Virtual States Remain A Fantasy

The rise of the "virtual state" as depicted by Richard Rosecrance in an article written in 1996 seems compelling, but in a tantalizing way.

The very fact that virtual states had not taken root in a significant way in the decade since the article was written is perhaps an indication that though captivating, the concept is one that remains somewhat illusive and out of reach.

Rosecrance argued that since land is no longer the major factor of production and an indication of a country’s power, states would increasingly focus on mobile factors of production such as human resources, capital and information. Hence, wars of conquest will lose the allure and justification that they once possess.

But if states are no longer obsessed with land and expanding overseas empires, it follows that this lack of interest in war will imply that states need no longer fear one another. But this is certainly not the case, particularly in Asia, where fear, distrust and traditional animosities remain, and military buildup continues, sometimes at an alarming pace.

While corporations can, as Rosecrance argued, sub-contract their production processes and facilities elsewhere, it is doubtful if the same principles of lowest costs, production efficiency and bottom-line can be applied to countries. After all, states have various concerns that extend beyond the profit motive, to include concerns such as sovereignty and security.

Perhaps it can be argued that the concept of virtual states had found some semblance of fruition among smaller economies such as Hong Kong, Taiwan, Singapore and Netherlands (the example of Nestle in the article), where land and other natural resources are scarce. But even so, it should be pointed out that the concept of virtual state is not one that is borne out of deliberate consideration, but is instead unwittingly foist upon these smaller economies. Indeed, these economies have no choice but to internationalize and to look beyond their shores if they hope to survive, let alone prosper.