Research for International Economics

The Unite States is entering a momentous period in its history. The Cold War is over. The threat of world war III has dissipated along with the USSR and its communist part. The post-Cold War world is taking shape, with profound changes affecting both international and domestic politics. First, there appears to be a profound shift from geopolitics and military threat to geoeconomics as the basis for this new order. Second, the rebuilding of economic and social structures at home has assumed greater importance as a legitimate national security imperative. Given the strength, resilience, and leadership of the United States, it would appear that the end of the Cold War should redound to America s distinct advantage. The Center for Naval Analyses is using this year's annual conference as a forum to debate how these changes will affect America's national security policy and its maritime component in the post-Cold War world.

Recent Soviet press statements reflect a growing conviction that the emerging 'Pacific Century' has important implications for the USSR. While seemingly downgrading the military component of Soviet Far East presence, Soviet leaders are contemplating various unprecedented measures. Among them are the creation of 'free economic zones' and the opening of several ports, including Vladivostok. This research memorandum assesses the status of these developments, discusses some of their implications, and examines the possible nature of economic activity in the zones and potential sites for them. Also briefly noted are new trends in Soviet economic thinking.

This paper expands upon a model developed by Ladman to provide a vehicle to explain not only the historical development of the border area economy, but also to provide a useful instrument to predict the impact of changes in economic activity in the two-nation region.