Urpo Kivikari

Professori Urpo Kivikari
Turun kauppakorkeakoulu
p. (02) 3383570

The Gulf of Finland Growth Triangle

1. A Growth Triangle as a Vehicle of Integration

Mutual economic relations between Finland, Estonia and Russia have undergone a radical upheaval during the 1990's.The changes which have occurred, both enable and necessitate the search for new platforms, serving as the basis for future development of these relations. Finland, Estonia and the St. Petersburg area, which here refers to the city of St. Petersburg and the Leningrad oblast or district, form a solid entity without other areas falling between them (see Figure 1). The adoption of a market economy in Russia and Estonia has brought the cross-border areas, with their demand and supply forces close to Finland as well as each other, which is obvious from looking at the map. This study examines Finland's needs and opportunities for cross-border integration with Estonia and the St. Petersburg area by applying the concept of a "growth triangle", developed and adapted to East-Asian circumstances.

1.1  The Concept of a Growth Triangle

A growth triangle is a relatively recent addition to the vocabulary of development and international economics. A growth triangle forms an economic zone exceeding national boundaries, usually including areas from three or more countries. Unlike trade blocs growth triangles usually do not consist of states as a whole but rather, parts of them so one country can be part of more than one growth triangle. Although a growth triangle would primarily result in international co-operation between areas, it is important for the project's success that it is also considered to be nationally beneficial and that it enjoys political backing at both regional and national level.

A growth triangle provides a solution to the strategic and administrative problems of regional co-operation between countries differing in their stages of social and economical development and other features. Areas close to each other but different in their production fundamentals can, as parts of a growth triangle, utilise their comparative advantages by means of strategic alliances and other forms of co-operation. The geographical proximity of the partners is an essential prerequisite for the achievement of savings by trade and industry in their expenses arising from transport, time and information costs. A growth triangle aims at attracting investment and promoting sales in outside market

Figure 1. The Growth Triangle of the Gulf of Finland.

1.2 Asian Growth Triangles

The concept of growth triangles gained publicity in 1989 as the incumbent political bodies of Singapore, Malaysia and Indonesia decided officially to establish the "Southern Growth Triangle" (SIJORI). It came about by the joining of Singapore, Johor in Malaysia and the Indonesian island of Batam in the province of Riau. Preparations for the project had gathered pace rapidly. It had been introduced in 1988 by the Singapore Industrial Association's first visit to Johor and the ensuing high-level political meetings between the three countries (Waldron 1997, p. 54).

This growth triangle is characterised by the mutual complementary nature of the three economies involved, which is largely based on differences in their stages of development. The per capita national income of Singapore (USD 12,890 in 1991) is about 25 times higher than that of Batam (USD 500) and approximately quadruple in comparison to Johor (USD 3,600). Attracted by low labour costs (Batam) and relatively skilled work force (Johor) industrial production has moved out of Singapore where, nevertheless, planning, marketing and distribution have remained. The growth triangle has clearly been able to utilise the benefits provided by economies of scale and scope as well as those of vertical integration.

The impact of the growth triangle has been most visible on the island of Batam, where the established industrial park, alone, had by 1994 created 32,000 jobs and a volume of annual exports worth USD 600 million. (Thant 1996, 67). Johor especially encourages research, technology, employment and investment projects geared to promoting exports (Kettunen 1998, 86). The development of the growth triangle has been markedly supported by their proximity. The distance between Singapore and Johor is just one kilometre and the island of Batam is just 20 kilometres away.

SIJORI was, in effect, based on bilateral agreements until 1995 when it became even formally, a trilateral co-operation project. At the same time the growth triangle has become more institutionalised. Alongside bilateral co-operation bodies, the growth triangle now employs a  Joint Business Council as well as working groups in various fields. In 1996 the growth triangle was significantly extended to encompass new areas in Indonesia and Malaysia so that now it consists of an area of more than half a million square kilometres incorporating a population of 34 million. In conjunction with the extension, the name of the triangle was changed to the Indonesia-Malaysia-Singapore Growth Triangle (Kettunen 1998, p. 90).

Unlike SIJORI, which is "officially" founded in the public eye, the "South China Growth Triangle" has operated without open and high-level political co-ordination. The growth triangle is formed by Hong Kong, parts of Taiwan and the provinces of Guandong and Fujian in the People’s Republic of China. Even this growth triangle would  have been  unfeasible without  indirect backing from the participating countries' political leadership. China has promoted openness by the implemented economic reforms as well as by setting up special economic zones attracting foreign investment. Hong Kong has encouraged enterprises to establish industrial production in Southern China whilst Taiwan has liberalised her investment and trade policies regarding China.

Mutually complementary parts of the growth triangle have benefited significantly from the co-operation. The Chinese provinces have developed a strong orientation towards exports, Hong Kong and Taiwan have gained advantages in terms of lowered labour costs and alleviated labour shortage. Direct investments from Hong Kong into Guandong have created an estimated three million jobs and clearly have raised the local income level above the average income of the rest of China. The province of Fujian has received numerous investments from Taiwan. An estimated 12,000 Taiwanese companies have invested via Hong Kong into mainland China, and even trading  directly with China has grown vigorously (Thant 1996, pp. 5-6). From the growth triangle's standpoint, the incorporation of Hong Kong into mainland China, is naturally, a significant change.

In both the cases described, the external effect of growth has spilled over from an advanced economic centre (Hong Kong, Taiwan, Singapore) to peripheral areas with abundant resources and low labour costs. New growth areas have become production exporters. Despite the favourable development of the growth triangles, the lingering shortcomings in institutional and physical infrastructures, legislation and labour mobility still need to be addressed (Waldron, p. 1997).

The other five growth triangles established in Asia do not, as yet, have a readiness comparable to that of SIJORI and the South China Growth Triangle. These recently conceived growth triangles, developed under the auspices of the south-east Asian co-operation body ASEAN - besides SIJORI - include the growth triangles of North ASEAN (Thailand, Malaysia and Indonesia) and East ASEAN (Indonesia, Malaysia and Philippines). Similarly, at the initial stages of their development, stand the Yellow Sea co-operation zone (China and Japan) and the Mekong area project (Thailand, Cambodia, Laos and Vietnam). Even Russia is involved in a growth triangle since it participates in the Tumen river basin development programme together with certain areas of China and North Korea (Waldron 1997, p. 58).

1.3 The Benefits of a Growth Triangle

Many presentations take the view that the Asian growth triangles have promoted international sub-regional development. Areas in a growth triangle, close to one another but parts of different countries may complement each other and create synergies in terms of utilising natural resources, labour force, capital, technology and management. International vertical specialisation and the acquired comparative advantages have yielded benefits not obtainable without the framework provided by a growth triangle (cf. Waldron 1997, pp. 57-67).

Views, as they've been presented so far, on the benefits of growth triangles, are based on rather meagre experience and may be considered more impressionistic than analytical. Nevertheless, there is another approach, the analysis and assessment of growth triangle benefits and preconditions from the perspective of general economic regularities and theories. A growth triangle appears to create an advantageous setting for the implementation of some economic regularities.

Ng and Wong (1991) have identified four dimensions wherein economies of scale and scope may be expressed in growth triangles. First, increased integration leads to growing agglomeration. This enables starting a production, the fixed costs of which are high, whilst generally reducing the production costs thanks to the advantages obtained through greater scale.

In a growth triangle the commercial contacts, keener competition, networking and external influences accelerate the transfer of technology. A number of studies have shown that technical information and innovation processes develop quicker in an environment equivalent to the conditions offered by a growth triangle. Proximity and access to economic networks play an important role in the utilisation of technological diffusion.

Growth triangles provide valuable international training for companies with no previous experience in international operations. In a growth triangle setting, more experienced companies can by being geographically close, considerably facilitate the internationalisation process of less experienced companies.

Inasmuch as the growth triangles increase competition in their area they, at the same time offer opportunities for developing solid strategic alliances. Cross-border co-operation creates joint ventures, alliances, networking and other forms, which unify the interests of companies operating in the area. This also facilitates the development of the most competitive companies, in the given area, into becoming multinationals (cf. Ng - Wong 1991; Waldron 1997, pp. 57-59).

A growth triangle provides companies in the area with additional stimuli and opportunities for investment. What is even more important however, is that the wide range of production facilities and the access to foreign markets offered by the growth triangle attracts foreign direct investment.

The investors aim primarily at export orientated production, particularly when the significance and result of the growth triangle is based on the added value produced in its exports. Darryl W. Waldron has applied Porter's value chain to establish the circumstances when a growth triangle may yield added value to export processes.

Firstly, in terms of infrastructure and administration, a growth triangle can integrate traffic, telecommunications, water and energy supplies and other such networks and can also streamline public policies and standardise regulations as well as the manner in which these are applied. A growth triangle can regionally promote  a labour force policy and land use, facilitate the mobility of labour, capital, goods and services, balance the distribution of benefits accrued as well as helping control the establishment of the labour force and other resources. A growth triangle can facilitate technological development through joint programmes, incentives and other forms of co-operation.

A growth triangle may contribute to the use of land, public financing, the labour force and natural resources as well as to the availability of auxiliary services linked to production. In the growth triangle area, inbound logistics can be improved by simplifying border formalities and by developing institutions, technology and infrastructures. Outbound logistics can be developed by co-ordinating both the internal labour division of production processes and transport related functions. Operational smoothness can be effected by promoting the mobility of goods and other factors of production, by providing  the necessary auxiliary services and by creating expedient sets of norms to meet the needs of the growth triangle. A growth triangle may be engaged in the joint planning of strategic marketing, co-ordinating advertising and other methods of sales promotion as well as, in more general terms, bringing the functions of  both public and private sectors more into line with each other (cf. Waldron 1997, pp. 62-63).

The degree to which a growth triangle is able to deliver added value for production and exports, in line with Porter's model, is essentially dependent on its character (official/unofficial), the manifest objectives and designed purpose, the authority it has been designated with and the basic resources at its disposal.

1.4 Success Factors of a Growth Triangle

A growth triangle is a form of international regional co-operation that has been in existence just a short time and has, so far, been implemented only in an Asian environment. Nevertheless, generalising assessments have been presented about this as yet, developing institution. The estimates presented up till now, give an impression suggesting that a growth triangle has already established its feasibility under circumstances where its operational preconditions are met (cf. Waldron 1997, pp. 65-67). What criteria can be considered as  the key success factors of a growth triangle? The list presented below is based on experience accumulated in Asia and argumentation deductible from the conceptual content of the growth triangle.

The Complementary nature of economies

Characteristic of the Asian growth triangles is the difference of the parts, both in terms of  the structural factors of production and stage of economic development. The comparative advantages of different parts should be extensively utilised in the international division of labour to be implemented within the production chains. Although the economic complementary nature of and between the parts forms the essential foundation of a growth triangle, it doesn't have to be manifest in every respect. Even if all the members would suffer from capital deficiency, this would pose no obstruction to success should investment capital be tempted to come in from outside the growth triangle.

Geographical proximity

The advantages involved in a growth triangle are essentially based on the "proximity benefits" it creates. Distance equals expense in a market economy. Geographical closeness becomes a particularly decisive factor whenever minimising costs accruing from transport, time consumption, flow of information and cultural differences. In cases characterised by the pronounced significance of public relations, other than geographical proximity, factors such as the similarity of languages, cultures, views and even ways of life will also have an influence. Growth triangles contribute to the "regionalisation of trade", which is not a meaningless feature of development in an increasingly global economy.

Political commitment and co-ordination

Regardless of  whether, in fact, a growth triangle is "official" or "unofficial" the adequate political commitment on the part of the participating countries and regions is a prerequisite for its success. A growth triangle comes into existence on the basis of decisions taken by national and regional political bodies as well as the co-ordination and implementation of those selfsame decisions. The foundation of a viable growth triangle lies in  the "growth triangle policy" exercised individually and jointly by the participating bodies in the areas of customs and taxation practices, land use, labour force, financing, infrastructure and so on. The objective has to be  the avoidance and reduction of discontinuities, inconsistencies and frictions hampering the economic activity.

Naturally, every region and state participating in the growth triangle will have to see the effects of such a co-operation as primarily favourable from their own individual perspective. They should also spill over to outside of the growth triangle but it would advisable to restrict the potential negative effects to within the growth triangle itself.

Support from institutions and authorities

A certain Asian tradition has been characteristic to the growth triangles inasmuch that personal contacts are more important than bureaucratic practices. However, institutionalisation has advanced even in the Asian growth triangles keeping abreast with integration. Several state and regional offices and organisations will, inevitably, deal with issues related to growth triangles. The particular type of organisation any given member deems necessary, depends on the nature of their participation in the growth triangle. The growth triangle itself is also certain to need institutions of its own, ranging from meetings of high-level political decision-makers to various work groups dealing with practical problems.

The roles and responsibilities of the different actors should be clearly and simply defined. It is imperative for the growth triangle's success that the companies are allowed to deal with authorities who have fully realised the triangle's objectives and are prepared to work for their achievement.

Administrative transparency and organisational flexibility

Legal and commercial sets of norms regulating the activities within the growth triangle should be unambiguous. Administration should create mechanisms that work toward establishing as smooth as possible a connection between companies' investments on the one hand and the growth triangle's resource basis as well as its strategic priorities, on the other.

A growth triangle cannot be  rendered fully operational in its founding stages. Through the course of time, changes will take place in the participants' attitudes and circumstances and it is also advisable not to specify the growth triangle borders too rigidly. Growth triangles are inherently functional and not administrative entities, similar to the so-called mesoregions representing broader structures of co-operation.

The need for the joint development of the infrastructure

For adjacent regions belonging to different countries, it is justifiable to co-operate in the maintenance and improvement of  their infrastructures, which is why this operational prerequisite of a growth centre is met in many border regions. The need for joint effort in the development of infrastructures in fields such as traffic, energy and water supply, environmental issues and telecommunications is usually obvious. It is highly irregular to travel to the border and not to cross it, environmental pollution knows no boundaries etc. A growth triangle can achieve easily verifiable economies of scale and scope in the spheres of infrastructure and public services. Indeed, the alluring prospects of developing infrastructure and public services were the single most important incentive for the establishment of the first growth triangles.

Private sector motivation

A growth triangle remains an empty shell without a core unless companies develop an interest in the opportunities it provides. Motivating the private sector requires incentives,  involving relative advantages that can be turned into significant long-term surplus values. Adopting the companies' point of view, the growth triangle should look like a progressive and flourishing environment for investments supporting both the formation of clusters and individual enterprises in their need for development and the transfer of technology. Preconditions for success include the compatibility of objectives between private and public sectors as well as between the different parts of the growth triangle.

1.5 The Application of a Growth Triangle to the Baltic Sea Rim

The examples of a couple of briskly launched growth triangles have encouraged the establishment of corresponding economic zones in various parts of East Asia. There have been no attempts, however, to adopt this innovation, widely regarded as productive, elsewhere. Daryl G. Waldron, who has specialised in growth triangle problematics, suspects it is likely that the growth triangle will continue to remain an exclusively East-Asian phenomenon. On the other hand, he suggests that also - and only - in Europe, somewhere along the border zone between East and West, could the seemingly simple but in reality rather demanding conditions for a successful growth triangle be met (Waldron 1997). The surroundings of the Kaliningrad area in the southern Baltic Sea might serve as a potential location for a feasible growth triangle (Kivikari 1998).

Within the European sphere and assessing the matter in advance, the most ideal place for a growth triangle appears to be the nearby areas of the Gulf of Finland, i.e. the region formed by Finland, Estonia and the St. Petersburg area. Without conducting any particular studies, it is recognised that this is an area where the vital prerequisites for a growth triangle, such as the complementary natures of their economies, geographical proximity and joint needs for developing their infrastructures, come together. Naturally, these issues as well as the basic foundations for a growth triangle as defined in terms of institutions, political will and co-ordination, administrative procedures and private sector interest, will demand additional clarification. At any rate, a closer look at the advantages and preconditions, as well as the weighing-up of these does seem to be merited. Given that we are aware of the potential benefits involved in a growth triangle and the degree to which, at the very least, this area meets the initial conditions for a growth triangle, this appears to be particularly justifiable.

2. Implementation of the Gulf of Finland Growth Triangle

2.1 Basic Factors of a Growth Triangle

Essential ground-rules and factors, on the basis of which the Gulf of Finland Growth Triangle could develop as a web of countless issues and ties, mirroring its East-Asian models, will be examined in the light of the summary as presented in the table below  (statistical data and other material in Kivikari - Lindström 1999).

The mutual complementarity of those parts forming the Growth Triangle, would  most conveniently be verifiable using tables in which the data concerning Finland, Estonia and the St. Petersburg area would be presented in parallel columns. Unfortunately, the as yet available statistical information does not allow the data to be compared with a sufficient degree of validity so as to justify the general use of such a presentation method. Nevertheless, at the moment we can state, as was the case even in the earlier 1990s (e.g. Borsos - Erkkilä 1995), that the clearly different structures of production, expenses and foreign trade of these three areas are mutually complementary. It is equally obvious, that in terms of income and cost levels, Finland is clearly dissimilar to its neighbours.

Differences and complementarity become apparent in terms of utilisation of various international trade operations. Due to their familiarity, holidaymaking and gateway functions, the commerce between Finland and Estonia has already advanced beyond its theoretical norm. Likewise, an all-round engagement in various operations, based on the facilities and comparative advantages of both economies, has been developing favourably in Fenno-Estonian relations. In addition to inter-industry trade the vertical intra-industry trade, as part of the production process-internal division of labour (the so-called outward processing trade, e.g. in the electronics and clothing industries), has also reached a significant level, similarly to that of direct investments fr

Table 1. Fundamentals of the Gulf of Finland Growth Triangle

Although Finnish economic ties with the St. Petersburg area have become wide-ranging and versatile, should we elect to choose the general internationalisation having taken place in the St. Petersburg area as our point of comparison, there is still a lot of room for further development. In line with this, Estonia and the St. Petersburg area have also failed, under the present circumstances, in utilising the complementarity of their economies to anywhere near to its full potential. The circumstances of the 1990’s have failed to give support to desirable cross-border co-operation, with regard to the scientific, technological, industrial and other resources extant in St. Petersburg.

The parts of the Growth Triangle outlined here each belong to different market areas, so the combined market they represent covers almost all of Europe and a considerable part of Asia, too. This, naturally, is an excellent incentive for attracting both internal and external interest towards a project like a growth triangle.

The Gulf of Finland Growth Triangle would undisputedly meet the preconditions of geographical proximity and good transportational accessibility. Other dimensions and expressions of their physical adjacency are also not to be underestimated. Both statistics and surveys show that in the 1990’s private sector internationalisation has most often started from within the growth triangle. The neighbour is considered to be interesting and important. Companies regard their closest neighbourhood as almost akin to their domestic market, even though the market area (EU-CIS-Baltic States) taken as a whole, would be unfamiliar and difficult.

The bulk of the tourist traffic in the area occurs within a triangle formed by the principal centres of Helsinki - Tallinn - St. Petersburg, although there is certainly holidaymaking outside this hub as well. Two out of three tourists coming to Finland from Russia are natives of the St. Petersburg area, which is also the home of the Ingrian population migrating to Finland. The Russian population of Estonia has not shown signs of mass movement to Russia. All in all, migration in the area has remained lower than expected.

Even if some friction remains in the intercourse between Finland, the St. Petersburg area and Estonia, the neighbourly intercommunication can be described as connected by bridges rather than separated by walls. No other country is so close to Estonia than Finland. In Estonia the Russian population in particular, has good opportunities for developing ties to the St. Petersburg area. During the Soviet period, trade and cultural links between Finland and St. Petersburg (Leningrad) were quite tight. The county of Turku and Pori as well as that of Kymi maintained a special relationship to the Leningrad area. At present this type of liaison is managed mainly by provinces in southern Finland.

There is a considerable number of bilateral activities taking place between Helsinki, St. Petersburg and Tallinn and the on-going multilateral co-operative ventures (for instance, membership in the "Major Baltic Cities" circle) makes the ties even closer. The same applies to Turku, having maintained a twin-city relationship with St. Petersburg for decades. There is a special relationship between Lappeenranta and Vyborg, similar to that which exists between the adjacent border cities of Imatra and Svetogorsk. In the Estonian-Russian border zone Narva and Ivangorod familiarise themselves through cross-border interaction. Communication at municipal level is by no means limited to the aforementioned cases. The number of new ties created between schools, offices, hospitals, parishes, associations etc. is also appreciable.

As a member of the European Union, Finland is engaged in and utilising the Union's trade policies in her trade relations, implementing various agreements and programmes concerning Russia and Estonia. The EU's essential aid programmes involving Russia (Tacis) and Estonia (Phare) are available separately but also jointly in the area conceived of as a growth triangle. The Northern Dimension project, adopted by the EU on the initiative of Finland, should in the future promote the development of the coastal regions surrounding the Gulf of Finland.

After the end of the cold war, new avenues were opened to co-operation in the Baltic Sea area. These are exemplified by the birth of tens of Baltic Sea organisations, right at the dawn of the new era in the early 1990’s. The establishment of these networks also contributed to the strengthening of the ties between Finland, Estonia and the St. Petersburg area.

With regard to laying down foundations for the Gulf of Finland Growth Triangle, the cross-border co-operation implemented in the 1990’s with financial support from the Finnish State, has been significant. The effects of this programme have been tangible in many areas of administration and also life in general. Naturally, the neighbouring countries have a number of mutual agreements and practices designed to promote the management of common interests and problems in many fields. These are going to be a major help should the launch of a co-operative action of a growth triangle type be seriously considered. It goes without saying that, as yet, neither growth triangle policy nor institutions serving its cause are in existence.

Joint operations for the improvement of the infrastructure and environment within the landmass surrounding the Gulf of Finland follows naturally. In this area, there is no shortage of projects that can only be expediently and efficiently developed through their engagement in bilateral or trilateral co-operation. Even if interests in environmental protection, the development of communications and building energy networks were not contradictory, preferences and priorities often differ, jeopardising the implementation of these projects.

2.2 Advantages of a Growth Triangle

Although the conceivable benefits and effects of a growth triangle (see section 1.2) cannot be quantified in advance, in terms of growth figures for production, income, export and foreign investments or the number of jobs created, some preconception of the advantages is, naturally, a prerequisite for both the recommendations and measures needed for the creating the Gulf of Finland Growth Triangle.

A growth triangle's basic idea, i.e. the view of joint benefits and problems shared provides a motive for reducing friction in the international connections within the growth triangle and cutting off such internal competition that only adds to the problems (of some members) without benefiting anybody.

A growth triangle is instrumental in helping companies to face the challenges of internationalisation and globalisation right in their domestic market. A reduction in the number of obstacles to internationalisation would be significant, particularly for the Russian and Estonian companies.

For companies, the growth triangle means a greater selection in choosing the best location. Thanks to the Gulf of Finland Growth Triangle, it will be more economical for the companies to make use of the different production environments and commodity markets in the neighbouring areas.

The spheres of influence and significance of a growth triangle are far greater than its actual size. As a vehicle for private sector internationalisation, a growth triangle will exercise an influence far beyond its own borders. Companies operating within the growth triangle are provided with all-round conditions for production at low transaction expenses and extended markets (the EU; CIS; Baltic States, Cefta). Without these connections, the operational potential of peripheries like Finland, Estonia and the St. Petersburg area, as extremities of their own market areas, might remain underdeveloped.

The Gulf of Finland Growth Triangle would increase private sector competition by facilitating the operation of its own companies within the area and by attracting investments and commercial activity from elsewhere. It doesn't curb competition between its constituent parts or between the ports, routes and energy networks within the area. A growth triangle might shift the competition onto a sounder basis.

The growth triangle atmosphere would dispel suspicion regarding a partner's ulterior motives and their wish to hamper a competitor's activities. The reception of the Northern Dimension in the St. Petersburg area and Estonia provides a good example of how comments of approval concerning the situation at present, are mixed with reservations. The idea behind the Northern Dimension is considered viable but at the same time there are fears that the St. Petersburg area might be "overlooked" because of the programme's strong emphasis on issues like energy and raw materials and its limited regard for science, art and tourism which are important matters for St. Petersburg. In Estonia, the question has been raised as to whether Finland's real motive behind the Northern Dimension is to take over transit traffic from Estonia.

The upheavals and winds of change of the 1990’s have witnessed fluctuations in the ways that Finland, Estonia and the St. Petersburg area have viewed one another. The achievement of a position in the neighbour's market or on his list of favourites has not guaranteed a permanent status. It has been noticed that even the purest of motives do no necessarily strengthen friendship. There might be room for improvement in the attitudes and procedures of the party giving aid and sometimes the receiving party fails to show the level of gratitude expected. In Finland and Sweden, leading politicians and the media may present pungent and negative remarks about the neighbour without the danger of doing damage to their old and established friendship. In the area around the Gulf of Finland the relationships are far more sensitive to disturbances. Public opinion or a manner perceived as negative on the part of the other side, as well as regrettable individual incidents, hamper relations. Here, particularly, good neighbourly relations require fostering and understanding of the partner's position. It is not in the interest of our relations if Estonia is perceived as a "periphery of Finland". Neither does it make a positive contribution should St. Petersburg's development strategy present the close co-operation between Finland and Estonia as a threat (not merely competition) to Russian transport. The existence and achievements of the Gulf of Finland Growth Triangle might create a favourable and stable environment for mutual relations as well as promote the feeling of togetherness, both in the border areas and between the states.

At present, the transit traffic and other gateway activities (see Kivikari 1997) in the areas surrounding the Gulf of Finland take place within three double gateways (Finland - Estonia, Finland - Russia and Estonia - Russia) as well as through that of St. Petersburg gateway. The Gulf of Finland Growth Triangle would create a kind of triple gateway, which as an incentive for direct investments and other international activity, would be superior to the present situation. All three parties would be included, which would dispel suspicion, build confidence and speed up joint projects.

The Gulf of Finland Growth Triangle would make a clear improvement in both the building of infrastructure and environmental protection. A better co-ordination of project priorities and schedules would, alone, bring in great savings in expenses and facilitate the securing of financial backing. Changes in traffic and energy networks would effect the competitive situation in general. The combination of mutual competition and co-operation has often proved to be a tricky situation. Here, a growth triangle could provide assistance as well as in the additional respect that a third party, not participating in a bilateral project, would see the scheme as discriminatory in any way.

Perhaps the most precarious effect of a wider and deeper co-operation would be that particularly from the point of view of Finnish stability, both on macro and micro levels, the involved risks and dependence upon the neighbours would become greater. This would, however, be compensated by the benefits achieved through improved communication and predictability.

The Gulf of Finland Growth Triangle would seem to provide advantages for local and foreign companies as well as for the countries and regions involved. The benefits would not be exclusively economic inasmuch as it is a comprehensive project. The effects of increasingly close co-operation would surely be seen in political relations and social interaction and not insignificantly, in nature: on land, in the sea and in the air, literally.

2.3 Launching the Project

In the light of the preconditions and advantages presented, joint operations between Finland, Estonia and the St. Petersburg area, in line with the growth triangle concept, would seem to be well justified. However, some building blocks for the foundation of a growth triangle are still missing. At present, it is known that the awareness of the growth triangle, among the "right" people and in the "right" quarters is less than desirable and there is certainly a lot of incompleteness and insufficiency around the issue.

Perhaps the growth triangle itself is inadequate. It may fail to look sufficiently interesting, seen from the EMU Finland, or from St. Petersburg marketing itself as the bridgehead of the "Baltic Bridge" leading to the whole world, or from Estonia for that matter, whose first priority is to join the European Union in its own right without delay and not through the medium of a triangle. Should preparations for the Gulf of Finland Growth Triangle continue, we will, when the time comes, know if it is more difficult for the parties in Northern Europe to see this growth triangle as part of a multi-layered internationalisation and globalisation, that is, in terms of its effects, far wider than the geographical area involved, than those in East-Asia. Interest in the Gulf of Finland Growth Triangle will be determined, simply, by whether all the parties involved believe that the project will yield significant benefits compared to the situation as it exists at present situation.

The growth, explicitly suggested in the very name,  "growth triangle" - understood widely as development, or in the more narrow sense, as economic growth - is perceived of as interesting by many quarters having leverage enough to influence the realisation of the Gulf of Finland Growth Triangle. Among the realising bodies, local companies will be the first and the last. First, because without their interest in different parts of the planned growth triangle, the bottom for the whole project would fall out; and last, in the sense that only an active stake on the part of the companies in the established growth triangle, will make it functional and viable.

The East-Asian growth triangles have been set in motion by other quarters as well, but starting the Gulf of Finland Growth Triangle will undoubtedly necessitate a political initiative. Since initiatives for getting the project under way require a dynamic and visionary political will, even though it might initially seem to be preposterous, it is nonetheless practical, regarding the Gulf of Finland Growth Triangle, to attempt to assign the task to somebody.

As the smallest participant, Estonia can be assumed to benefit most from a stake in the Gulf of Finland Growth Triangle, particularly as in Estonia there is an element of discontent with the present state of neighbourly relations. In Estonia the political leadership and people have, as a whole, in the 1990’s faced greater changes and upheavals than a growth triangle, so a project in one’s own authority, which is perceived to be advantageous, would hardly collapse because of resistance to change. On the other hand, the agenda of the Estonian government is full to the brim of unfinished foreign political grand designs. Preparations for the membership in the European Union, adaptation to the quite recently achieved membership of the WTO, the development of relations to NATO and improving their relationship with Russia are likely to require particular attention. Although the last objective on the above list and the Gulf of Finland Growth Triangle support one another, Estonia's chances in managing the launch of the joint operation would be shadowed by their Eastern neighbour's presumably reserved attitude towards Estonia's "leading role". At any rate, it is safe to assume that official Estonia will be motivated to take part in a growth triangle.

From outside assessment, the Gulf of Finland Growth Triangle would provide a useful tool for developing the St. Petersburg area. Nevertheless, creating the political will to back the project would not entirely be without complications. The St. Petersburg area lacks a will of its own since it consists of two administratively independent parts, St. Petersburg and the Leningrad oblast. Uniting the administrative areas as federal subjects has been debated but the Gulf of Finland Growth Triangle cannot wait for a solution to this vexed question. Naturally, the conceivable benefits may bring St. Petersburg and the Leningrad oblast into mutual co-operation on this issue. Moscow's approval is an additional requirement, since it is hard to believe that the project has any real chance of succeeding without the Russian Federation's formal and actual backing. An Asian growth triangle has already been blessed by the highest authority in Russia but St. Petersburg, given its foreign relations, is a different and even a special case. Russia's attitudes and decisions are hard to anticipate. However, it is unlikely that the Gulf of Finland Growth Triangle would collapse should the St. Petersburg area not wish or be unable to participate in it. Regardless of the fact that the governor can exercise a powerful influence in his area, it is still unlikely that the issue would be put forth by any Russian political body.

From what has been said above, it follows that the possible further development and launch of the Gulf of Finland Growth Triangle depends on the political will shown by Finland, i.e. on the stance adopted by the Finnish government and its subsequent actions. This expectation regarding Finland's role is well justified. In Finland, it is easy to be motivated towards the development of co-operation in the area, we are after all, well aware of a number of frictions, drawbacks in competition and other problems that could be alleviated or possibly, removed entirely through the growth triangle platform. Finland has the necessary resources for both the decision-making and to act as the initiator of such a project. Finland's relations to the other parties are the least problematic and as an EU member Finland holds a special position, being almost obliged to develop ties with Russia and Estonia, of which, for instance, the Northern Dimension is a good case in point.

References:

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