cooperate in the pursuit of legitimate local interests. These institutions can help SMEs to acquire business and work skills, to access finance at competitive rates, and to match international quality standards to supply a range of inputs to the mine, with subsequent options to diversify both their product and geographical markets. Micro-enterprises can also play a role, and one that is strongly poverty-alleviating, where mining companies and NGOs nurture business start-ups like the cottage industry in Azeri refugee camps. There, wives stay home with their children, while earning $80 per month for a 25-hour working week—four times a teacher’s salary—produc- the brown journal of world affairs From Mining Enclave to Economic Catalyst ing industrial gloves (and other industrial clothing) to international standards. These micro-businesses pay taxes and are beginning to stimulate their own domestic input suppliers. They initially function as “stealth” enterprises below the radar of rent seekers because they are so small, but their expansion may attract unwelcome attention that will require assistance from the mineral firms with legal advice and other aid, as is already the case with mine-linked SMEs. In this way, mineral companies can expand a dynamic market sector to demonstrate the welfare benefits of efficient investment. This may even eventually tempt rent seekers to invest in competitive economic activity as an insurance policy against their own heavy dependence on capricious political favors. Conclusions Concern that multinational mining investments function as economic enclaves at the expense of the sovereignty and economic well-being of developing countries is not new. Such concern led to a wave of nationalizations during the 1960s and 1970s, but the competitiveness of the new state mineral enterprises was eroded because political ends overrode their commercial mandate. The nationalizations were part of fashionable postwar policies to extend the role of the state in economic management that distorted the political economy and, during the period of heightened commodity price volatility of 1974–1988, resulted in growth collapses for many resource-rich developing countries. The mineral-driven economies were among the worst affected because their commodity revenues were unusually large relative to GDP and allowed their governments more leeway to distort the political economy over a longer period of time than the governments of resource-poor countries like South Korea and Taiwan. The resource-rich countries have struggled during the last two decades to reform their economies and recover from the growth collapses in the face of the vested interests that exploit the distortions and undermine economic reform. In these circumstances, the contracts negotiated by international mining companies to win shareholder backing for renewed large-scale investment in developing countries can be turned to advantage for host nations. The mineral projects function, in effect, as early reform zones that permit linked and adjacent economic activity to operate with greater efficiency than is the case outside the mining enclave in the distorted economy. Rapid growth of directly productive investment within the mineral region can help build a dynamic market sector that eventually absorbs unproductive labor and capital from the distorted sector and also provides that sector with a strong demonstration effect. In addition, it builds a political constituency for reform to take on the rent seeking interests. This dual track reform strategy makes a virtue of the enclave character of mining that has, hitherto, been portrayed by some as detrimental. Fall/Winter 2006 • volume xiii, issue 1 143 Richard Auty Mineral enclaves can therefore be an asset for long-term development if best practice mining firms are not displaced by rivals from emerging markets that exhibit less concern for broad-based social welfare. A second threat emerges if governments newly flush with windfall revenues fail to recognize the potential long-term benefits from building a dynamic competitive economy. Unfortunately, the 1960s and 1970s appear to have been decades of solitude for the governments of countries like Venezuela and Bolivia, which appear to have learned little. But mineral companies must also recognize that host governments merit a share of the windfall profits from unexpected booms in the prices of their finite natural resources, and they must strive to foster the welfare-enhancing expenditure of such revenue. W A Notes 144 1. World Bank, Final Report of the Extractive Industries Review. (Washington, DC: World Bank, 2003). 2. Raymond Vernon, Sovereignty at Bay: The Multinational Spread of U.S. Enterprise (New York: Basic Books, 1971). 3. Norman Girvan, Foreign Capital and Economic Underdevelopment in Jamaica, (Kingston, Jamaica: Institute of Social and Economic Research, University of the West Indies, 1971). 4. Deepak Lal, The Poverty of “Development Economics” (Cambridge, MA: Harvard University Press, 1985). 5. Paul Cashin and C. John McCDermott, “The Long-Run Behavior of Commodity Prices: Small Trends and Big Variability,” IMF Staff Papers 49, no. 2 (2002): 175–198. 6. Richard M. Auty, Resource Abundance and Economic Development (Oxford: Oxford University Press, 2001). 7. Richard M. Auty and A. H. Gelb, “Political Economy of Resource-abundant States,” in Resource Abundance and Economic Development, ed. R. M. Auty (Oxford: Oxford University Press, 2001), 126–144. 8. Auty, Resource Abundance and Economic Development. 9. Michael Lewin Ross, “Does Oil Hinder Democracy?” World Politics 53, no. 3 (2001): 325–361. 10. Ian Bannon and Paul Collier, Natural Resources and Violent Conflict: Options and Actions (Washington, DC: World Bank, 2003). 11. C. Peter Timmer, Operationalizing Pro-Poor Growth: Indonesia (Washington, DC: World Bank, 2004). 12. David Humphreys, “A Business Perspective on Community Relations in Mining,” Resources Policy 25 (2000): 127–132. 13. Goldman Sachs, Introducing the Goldman Sachs Energy Environmental and Social Index (London: Goldman Sachs, 2005). 14. Shaomin Li, Shuhe Li, and Weiying Zhang, “The Road to Capitalism: Competition and Institutional Change in China,” Journal of Comparative Economics 28 (2000): 269–292. 15. Goldman Sachs, Introducing the Goldman Sachs Energy Environmental and Social Index. 16. Simon Johnson, Daniel Kaufman, and Andrei Shleifer, “The Unofficial Economy in Transition,” Brookings Papers on Economic Activity 2 (1997): 159–239. the brown journal of world affairs From Mining Enclave to Economic Catalyst Country PCGDP Voice + Political Effective Regulation Rule of Aggregate ($US PPP AccountGraft stability Governance burden law index 2004) ability Mali 1,030 0.35 0.07 -0.29 -0.26 -0.34 -0.52 -0.99 Nigeria 1,113 -0.65 -1.48 -1.02 -1.26 -1.44 -1.11 -6.96 Benin 1,127 0.3 -0.37 -0.39 -0.49 -0.47 -0.34 -1.76 Mozambique 1,233 -0.13 -0.15 -0.39 -0.29 -0.6 -0.79 -2.35 Angola 2,308 -1.02 -0.95 -1.14 -1.4 -1.33 -1.12 -6.96 Ghana 2,316 0.39 -0.1 -0.17 -0.28 -0.16 -0.17 -0.51 Azerbaijan 4,175 -0.97 -1.52 -0.81 -0.57 -0.85 -1.04 -5.76 Philippines 4,558 0.02 -1.01 -0.23 -0.06 -0.62 -0.55 -2.45 Peru 5,641 -0.04 -0.68 -0.58 0.17 -0.63 -0.35 -2.11 Venezuela 5,963 -0.46 -1.1 -0.96 -1.24 -1.1 -0.94 -5.8 Algeria 6,507 -0.91 -1.42 -0.46 -0.93 -0.73 -0.49 -4.94 Kazakhstan 7,494 -1.21 -0.11 -0.63 -0.89 -0.98 -1.1 -4.92 Botswana 9,267 0.73 0.7 0.83 0.96 0.73 0.86 4.81 Malaysia 9,760 -0.36 0.38 0.99 0.44 0.52 0.29 2.26 Chile 11,487 1.09 0.89 1.27 1.62 1.16 1.44 7.47 Trinidad & Tobago 11,910 0.49 0.04 0.47 0.61 0.17 0.02 1.8 Saudi Arabia 14,022 -1.63 -0.6 -0.06 -0.34 0.2 0.15 -2.27 South Korea 20,371 0.73 0.45 0.95 0.69 0.67 0.17 3.66 United Kingdom 30.843 1.37 0.77 1.85 1.62 1.71 2.06 9.38 Table 1 Institutional Quality 2004: Hydrocarbon Exporters (italics) and Comparator Countries The index scores each range from 2.5 to -2.5 and are based on several surveys in each country. Fall/Winter 2006 • volume xiii, issue 1 145 E-access with every subscription! Journal of East Asian Studies Edited by Stephan Haggard ASSOCIATE EDITORS: Yun-han Chu, Byung-Kook Kim, Xiaobo Lu, Andrew MacIntyre, and Yoshihide Soeya The Journal of East Asian Studies is redefining Asian studies! Experts from around the globe come together in this important forum to present compelling social science research on the entire East Asia region. A peer reviewed journal, issues covered include democratic governance, military security, political culture, economic cooperation, human rights, and environmental concerns. Thought-provoking book reviews enhance each issue. “ JEAS is a sharp and theoretically informed journal, and essential reading for scholars focusing on East Asia.” —DAVID C. KANG 1800 30TH ST. 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