The Economics of Secession: Empirical Evidence (Part II)

  • Milica Zarkovic Bookman


The previous chapter established the secessionist region’s level of development and income position relative to the state economy. This chapter contains data pertaining to trade dependency, interregional flows, and decentralization in the seceding regions. Interregional trade and financial flow data are extremely meager, even in countries with relatively sophisticated statistical systems, necessitating the extensive use of secondary evidence. The analysis of the empirical evidence presented here is conducted in chapters 5 through 7.


Central Government Develop Region Foreign Currency National Minority Interregional Trade 
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  1. 2.
    The economy of Papua New Guinea is highly regulated with respect to prices. Goodman, Lepani, and Morawetz describe the price policy in wages, commodities, and manufactured goods, indicating a price structure that supports efforts at import substitution (Raymond Goodman, Charles Lepani, and David Morawetz, The Economy of Papua New Guinea, Canberra: The Australian National University, Development Studies Center, 1985, pp. 59, 89, 128).Google Scholar
  2. 3.
    Despite the central government’s large involvement in the economy of the region, the central policy of export promotion, coupled with the largely foreign ownership of the mines, resulted in the exclusion of copper from trade barriers. See Philip Darnel and Rod Sims, Foreign Investment in Papua New Guinea: Politics and Practices, Canberra: The Australian National University, Pacific Research Monograph no. 12, 1986.Google Scholar
  3. 5.
    The copper mines in Bougainville employed labor from other parts of Papua New Guinea, due to the lack of sufficient locals that were either willing or able to satisfy the demands of the foreign managers. This inflow of migrants had far reaching effects on the established economy, land rights, social network, et cetera. (Azeem Amarshi, Denneth Good, and Rex Mortimer, Development and Dependency: The Political Economy of Papua New Guinea, Melbourne: Oxford University Press, 1979, p. 209).Google Scholar
  4. 8.
    Tibet’s principal outputs are wool and wool products, and its proportion of total Chinese production in these items is low (.16 percent), and therefore it is inferred that die proportion of Tibet’s output in foreign exports is also low (State Statistical Bureau, People’s Republic of China, Statistical Yearbook of China 1985, Oxford: Oxford University Press, 1985, pp. 350, 503).Google Scholar
  5. 10.
    The central Chinese government has freely used pricing policy on goods traded with Tibet in order to achieve its goals. For example, when the United States began its boycott of Tibetan wool, Beijing responded by purchasing Tibet’s entire wool production and paying three times the market price for it, with the goal of endearing the population (A. Tom Grunfeld, The Making of Modern Tibet, Armonk, N.Y.: M. E. Sharpe, 1987, p. 110).Google Scholar
  6. 12.
    Much to the chagrin of the Tibetans, the Chinese policy of assimilation entailed the in-migration of the Han population to teach, build, and partake, as cadres, in the reconstruction and administration of Tibet. No accurate numbers exist on their size. Lucien Pye has claimed that in 1976, the Han had come to outnumber the Tibetans two to one (Lucien Pye, “China: Ethnic Minorities and National Security,” Current Scene (Hong Kong) 14, no. 12, 1976, pp. 6–7).Google Scholar
  7. 15.
    For lack of other statistics on internal trade, the following information is offered: In the early 1970s, the Northern Province produced over 15 percent of the island’s chilies and 83 percent of the domestic requirements for onions, implying that their principal produce was exported to the southern regions of the state (Chelvadurai Manogaran, Ethnic Conflict and Reconciliation in Sri Lanka, Honolulu: University of Hawaii Press, 1987, p. 138).Google Scholar
  8. 19.
    The central government sponsored migration of people (largely Sinhalese) into the sparsely populated areas of the Northern and Eastern Provinces (Robert Kearney, “Ethnic Conflict and the Tamil Separatist Movement in Sri Lanka,” Asian Survey 25, no. 9, September 1985, p. 904).CrossRefGoogle Scholar
  9. 20.
    This is the only available figure. It refers to international exports in 1982, in tons per 100 population (Christine Drake, National Integration in Indonesia: Patterns and Policies, Honolulu: University of Hawaii Press, 1989, p. 297, Appendix 2).Google Scholar
  10. 22.
    The local government is in charge of regulating the prices of numerous goods produced in East Timor, including coffee (M. Hadi Soesastro, East Timor: Questions of Economic Viability, in Unity and Diversity: Regional Economic Development in Indonesia Since 1970, Singapore: Oxford University Press, 1989, p. 225).Google Scholar
  11. 24.
    There is evidence of in-migration into East Timor of two different groups of individuals. First, as part of a transmigration project, the central government has engaged in the moving of retired or near-retired army personnel, largely for the purposes of national security (Timothy Babcock, “Transmigration: The Regional Impact of a Miracle Cure,” in Colin MacAndrews, ed., Central Government and Local Development in Indonesia, Singapore: Oxford University Press, 1986 p. 179). Second, in order to satisfy manpower demands, as well as to relieve population pressures in overpopulated regions, the government sponsored migration. This included the movement of active government personnel into the public sector of the region (20 percent of the population of East Timor employed in the public sector).Google Scholar
  12. 27.
    Foreign exports of wheat, the primary agricultural product of Punjab, have been insignificant during the 1970s: between 2 and 13 percent of the product, depending on the year, was destined for international or local use. A breakdown of those two categories is not available (see Milica Zarkovic Bookman, The Political Economy of Discontinuous Development, New York: Praeger, 1990, p. 151).Google Scholar
  13. 31.
    Punjab is a unique case among developing regions insofar as it was extremely successful in adapting foreign technology to the local environment. The green revolution package of technologies, introduced in the mid-1960s, was adapted to local conditions because of an infrastructure capable of this transformation (see M. Zarkovic, Issues in Indian Agricultural Development, Boulder: West-view Press, 1987).Google Scholar
  14. 32.
    With the exception of peak agricultural periods, during which migrant day laborers from adjoining states in-migrated, Punjab has satisfied its labor demand with its own population (see P. Bardhan, Land, Labor and Rural Poverty, New York: Columbia University Press, 1984).Google Scholar
  15. 38.
    According to per capita taxes paid to the center, Kashmir ranks among the highest of the Indian states, while according to contribution to state plans, the percentage of Indian contribution is high (relative to the region’s population). See I. S. Gulati, ed., Center-State Budgetary Transfers, Bombay: Oxford University Press, 1987.Google Scholar
  16. 39.
    For decades, the Karens have dominated trade across the important Thai-Burmese border. This black market thrives to compensate for the inability of local or state production to satisfy consumptive and industrial needs (Wolf estimated that 80 percent of the consumer goods entering the country did so through the Karen areas (Jim Wolf, “Asia’s Civilized Insurgents,” Bangkok Post, November 9, 1983, p. 5). With respect to exports, lumber is exported from the Karen regions, mostly to Thailand. It is estimated that in the Karen region, 65 saw mills are engaged in preparing teak for export (Ronald Renard, “The Karen Rebellion in Burma,” in Ralph R. Premdas, S.W.R. de A. Samarasinghe, and Alan B. Anderson, Secessionist Movements in Comparative Perspective, New York: St. Martin’s Press, 1990, p. 107).Google Scholar
  17. 45.
    The southern regions are net exporters of water and oil to the northern regions (see Charles G. Gurdon, “The Economy of Sudan and Recent Strains,” in Peter Woodward, ed., Sudan After Nimeiri, London: Routledge, 1991).Google Scholar
  18. 52.
    The price interventions that most affect the Eritrean economy are those pertaining to port duties and agriculture. In the case of the former, these were kept artificially low in order to reduce costs to the center, which had no access to the waterways other than the Eritrean ports. When the Eritreans came to power in May 1991, they eliminated this price bias and proceeded to extract income from the ports. With respect to agricultural prices, these were set by the Agricultural Marketing Corporation so as to provide food at cheap prices for the urban population, mostly of Addis Ababa. This policy hurt the Eritrean farmers. See Okbazghi Yohannes, Eritrea: A Pawn in World Politics, Gainesville: University of Florida Press, 1991, p. 266.Google Scholar
  19. 53.
    There has been an inflow of capital from the Arab countries to support the war and capital from Eritrean exiles, mostly residing in Sudan (Tekle Mariam Woldemikael, “Political Mobilization and National Movements: The Case of Eritrean Peoples Liberation Front,” Africa Today 38, no. 2, 1991, p. 36).Google Scholar
  20. 61.
    Trade between the north of Senegal and Casamance has been hampered due to the lack of a transportation network and the reality of geography. In other words, the shortest way from Casamance to Dakar is through Gambia, an unwilling transit partner. The building of a bridge and dam in Gambia in the 1980s has significantly increased the possibilities for interregional trade within Senegal. For a discussion of these trade constraints, see Sheldon Gellar, Senegal: An African Nation Between Islam and the West, Boulder: Westview Press, 1982, p. 74.Google Scholar
  21. 62.
    In the agricultural sector there exists a government marketing system that distorts prices, often to the disadvantage of the Casamance cultivators (see Rita Cruise O’Brien, “Introduction,” in The Political Economy Of Underdevelopment: Dependence in Senegal, Beverly Hills: Sage, 1979, p. 22).Google Scholar
  22. 67.
    Especially during the time of the Ba’th authority in Baghdad, the flow of financial resources into the Kurdish areas was, according to Helms, substantial. Funds were provided for hospitals, farms, housing projects, and so on. (Christina Moss Helms, Iraq: Eastern Flank of the Arab World, Washington: Brookings Institution, 1984, p. 33).Google Scholar
  23. 72.
    There is evidence of little economic benefit from the center. According to the Frazier Institute in British Columbia, the outflow from the province to the federal government is roughly equal to what it gets back in various social payments and government contracts. Indeed, the net flow from the center has been calculated at a mere $300 per year per head (Quebec manages its own social security and pension fund), certainly not sufficient to create dependency on the center (The New York Times, June 24, 1990). Some even argue that during 1986–90, Quebec was a donor province, giving more to the federal government than it got in return (The Wall Street Journal, April 13, 1990). Leslie and Simeon claim that the data are inconclusive in this respect (Peter Leslie and Richard Simeon, “The Battle of the Balance Sheets,” in Richard Simeon, ed., Must Canada Fail?, Montreal: McGill-Queens University Press, 1977).Google Scholar
  24. 79.
    “The small size of the domestic market dictated an export-oriented production which in turn tended to result in light industries with relatively low transport costs”: Sabine Wichert, Northern Ireland since 1945, London: Longman, 1991, p. 58.Google Scholar
  25. 82.
    There has been a sporadic inflow of capital from the rest of United Kingdom. However, the inflow that has made a great impact on the economy is the recent capital from foreign sources, mostly due to the success Ireland has achieved in attracting overseas moves and therefore entering the sphere of service export production. See R. R. MacKay, “Regional Policy,” in Donald MacKay, ed., Scotland 1980: The Economics of Self-Government, Edinburgh: Q Press, 1977, p. 191.Google Scholar
  26. 83.
    During 1961–71, 6.9 per 1000 of Roman Catholics and 2.8 of non-Catholics emigrated from Northern Ireland (John Simpson, “Economic Development: Cause of Effect in the Northern Ireland Conflict,” in John Darby, ed., Northern Ireland, The Background to the Conflict, Belfast: Appletree Press, 1983, p. 102, Table 4.13).Google Scholar
  27. 90.
    According to Birch, the citizens of Scotland contribute less than average to government revenues but enjoy public services that are more expensive than average. Indeed, central government expenditures per head in 1968–69 were 42 percent higher in Scotland than in England (Anthony H. Birch, Nationalism and National Integration, London: Unwin Hyman, 1989, p. 84).Google Scholar
  28. 91.
    According to Clark, one of the Basque Provinces, Navarra is taxed at special rates and is given more local autonomy than other regions to gather taxes (Robert P. Clark, The Basques: The Franco Years and Beyond, Reno: University of Nevada Press, 1979, p. 221).Google Scholar
  29. 98.
    Estimated on the basis of data in Istituto Nazionale di Statistica, Le Regioni in Cifre, Roma: Istat, 1992, Table 12.6.Google Scholar
  30. 103.
    The existence of foreign sources of capital in the region is shown by the fact that 39 joint ventures were registered in April 1990 (Deutsche Bank, The Soviet Union at the Crossroads, Frankfurt: Deutsche Bank, 1990, p. 47, Appendix 3).Google Scholar
  31. 104.
    See Bahry for an explanation of inflows into all the Soviet regions in this table (Donna Bahry, “The Evolution of Soviet Fiscal Federalism,” in Rachel Denber, ed., The Soviet Nationality Reader, Boulder: Westview Press, 1992, p. 314). She describes how the determination of how much of revenues is kept within the region depends upon the regional level of development. For example, the higher deductions (from payments to the center) went to the less developed republics, so that regions such as Tadzikhistan and the Tatar Autonomous Region kept almost 100 percent of some taxes, while regions such as Latvia had to give close to 50 percent of their receipts to the all-union budget.Google Scholar
  32. 116.
    Although from World War II until 1981, Slovenia was a net population absorber, the percentage of the population that were migrants remained relatively low (1960s: 0.8 percent of population; 1970s: 2.2 percent of the population) (Savezni Zavod za Statistiku, Saopstenje, no. 365, Beograd, 1984).Google Scholar
  33. According to Prout, migrants form an insignificant proportion of the Slovenian labor force, mostly the unskilled or semiskilled laborers (Christopher Prout, Market Socialism in Yugoslavia, Oxford: Oxford University Press, 1985, p. 135).Google Scholar
  34. However, Schrenk estimates that 20 percent of total employment in Slovenia is performed by workers of other ethnic groups not permanently settled in the region (Martin Schrenk, Cyrus Ardalan, and Nawal A. Tatawy, Yugoslavia: Self-Management Socialism and the Challenges of Development, Baltimore: Johns Hopkins University Press, 1979, chapter 10).Google Scholar
  35. 117.
    There is evidence that some 50 percent of Slovenian foreign imports are in the category of raw materials (Statisticki Zavod za Statistiku, Statisticki Godisnjak Jugoslavije, Beograd, 1985 (Table 218–3), 1986 (Table 218–3), and 1987 (Table 219–3). At the same time, trade in raw materials never exceeded 3.3 percent of wholesale trade (Bookman, Political Economy, p. 180). This leads to the conclusion that there was much local input into industry.Google Scholar
  36. 119.
    This number refers to the percent of total trade that is accounted for by foreign trade, not the percent of regional production that is destined for foreign markets (Savezni Zavod za Statistiku, Statisticki Godisnjak, Belgrade 1990, Table 220–5). Thus, the entries for Croatia and Kosovo are not comparable with the entry for Slovenia.Google Scholar
  37. 123.
    The population of Krajina has been on the decrease, due to the out-migration of the Serbian population. This is true both in absolute numbers and a propor tion of the population of Croatia, and the proportion of the Serbian population in Croatia. (In 1971, the population of Krajina made up 6.5 percent of the Croatian population, and this percentage dropped to 5.8 in 1981 (Jovan Ilic, “Characteristics and Importance of Some Ethno-National and Political-Geographic Factors Relevant for the Possible Political-Legal Disintegration of Yugoslavia,” in Stanoje Ivanovic, ed., The Creation and Changes of The Internal Borders of Yugoslavia, 1991, p. 89).Google Scholar
  38. 127.
    There has been a simultaneous inflow and outflow of population to and from Kosovo. The inflow has been mostly of illegal Albanians: this has been reported in the popular press, but official estimates are not available to the author (according to Dragnich and Todorovich, between 200,000 and 240,000 Albanians entered the region in the aftermath of World War II). At the same time, Serbian residents have been leaving the region (Dragnich and Todorovich estimate this to be 100,000 during World War II, and between 150,000 and 200,000 during 1961–81). This migratory pattern (together with the high fertility rates among the Kosovars) has altered the demographic picture of Kosovo. See Alex N. Dragnich and Slavko Todorovich, The Saga of Kosovo, Boulder: East European Monographs, 1984, p. 158.Google Scholar
  39. 131.
    Slovakia is a net out-migrating region, as employment opportunities in the growing sectors of the Czech economy attracted manpower. Steiner estimated that tens of thousands of Slovaks were forced to emigrate to the Czech lands for employment, while Koctuch claims that the oversupply of labor in Slovakia is on the order of 200,000 people (Eugen Steiner, The Slovak Dilemma, Cambridge: Cambridge University Press, 1973, p. 134Google Scholar
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  43. 135.
    Schopflin describes the investments of the Romanian government into the area of Transylvania and claims that the sum invested there was “considerable.” Just 22 factories were built in Covasna and Harghita between 1966 and 1975 alone (George Schopflin, “Transylvania: Hungarians under Romanian Rule,” in Stephen Borsody, ed., The Hungarians: A Divided Nation, New Haven: Yale Center for International and Area Studies, 1988, p. 136).Google Scholar
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    The data on this out-migration is unclear. Secondary evidence points out that population movements in Romania are part of the minority or industrialization policy of the central government. This implies that no citizen is allowed to relocate without specific permission. However, in the effort to break up the Hungarian minority, the government has consistently assigned Hungarian graduates to jobs outside their native communities, while Romanians are brought into the area to fill positions that could be filled by Hungarians (Bulcsu Veress, “The Status of Minority Rights in Transylvania: International Legal Expectations and Romanian Realities,” in John F. Cadzow, Andrew Ludanyi, and Louis J. Elteto, eds., Transylvania, The Roots of Ethnic Conflict, Kent: Kent State University Press, 1983, p. 285).Google Scholar
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    Mining in Katanga represented 80 percent of Congolese mining production, and the region was the sole producer within Congo of copper, cobalt, silver, and platinum. (Howard Epstein, Revolt in the Congo, 1960–64, New York: Facts on File, 1965, p. 178). This 80 percent contributed strongly to ranking the Congolese production of copper at 8 percent of global production. The region also contains most of the world deposits of cobalt and industrial diamonds.Google Scholar
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© Milica Zarkovic Bookman 1992

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