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ABSTRACT
Six years has passed since the liberalization of Macau’s gaming industry in 2002, and people have begun to talk about “re-colonization” or “the new Opium War.” Given the weight of such matters, it is important that we understand the development of Macau’s economy, especially the gaming industry, where we have witnessed heavy foreign investments in the last few years. This paper will first explain dependency theories, especially dependent development and the developmental state. Second, we will see what the problems are in Macau’s economy. Third, we will discuss how the problems might be resolved following the route of dependent development. Fourth, we will emphasize the important role of the developmental state and community organizations. The major argument of the paper is that while it is generally a good idea to introduce foreign capital to Macau’s gaming industry, the state needs to balance the interests of local capital, foreign capital, and the local community. Only when their interests are balanced can there be development. This is especially important since more countries and districts in the region like Japan, Singapore, and Taiwan have either been building casinos or are considering it. There has been constant talk in Hong Kong, too, about establishing casino style gambling. Our study thus also both helps understand such issues in other areas and calls for further comparative research on the same topic. The method I use is mainly historical-comparative, but relevant statistical data will also be presented to illustrate the issues discussed.
Keywords : dependent development, gaming industry, local and foreign capital, the developmental state, Macau
The gaming industry seems to be flourishing in many parts of the world. In Asia alone, Macau has already become the world’s gambling mecca, surpassing the Las Vegas Strip in revenue in 2006, and was positioned to surpass Clark County in 2007, with a gambling income of 83 billion Macau patacas (MOP).
1 Korea already has casino style gambling, and Japan and Singapore are building casinos. Taiwan, and even Hong Kong, are thinking about it. Mainland China does not have casino style gambling, but other kinds of illegal gambling have also persisted, and state lotteries have long been introduced. The trend seems unstoppable, whatever the form. It is therefore understandable, for example, that whilst in the 1960s the British government was talking about discouraging and strictly controlling gambling, in the 2000s it is talking only about keeping gambling crime-free, ensuring that it is conducted fairly and openly, and protecting children and other vulnerable persons from being harmed or exploited by gambling.
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In the globalization of gambling, Macau has made great strides since the liberalization of gambling in 2002. In
2001 foreign direct investment was only MOP$1.3 billion, but in 2005 it was already MOP$10.6 billion, most of which was casino capital.
3 The increased casino revenue also means increased government tax dollars. The six concessionaires each have to pay 35 percent taxes on their gross gaming revenues in addition to 1.6 percent of them to Macau Foundation for social, economic, and cultural development, and 2.4 percent for urban development and construction (So Hang Tai, 2006:75). This means that in 2007 alone, the Macau government collected MOP$32.4 billion in gambling taxes. Over 80% of government revenue comes from gambling. In
2006, Macau’s gross national product per capita was already MOP$227,508, surpassing that of Hong Kong, and close to Japan (Lou Shenghua, 2007).
1 Clark County includes not only the Las Vegas Strip, but also the Las Vegas Downtown, North Las Vegas,
Laughlin, Boulder Highway, and Mesquite. The gambling revenue for the county in 2006 was US$10.6 billion, or Macau patacas (MOP)$84.8 billion. One USD equals about 8 patacas. See “Qunian Dushou Sheng Yue
Sicheng Da 830 Yi” (The income from gambling had a 40% increase and reached MOP$83 billion” in Macau
Daily , January 4, 2008, A10. See also Pinto (2007:67).
2 See Annual Report of the Gaming Board for Great Britain 2004-05 at the British Gambling Commission’s website http://www.gamblingcommission.gov.uk/Client/mediadetail.asp?mediaid=3 , accessed on January 12,
2008.
3 See “Xiyin Waizi Yazhou Di San” (Number 3 in Asia in attracting foreign investments), Shang Xun (Business intelligence), Issue 28, December 2007.

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Does all this data signify that Macau’s economy is developing healthily? Not necessarily. Problems abound. In fact, this paper attempts to understand the problems derived from gaming development and to explore ways to deal with them. In doing this, theories of development, such as world-systems, dependency, dependent development, and the developmental state, are relevant and useful. These are therefore explained first before moving on to an explanation of the problems and their possible solutions in the light of these theories. The method used in this paper is mainly historical-comparative, but statistical data is also presented as necessary to illustrate specific points.
1.
DEPENDENT DEVELOPMENT, THE DEVELOPMENTAL STATE,
AND MACAU’S GAMING INDUSTRY
Generally speaking, there are three branches of theory regarding development: modernization theory, dependency theory, and world-systems theory. Modernization theories view development as progressing from traditional to modern, stage by stage, politically, economically, and socially. Classical dependency theories think that underdevelopment was caused by the exploitation of the underdeveloped countries by the developed ones. So dependency is necessarily bad. The new dependency theories, namely, dependent development theories, however, think that the interests of the exploiter and the exploited can overlap. Development is possible even when there is dependency.
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Closely related to the dependency theories is Wallerstein’s world-systems theory, which suggests that there is a capitalist world-system. Rich industrialized countries like the U.S., Japan, Britain, France, and Germany, are at the core. The underdeveloped countries are on the periphery, while those that trade with both the core and the periphery, like Taiwan and Korea in the 1970s and 1980s, are at the semi-periphery.
The former Communist countries belonged to a different system, but many of them are now being integrated into the capitalist worldsystem, like China. Dependency development, then, could mean a process by which underdeveloped countries move from the periphery to the semi-periphery, and then from the semi-periphery to the core.
Furthermore, as Gereffi and Evans (1981:33) point out, “The process of dependent development is the result of the interaction of TNC [transnational corporations] strategies with the political and economic strategies of local social classes and host country states.” This touches on Evans’ concept of triple alliance. In his analysis of development in Brazil, Evans (1979) discusses the interaction of the multinationals, local capital and the state in deciding the direction of the socioeconomic development of a country. To be more specific, it might be useful to separate local capital from other classes. McDonough (1980) refers to other members or classes as a fourth actor, either in alliance with the above mentioned three, or in conflict with them, including, for example, labor and/or other social organizations.
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Also related to the triple alliance is the concept of the developmental state. This concept “focuses on the political will, the ideological coherence, the bureaucratic instruments, and the repressive capacity needed to formulate and implement effective economic policies to promote high-speed capitalist growth” (Gereffi and
Fonda, 1992:424-5). The kind of state in developing countries includes the bureaucratic-authoritarian state like that in Latin America in the 1960s and 1970s, or Taiwan and Korea in the 1970s and 1980s. One might even argue that it is the kind of state in mainland China now. In all of these cases, the state is able to institute rules and regulations that encourage foreign investment in their home countries and to repress labor movements to create a welcoming environment for foreign capital. Many of these regimes have later on developed into democracies as they enter the semi-periphery and even the core, like Taiwan and Korea. The mainland Chinese state seems to be developing in the same direction, following what is often called the East Asian Model (of dependent development).
Are these theories applicable to the analysis of Macau’s economy? There are several difficulties. First, dependent development theories as we explained above are mainly applied to countries where manufacturing is the chief money-making industry, as in mainland China now (Gereffi and Evans, 1981:31-64). The nature of the transnational corporations (TNCs) is thus very different: in Macau it is the service industry, especially the part that is related to gaming, which is the money-maker of the economy. As Gereffi and Evans (1981:57) point out
4 For discussion of development theories in these pages, see Alvin Y. So (1990). For more studies using development theories, see York W. Bradshaw (1985:195-207); Masayo Goto (2001)
5 In a review of Evans’ 1979 book, Peter McDonough refers to the fourth actor as the church, politicians, and the labor leadership in Brazil. In Macau, the role of the church is very limited. Politicians seem to be part of the state, even though they may have different views regarding development. But labor is indeed a force, albeit not a very forceful one. We will discuss these actors later in the paper.

3 when comparing Brazil and Mexico, “students of dependent development will be faced with a new series of intellectual challenges” when applying the theory of the development of the manufacturing industry to the development of the service industry. Macau’s is not only a service industry, but also a special kind of service industry.
Second, although the four actors also exist in Macau, they are of a very different nature than the ones analyzed in the literature. The multinational corporations are all of one kind: they are gambling businesses, providing a special kind of service. And even local capital defies definition. In 2001, after Macau was returned to China, the
Macau SAR (special administration region) government decided to end the monopoly by STDM (Sociedade de
Turismo e Diversões de Macau, or Macau tourism and recreation company), headed by Stanley Ho, and to open the industry to foreign competition. In 2002 it granted three concessions: Wynn Resorts from the U.S., the
Galaxy Group of Hong Kong, and STDM (now called SJM, Sociedade de Jogos de Macau, or Macau gaming company). Wynn Resorts then offered a sub-concession to Melco PBL, which opened The Crown Casino in
Macau in 2007. Melco is the Melco International Development Limited ( 新 濠 國 際 發 展 有 限 公 司 ), a conglomerate in leisure, gaming, and entertainment, located in Hong Kong and with Yau Lung Ho, a son of
Stanley Ho’s, as the chairman of the board and chief executive officer. PBL is a broadcasting and entertainment industry based in Australia. So Melco PBL is a joint venture of the two companies. It is hard to say whether
Melco PBL is local or foreign capitalised. The best we can say is that it is both, if we consider Hong Kong as local, or at least as Chinese vs. foreign.
The Galaxy Group offered a sub-concession to Las Vegas Sands, which opened The Sands in 2004, and then
The Venetian Macao in 2007. The entire 120 acre “Cotai Strip” featuring a number of casino hotels is expected to open in 2009.
6 SJM offered a concession to MGM Grand Macao, which opened in late 2007. MGM Grand
Macao is a partnership between MGM Mirage of Las Vegas and Pansy Ho Chiu-king, one of Stanley Ho’s daughters, the Chairwoman of Macau Tower Convention & Entertainment Center, and Executive Director of
Air Macau Company Limited.
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So out of the six major players, the Sands and the Wynn can be viewed as foreign capital, while SJM is entirely
Chinese (local) capital. Galaxy Group is not entirely Chinese, since in October 2007, Permira Funds, a British company, bought 20% of the shares of Galaxy Holdings, which means that they will be a gambling business partner as well. Melco PBL and MGM Grand Macao are both joint ventures about 50% Chinese and 50% foreign. To use the words of Tan Bo-yuan, the secretary of finance of the Macau government, half of the capital is local (meaning Macau and Hong Kong), while the other half is foreign (Side, December 9, 2007). One can argue, however, that none of them is really local, since they are either from Hong Kong, the U.S., England, or
Australia. And they are all TNCs. But because the CEOs of both Melco PBL and MGM Grand Macao are
Chinese and they own a bit over half of the stocks of these companies, they take on an air of local capital, and interact with the American companies as if they are different.
Thirdly, what then is the interaction like between the foreign and local capital, if we can separate the two? As
Gereffi and Evans ask, “To what extent has the level of external control over the local economy been exacerbated by displacement of the national bourgeoisie? To what extent have these effects been counterbalanced by joint national-foreign ownership of TNC subsidiaries and effective state regulation of their behavior (Gereffi and Evans, 1981, 32)?” That we need to find out.
Fourth, the developmental state is also different from that illustrated in the literature. Like Hong Kong, under the “one country, two systems” formula, Macau enjoys high autonomy in the People’s Republic of China (PRC).
It has more democratic elements in its political system. For example, the Chief Executive is elected by a committee of 300 representatives from various social organizations, and 12 of the 29 legislators are elected by the populace, 10 are elected by social organizations, and only 7 are appointed by the Chief Executive. This in general is more democratic than the mainland system. How effective is the state in its interaction with the other
6 According to Sands Macao’s news release on August 28, 2006: “The Venetian Macao will also serve as the anchor of the Cotai Strip(TM), a master planned development of resort and casino properties. The Cotai Strip will feature hotels operated by some of the most prestigious names in the hotel industry, including Four Seasons,
Sheraton, St. Regis, Shangri-La, Traders, Hilton, Conrad, Fairmont, and Raffles. Las Vegas Sands Corp. will own and construct each of the hotels as well as operate the casinos and entertainment venues in each hotel.” See http://phx.corporate-ir.net/phoenix.zhtml?c=185629&p=irol-newsArticle&ID=899653&highlight = [09/03/2006].
7 The Harrah’s has just bought a large stretch of golf-course on the Cotai Strip, and is likely to use it for a casino in the future if the government agrees. For now we will not yet consider Harrah’s to be an example of foreign capital in the gaming industry.

4 three actors: local capital, foreign capital, and the larger community, then? This is what we need to analyze as well.
As we can see, although the above mentioned development theories seem applicable to an analysis of Macau’s economic development, the situation in Macau poses more challenges. Nonetheless, they can help us explain development in Macau to a great extent. When discussing the development of Brazil in the 1970s, Fernando H.
Cardoso points out that dependent development is not without cost, including “a regressive profile of income distribution, emphasizing luxurious consumer durables as opposed to basic necessities, generating increasing foreign indebtedness, contributing to social marginality and the underutilization and exploitation of manpower resources, and thereby leading to an increase in relative misery (So, 1990, 141).” Macau’s situation is different, but we want to see how different or similar it is. We will now examine the problems in Macau’s gaming industry in light of the dependent theories outlined above.
2. PROBLEMS IN MACAU’S GAMING INDUSTRY
In the following pages, we will discuss some serious problems in Macau’s economy, including difficulties facing other parts of the service economy, the political challenges derived from the competition between foreign and local Chinese companies, and the casino operators’ responsible gaming practices in relation to their corporate social responsibility. We will also discuss the role of the state in solving these problems.
First of all, the expansion of the gaming industry has greatly strained other enterprises’ human resources, and the latter also find that they are losing business to casinos, at least they think they do. And they have to find ways to survive in the market. This is a different kind of “displacement of national bourgeoisie,” as explicated in the dependent development theory we mentioned above.
With the industry hiring more people, other enterprises find that their employees leave them for casino jobs. By the end of 2005, the gaming industry employed 26,000 workers, an increase of 22.8% compared with 2004
( Macao Daily, March 31, 2006). With the new casinos opening, the industry was already hiring more than
45,000 workers in 2007. (The population in Macau is 525,000.) There were 28 casinos by the end of 2007 and it is estimated that there will be altogether 30 casinos by 2009 ( Macao Daily, April 15, 2006). According to government statistics, there are 26,000 enterprises in Macau, and 99% of them hire fewer than 100 people. In fact, 91.5% of the enterprises hire fewer than 10 people ( Macao Daily, Nov. 26, 2006). It is these enterprises that feel the strain in human resources. Casinos tend to pay more money than these small companies can, and they provide better working conditions, including normal weekend and public holiday breaks, so such employers are witnessing large numbers of their workers quitting their jobs to join the casinos. The tourist industry, for example, has lost 40% of their employees to casinos, including their drivers and secretaries. There are over 100 travel agencies hiring 3,000 workers, but they find they need to apply for non-Macau residents, i.e., foreign labor, or the so-called wailao workers ( Macao Daily, Aug. 27, 2006).
What can the state do, then? One of the most acute social problems in Macau now is the so-called hei gong , or illegal workers. There have increasingly been more demonstrations in Macau, for example on May 1 (Labor
Day), October 1 (National Day), and December 20 (the day of Macau’s return to China). One of their complaints is that companies prefer to hire foreign to local workers. So the government is very careful in allowing only a limited number of non-Macau workers so as not to antagonize the locals. But this further exacerbates the labor shortage problem. Many have called for relaxation of the rules for hiring foreign workers, such as allowing foreign, but mostly mainland, college students graduated from Macau to join the labor market, even for a year or two, in Macau, but the developmental state is too cautious to act on such suggestions. Because of the executive-led structure of the government, the legislature does not seem to be doing much in this regard, either. So the developmental state is rather weak, as we can see in its ways of dealing with this and other problems. After the Ao Man Long corruption case, the government seems even weaker, not taking as much responsibility as it should for fear of making more mistakes (Pina, March 2008).
Second, the competition between Stanley Ho’s SJM, the local Chinese gambling company, and the Americanowned casinos has become intense. This arouses nationalist feelings. This may be the major “displacement of national bourgeoisie,” if we view SJM as local and national, although SJM, and even Melco PBL and MGM
Grand, do like to view themselves as local.
As we mentioned earlier, Stanley Ho’s businesses are local in the sense of Hong Kong and Macau, which are both Chinese territories. His businesses are mostly in these locations. And he is a member of the Standing
Committee of the Chinese People’s Political Consultative Conference, an organization composed mostly of

5 various small political parties and groups, whose importance is close to the Chinese National People’s Congress.
On the other hand, he used to own nine casinos in the Philippines, and he now owns the majority share of a casino in Lisbon, Portugal. Overall, he has business interests in mainland China, Portugal, North Korea,
Vietnam, and the Philippines. The company has in the past decade or so tried to gain gambling licenses in
Australia, Canada, and the Philippines, although unsuccessfully because these countries questioned, but never confirmed, his ties with organized crime. In the Australian case, one of Stanley Ho’s executives attributed the failure to obtain a gambling license to Australian “racist policies (Lintner, May 2007).” Apparently, Stanley Ho is not happy with his frustrations in these failed efforts that may have to do with racial and ethnic reasons. So in a word, his company does have some characteristics of transnational corporations, although it can be treated mostly as a local Chinese company.
In 2005 SJM had a gross income of MOP$34.4 billion, 75.5% of the share of the market, Sands Macao made
MOP$7.7 billion, 17%, and Galaxy made close to MOP$4 billion, or 9%. Although SJM still had the largest share, its share decreased by MOP$800 million, or 2.3%, while Sands Macao increased its share by 147.7%, and
Galaxy by 29.3% ( Macao Daily, April 27, 2006). By November 2007, the market shares of these companies were: SJM, 37%; Las Vegas Sands (LVS), 28%; Galaxy, 15%; Wynn, 15%, and Melco PBL, 5% ( Macau
Business , December 2007). In January 2008, the market shares of each operator were changed as follows: SJM,
30%; LVS, 21%; Galaxy, 10%; Wynn, 17%; Melco PBL, 16%; MGM (opened in December 2007), 7%. We can already see a decreased share of the market on the part of SJM, although it might have picked up more in
February 2008 since it opened another casino then. Melco PBL and MGM Grand might take more of the market share in the future. By 2009, however, LVS plans to take 60% of the market share (Adelson, Sept. 4, 2006), which would leave SJM with an even smaller market share. It does not, however, necessarily mean that this will happen, or that SJM will make less money. In September 2007, for example, SJM saw an increase of revenue by
10% compared with the same period last year ( Macao Daily, October 5, 2007). But the competition brings other problems. The loss of market share has an effect mainly on the psychology rather than on the economics of local capital.
Stanley Ho has already complained that the American companies were practicing unfair competition by enticing his employees and not fulfilling their promises for investing in schools and gardens. Most recently he has accused American companies of taking the money they make back to the United States. He even blamed them for students’ dropping out of school to work in casinos. But Sheldon G. Adelson, chairman and chief executive officer of Las Vegas Sands Corp, and William Weidner, president and chief operating officer of Las Vegas
Sands Corp, said that if you don’t have the ability to compete, then don’t complain. If you cannot compete, you will have to face elimination. Or if you cannot stand the heat, stay away from the kitchen. Indeed, Stanley Ho said that one third of his VIP rooms were facing closure. He wanted the government to exercise control over the growth of the American companies. He was afraid that the Americans would become a leading player in
Macau’s economy. Furthermore they would try to influence Macau’s politics after that ( Macao Daily, Aug. 29,
2006; Macao Daily, October 5, 2007).
Ho’s accusations and worries are finding echoes in people with strong nationalist feelings (Ye Guilin, 2007).
Some have begun to talk about “re-colonization” or “the new Opium War.” Others have talked about Macau, especially the American companies, drawing blood from the Chinese mainland, which is still relatively poor. In the Chinese Communist Party’s 17 th Congress in October 2007, President Hu Jintao stated that the Chinese government will guard against the interference of outside forces in the businesses of Hong Kong and Macau.
Quite a number of opinion leaders and politicians in Macau have appeared on TV programs and written in newspapers to blame the American companies for causing the current social problems in Macau, including inflation, skyrocketing housing prices, congested traffic, etc. And they are warning that the American businesses have interfered in the government’s policymaking and hurt local businesses (including the gaming business), and they will eventually cause political problems in Macau since they will create their own representatives in the legislature. In the end, they will control the politics and economy in Macau and hurt the central government’s policy of “one country, two systems.” Also that the central government’s other guiding principle of “Macau to be governed by Macau people” will be in jeopardy (Chow Kam Fai, October 26, 2007). So we are seeing more nationalist complications emerge.
It is an interesting case study of the triple alliance among the TNCs, local capital (in this case SJM), and the state. How might the Chinese central state and local Macau government handle this issue? We know that one of the reasons why the Sands was granted a concession is Sheldon Aldelson’s help with the Chinese government to win the bid for the 2008 Olympics in Beijing ( Macau Daily Times, October 9, 2007 ). That’s an alliance. The
Macau government is also happy to see the Sands’s role in diversifying the gaming industry. That’s an alliance, too, and an example of dependent development. But the nationalist feelings on the part of local capital and the

6 local community are also issues that all parties have to deal with. It will be interesting to see how things will evolve, and in what way they will affect the socioeconomic development of Macau. We will come back to this point in the next part.
Third, there is the issue of problem gambling and the promotion of responsible gaming on the part of the casino operators. For most developing countries, the price paid for industrialization is often an environmental nightmare. For Macau, the price being paid for more development is problem gambling. The Institute for the
Study of Commercial Gaming at the University of Macau researched the gaming activities of Macau citizens in
2003 (Feng Jia-chao and Wu Mei-bao, 2003). Out of a representative sample of 1,121 Macau residents, ranging from ages 15 to 65, the researchers found that two thirds of the respondents participated in at least one kind of gambling activities in the year before. While it may be true that most of them might have done it for recreational purposes, 1.78% could be identified as “probable addicted gamblers” ( keneng yi chengwei bingtai dutu 可能已
成為病態賭徒 ), and 2.50% were “probable problem gamblers” ( 可能已成為問題賭徒 ). If the ratio holds, out of 460,000 Macau residents at the time, 8,188 would fall in the first category, and 11,500 would fall in the second category. With the population increase, the figure must be higher now. And that is not including the gamblers from mainland China, who constitute the majority of the people gambling in Macau’s casinos. To prevent people from getting into gambling problems and help those who have become addicted to overcome addiction has become a daunting task for Macau society, including not only the actors in the triple alliance, but also the Macau community at large.
The problems of such gamblers can be seen, indirectly, from the following Hong Kong example. In the year between 2003 and 2004, Ming Ai Zhan Qing Center 明愛展晴中心 , or Caritas A G Counseling Centre, of Hong
Kong helped 350 addicted/problem gamblers who came to them the first time. Each of these persons still had a debt of 200,000 to 300,000 Hong Kong dollars. Half of them were addicted gamblers. Fifty of them had thought about suicide ( Macao Daily, October 15, 2004). Kung Yick, a former Nationalist officer stranded in Macau, lost
U.S.$3 million, the money given to him by the Nationalists to help people escape from the mainland, in a gambling career of 40 years. He died in 1998 penniless, although he had no regrets for his gambling sprees
(McGivering, 1999). One constantly reads and hear stories of people, both in Macau and mainland China, who have lost their businesses and/or families because of gambling.
3. SOLUTIONS TO THE PROBLEMS AND DEPENDENT DEVELOPMENT
As Gereffi and Fonda point out, “The essence of development is to improve the quality of life. This generally calls for higher incomes, which are the result of gains in productivity and technological advances among nations.
Economic progress, in turn, depends on a number of other development objectives: better education, improved health and nutrition, a cleaner environment, a reduction of poverty, more equality of opportunity, an enhancement of individual freedoms, and a richer cultural environment (Gereffi and Fonda, 1992,420).” These may be called economic, social, cultural, and political goals of development. So when discussing solutions to problems, we need to keep these goals in mind, whether we are talking about the survival of small and mediumsized enterprises, the nationalist conflicts between foreign and local capital, or problem gambling.
As mentioned at the beginning of this paper, the Macau government has an ever increasing reservoir of funds and it has an opportunity to use this money wisely for the city’s development. Some have argued that the government should provide more welfare to the elderly and build more economic housing for the local Macau people who cannot afford the extraordinarily highly priced housing now. Others have argued for building the infrastructure that is sorely lacking in Macau. It appears that the government is thinking about or beginning to do all of these things, but it’s not clear how effectively these projects can be carried out. We will focus in this paper on the three problems we raised earlier:
First, how can the majority of Macau’s enterprises cope with their human resource strain caused by competition and prosper in this globalized market? They seem to be facing two kinds of challenges. On the one hand, they need to make their businesses more competitive. This means that they will have to bring their services up to par with international standards so that they can compete with the services provided at the casinos. For example, the food industry has to make their environment more welcoming to customers and their food more appealing to a wide variety of visitors from all over the world ( Macao Daily, October 8, 2007). On the other hand, they need to provide more benefits and better working conditions to their employees so that they can retain them. If they can do the first better and make more money that way, they will be able to do the second better. Only by doing these things can they stay afloat and survive the competition. And by meeting these challenges, they will also be contributing to the diversification of Macau’s economy.

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Of course, this is much easier said than done. Faced with the need to transform their services, the more ambitious are getting small loans from the government to upgrade their businesses and are doing quite well. But others are facing closure: small shops are increasingly replaced by chain stores. Still others see a drop in their earnings. All of them feel the squeeze of human resource shortages ( Macao Daily, October 29, 1997). This may seem to be a good thing in bringing Macau’s economic development to a higher level. But it can also arouse feelings among the local capitalists. We occasionally hear small and medium sized enterprises complain that the government is not doing nearly enough to help them survive in the market. But other than that, they seem to be taking it for granted that they will have to take care of themselves in the current transformation of Macau’s economy. In the past two years, people have taken to the street to protest against the importation of migrant labor, skyrocketing housing prices, traffic laws, corruption in the government, etc (Bill K.P. Chou, 2007). But the conflict between this part of the local capital and transnational capital has not figured as importantly.
Second, how might the conflict between the gaming part of local capital versus foreign capital be resolved?
While Stanley Ho is complaining about unfair foreign competition, he is quietly improving his services as other casinos do. Ironically, competition and conflict might actually lead to improvements, and conflicts can thus be melted, to some extent.
The first of such improvements is in the diversification of the gaming industry. Rather than focusing on the gambling itself, the casinos have been trying to add other components to their operations. Indeed, when they were granted the concessions, the casinos were required to invest in other operations than gambling, such as convention, shopping, and other recreational areas. SJM, for example, would build Macau Fishermen’s Wharf,
Ponte 16, and East West Cultural Village (McCartney 2006:53). The first two projects have basically been completed, but the last one not yet. Meanwhile, The Venetian Macao has opened its convention center, which offers one million square feet of convention and exhibition facilities, one million square feet of shopping center with 350 stores, a 15,000 seat stadium, 20 leading restaurants, as well as Gondola rides (The Venetian’s website,
October 9, 2007). All new developments such as these will diversify Macau’s gaming industry like never before.
They provide convention centers and entertainment activities other than just gambling. What the other four major players (The Wynn Macao, The Galaxy, The MGM Grand Macao, and Melco PBL) will do in the same regard is not yet clear.
8 But the trend seems promising. And it’s a progressive part of dependent development.
Las Vegas has witnessed the following marketing tools to attract visitors: Grand Prix and Formula One Auto
Racing, Boxing matches, golf tournaments, tennis tournaments, musical concerts, New Years Eve parties, etc., and it is the world’s honeymoon capital and a vacation destination for many families (Eade, 1996; Walker,
2005). One point of introducing foreign capital is the diversification of the gaming industry, and apparently more can be done. For example, one might argue that the diversification of the industry provides an opportunity for Macau to protect its World Heritage Site status and to change its image of being “a city of sin” into one of being “a city of culture.” But this is only an opportunity. How the gaming industry can associate with World
Heritage Site status is not yet clear. Can casinos expand their cultural component by integrating the local historical contexts into their entertainment sector? We know that The Venetian has incorporated the Venetian culture. But not many have thought about incorporating the Macau Portuguese/Chinese culture. For MGM
Grand Macao to simply build its grand lobby in the style of the Portuguese Central Train Station with a
Portuguese garden is a good start, but it is probably still too little, too symbolic, and too simple. How will the casinos diversify their own operations? Will the government endeavor to compete with the casinos in attracting people’s attention to Macau’s World Heritage Site status, or ask the casinos to include this in some way in their entertainment sector (Chen Limin, 2007)? In the triple alliance between the state, the multinational corporations and local capital, the government probably needs to take a stronger stand in promoting Macau’s culture. So can gambling and this other kind of “World Heritage” mesh? If so, in what way? Is foreign capital here only for money, or will it also be able to promote one of the cultural goals of development as we mentioned above? This we still have to see.
The second improvement derived from the conflict between foreign and local capital is the establishment of rules and regulations regarding the gaming industry. Take the credit system for example. Before 2004, it was illegal to lend money to gamblers, no matter by whom, although such practice was tolerated in reality. When
Wynn Resorts came to Macau, it insisted that gambling credit be made legal, and it has been since then (Wang
8 The Fishermen’s Wharf has been hosting medium- to small-sized conventions since its opening in 2006, over
25 of them by the end of first half year of 2007. It’s less expensive to have conventions in Macau than in Hong
Kong, where the prices will double. Apparently, the Venetian will attract large conventions in the future. See
“Ao Zhan Fei Ping Lalong Da Zhanhui” (The expenses for conventions are low here in Macau, and large conventions will be attracted), p. A10 of Macao Daily, August 27, 2007.

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Wuyi, 2005; Guan Hongling and Lei Qiang, 2005). This made it possible for creditors to pursue debtors through the courts of law, something they can do now in Macau but not in mainland China, since gambling is still illegal there ( Xun Bao , August 24, 2007). More such rules might help prevent crimes such as loan-sharking, criminal kidnapping, and even murder associated with such activities.
Establishing rules and regulations for the game is all very important. But it will not be an easy task. For example, can and should the gaming industry form its own association, as in the United States, so that it can better regulate itself? Liang Anqi, a legislator associated with the gaming industry, complained that the government promised to organize a gaming advisory board in 2007, but nothing had happened. Then at the end of 2007, the government announced its decision to form a gaming advisory committee composed of all the players in the field, including the casino representatives, government officials, and community leaders. So there might indeed be a triple or four part alliance. But it remains to be seen when it can be established and whether it will work.
Liang has also questioned the open-design of the Venetian Macao, where people can freely visit the gambling tables and machines without security checks. She wants the government to clarify its rules and regulations
(Liang Anqi, October 26, 2007). As we will discuss below, more areas will need regulating. Of course, rules without enforcement are useless. This is also a challenge to Macau’s gaming industry.
The third improvement is in human resource management. By definition, human resource management means the organization of employees as assets in a corporation in such a way that the employees will be valued as human beings and can be mobilized to do the most productive work for the company (Eade, 1996). How does one organize one’s employees, then? How does one show care for one’s employees? Wynn Resorts has been reported as providing its employees with a team member support program. This would give its employees 24 hours of free and confidential hotline support in Cantonese, English and Mandarin as well as training to help them deal with the various pressures derived from their jobs, including conflict management ( Xun Bao , August
17, 2007). In Las Vegas, the dealers at Wynn voted to join the TWU Dealers Local 721 (The Transport Workers
Union) for the purpose of collective bargaining and lobbying elected officials.
It looks that Wynn Macao is doing better than Wynn Las Vegas in terms of its human resource management, although more research still needs to be done to see what the similarities and differences are between the two locations. Research should also be done to compare not only the two Wynn properties but also the foreign vs. local Chinese companies and see whether they are doing similarly or differently regarding human resource management. We know that under the pressure of international competition, SJM has already improved its services and human resource practices. There is apparently more room for improvement, and we just need to find out specifically how. In a recent court case, a former employee has sued SJM for lost pay in holidays (they did not used to have holidays, including weekends, annual leaves, Spring Festival holidays, etc. when they worked there—things seem to have changed now) ( Macao Daily, September 28, 2007). How do Macau’s casinos compare in providing employees with pension plans, free life, health, accident and hospitalization insurance and free meals, in relation to the practice in Las Vegas? (Terri C. Walker (ed.), 2005)
If we judge competition and conflict between local and foreign capital from the point of view of a concrete improvement of quality of life in Macau, then the nationalist feelings we mentioned earlier are not really as important, unless there is unfairness and injustice involved. But they are important nonetheless. The gaming industry simply has to do more to alleviate Chinese nationalist feelings, not only in the above mentioned areas of diversification, regulation, and human resource management, but especially in preventing problem gambling.
We will come back to the role of the developmental state in the next section, but let us first see what the gaming industry is or is not doing regarding our third problem area.
The third problem we discussed earlier has to do with problem gambling. Will foreign investment help here?
Will dependent development work in this regard? That brings us to the issue of responsible gaming.
Responsible gaming means not only 1) that players should make rational and sensible choices, but 2) that the industry has an obligation to protect the players by providing rational and sensible products and services so that the players will make rational and sensible choices, and 3) that the industry has an obligation to contribute to the overall welfare of society rather than causing problems for sustainable development. This is also part of the casino’s corporate social responsibility (the Royal College of Psychiatrists, 2004; Richard Holm and Phil Watts,
2000). Other than the state, local capital outside the gaming sector, and the community organizations, what can the casino operators do to advance responsible gaming? Do they have an obligation to help individuals, including their own employees and families, prevent, intervene, and treat problem gamblers? What can they do?
Harrah’s is an industry leader in responsible gaming since the 1980s. In one of its programs named Operation
Bet Smart®, Harrah’s stated that they:

9 provide responsible gaming signage on the casino floor and back-of-house so that employees always know where to refer customers requesting assistance. We also provide responsible gaming information in brochures, on hold messages, and Harrah's responsible specific media campaign, as well as including helpline phone numbers on all marketing collateral, player cards, and hotel directories. These communication efforts serve to provide our customers an unobtrusive vehicle for obtaining more information about responsible gaming and seeking assistance (Harrah’s website, October 10, 2007).
Harrah’s has other programs like Self-Restriction/Self-Exclusion, Looking out for Kids, and Project 21, which
“teaches casino employees, minors, parents, and guardians about the consequences of gambling under the legal age.” Other casinos in the world have taken other measures. And the state may also set restrictions on where and how casinos can operate (Hancock, 2007).
But research finds that such measures are not effective since the incentives provided by the industry are far more powerful than their warning signage or other restrictions. So these measures have to be accompanied by other controls such as limits on the amount of money one can spend per gambling session, for example. Are Macau casinos and the government doing anything similar? Not really. The Sands Macao and The Venetian Macao seem to have taken some initial steps in the way of responsible gaming, but not much has really been done.
Furthermore, over 70% of casino revenue comes from the high rollers, who bet thousands upon thousands of dollars. And they bet in the VIP rooms (Wang and Zabielskis, 2008; Zeng, 2007). Comparatively speaking, in
Las Vegas the high rollers generate only 40% of the revenue (Walker, 2005). If the money comes from their own pocket and they can afford it, it is arguably acceptable practice.(Still, we read about too many tragedies here.) But if they gamble embezzled money, this is a pubic issue. Of course, it is hard for casinos to know what money is legal and what is not. But there are things they can do. They certainly know who is spending how much, and they know the identities of these people, too. They can certainly put a cap on mainland cadres or private business owners as to the amount of money they can bet in their casinos.
Whilst it is true that it may be the middlemen and women who control the money transactions, not the cadres themselves, the casinos can have leverage on the middlemen and women. If they want to control who is in their properties, they can exert control over the middlemen and women, who can then exercise control over the gamblers. This of course goes against their business instincts to make as much money as possible. And it may also be in conflict with some privacy laws. But some kind of compromise needs to be found to deal with the problem. If casinos are to be responsible businesses, they should make an effort to prevent illegal money from flowing into their pockets by adopting responsible gaming practices.
In the triple alliance, the government can also do something in this regard since the middlemen and women, numbered 3861, are licensed by the government (Li Yan, August 10, 2007). In summer 2007, the Guangdong government also issued an order to limit visas to Macau for their government officials. This is certainly one way to deal with the problem, even though corrupt officials and corrupt casino business operators can find other ways to avoid being caught (Li Yan, September 21, 2007). And the number of corrupt officials can be large.
9 So some concerted efforts by all parties have to be put on the table. Private gaming salons like the VIP rooms in
Las Vegas are not the most popular and contribute little (at least not the most) to the casino revenue there
(Walker, 2005, 244). If Macau wants to reverse its image of uncontrolled gambling, it may have to decrease the number of exclusive betting parlors. Yet the trend seems to be the opposite. Here dependent development faces serious challenges. Dependency does not yet mean development here.
4. THE IMPORTANCE OF THE DEVELOPMENTAL STATE AND THE LOCAL COMMUNITY
From the discussion in the previous sections on the problems and solutions in terms of competition faced by the small and medium-sized enterprises, the conflict between local and foreign capital, and prevention of problem gambling, we understand that up to now neither the government nor the community have played a strong role.
Therefore we will take a more detailed look at these two players in relation to Macau’s socioeconomic development.
9 Bill Chu, Harrah’s Asian regional marketing director, says that he brings 100 to 500 Chinese players a month gambling in the $30,000 to $100,000 category (Walker, 2005 : 467). That may be exaggerating, but by the same token, more such players would come to Macau, since it is so close and so convenient. One can imagine the amount of money involved. One does read frequently stories of mainland officials being tried and sentenced because of their using public funds to gamble and lose big here in Macau. See also Dai Anna 2007:107.

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As Xie Side points out, in the past eight years, the Macau SAR government has largely followed a laissez faire policy in its relationship with the market. This can already be seen from the Chief Executive’s 2000 state of
Macau report. He said that the government would let the market lead the development of the city, and it would protect the normal operations of the market mechanisms. Did this mean that the government would not do anything at all? Although the government does not say so, it appears that this is the case (Side, September, 9,
2007). The government’s role, however, is not necessarily to localize the gaming industry and reject foreign competition, as Xie seems to be implying. However there do seem to be many issues where the Government is not taking action when it probably should be. Here are a few examples.
First, many legislators have been calling on the government to clarify its labor policies to help especially the small and medium-sized local enterprises, but the government is still dragging its feet. The legislature, on the other hand, cannot do much since the political system gives most power to the executive. Of course, the government cannot take the full responsibility for the survival of the small and medium-sized companies. As we said earlier, much depends on how they can enhance their competitiveness. But the government’s role cannot be ignored, either ( Macau Business, December 2007).
Second, regarding the competition between foreign and local capital, the government needs to play a more open, fair, and just role. For example, in a recent conflict in December 2007, the government granted a ferry operation license to Las Vegas Sands’ Cotai Waterjets between Hong Kong and Macau. About one week into operation, the court intervened, and Sands Macao had to stop the operation because both Pansy Ho, the head of Sun Ta
Holdings Limited and MGM Grand, and Stanley Ho, her father, protested. Stanley Ho alleged that granting the shipping license to a gambling concessionaire was against the law, especially when it was not done in a transparent, tendering procedure (Azevedo, December 2007). At a legislative meeting, Liang Anqi, a wife of
Stanley Ho, even complained that the government was bestowing favors to certain casino operators at the expense of others ( 同人唔同命 ). She complained that the government granted the rights to certain casinos (she meant Sands Macao) for land development (she meant the Cotai Strip), more imported foreign labor, and more convenient ways of recruiting mainland workers, etc (Side, September, 9, 2007). Apparently, the government has not done nearly enough in regulating the gaming industry and balancing the business interests of foreign and local capital. (Cotai Waterjets resumed operation about a month later.)
Third, the government has done even less in requiring the casino operators, local or foreign, to practice responsible gaming. As we mentioned above, both the casino operators and the government are increasing their incomes, but no one has seriously thought about preventing problem gambling. Given the control measures that are increasingly taken in other parts of the world as, for example, in Great Britain, Australia and the U.S., they cannot just claim ignorance or pay lip service to such matters. This is one of the most important components of dependent development; otherwise, dependent development may largely fail.
As Jose I. Duarte points out, current problems seem to indicate that “too many discretionary decisions were taken without proper or explicit justification,” and public services seem to be “overwhelmed by their current tasks”, the government being “unable to anticipate consequences of public decisions or to adequately plan even for foreseeable outcomes.” He suggests that there might be possible structural or political obstacles hindering the government’s performance. Autonomy and responsibility need to be better designed and adequately respected, and “competence and dedication must be properly recognized and rewarded…(Duarte, December,
2007)” This will probably entail more democratic reforms of the government.
In addition to the role of the government, the community at large needs to be more aware and more active in affecting Macau’s socioeconomic development. Indeed, Macau has over 4,000 social organizations. But most of them are not active, and those that are active tend to be pro-government, an alliance that is more likely to promote “harmony” than development. For example, the workers’ associations, women’s associations, and neighborhood associations are three of the most powerful social organizations. They were normally in opposition against the Portuguese Macau government. But after the return of Macau to China, they shifted their loyalty to the Macau SAR government, and are seldom in conflict with it. They are, for example, against more democratic reforms to make the government more responsible. We mentioned several demonstrations, but they were organized by several pro-democracy organizations or new and small independent unions or citizen groups.
The mass media in Macau are also mild even in their criticism. They are afraid of rocking the boat (Zhidong, forthcoming ). It is true that there is plenty of discontent in Macau, but much needs to be done to turn it into productive forces to help enhance dependent development, including more democratization of the political system.

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5. CONCLUSION
In this paper, we have discussed some theories of development, especially dependent development and the developmental state. We have also discussed the problems of the gaming industry in Macau and their solutions.
We have emphasized the importance of the state and community organizations. We do see some problems with the internationalization of the gaming industry in Macau, and the introduction of foreign capital in the form of
Las Vegas style casinos. These include the strain on human resources and pressure put on the local small and medium-sized enterprises, conflict between local and foreign capital, and increased problem gambling. But we also see that the pressure put on small and medium-sized companies may actually help them to enhance their competitiveness. The conflict between foreign and local capital can lead to improvements in the diversification of the industry and in human resource management practices. We also see the necessity of the establishment of better rules and regulations that govern the industry. There are, however, still many problems that the state and the industry are not doing nearly enough to address, such as the diversification of the gaming industry and prevention of problem gambling. Only when these problems are resolved to a great extent can the nationalist feelings we mentioned in this paper be alleviated. The government so far has played a rather weak role in
Macau’s economic development, as have the community organizations as a whole.
As dependent development theories would tell us, it is the interaction between multinational corporations, local capital, the state and the community organizations that determines the direction of development. It is the balance and compromise of their interests and adjustment of their strategies that makes development possible. We need to further study each player’s strategies and see how a balance can be achieved. For only then can it be a winning situation for all the players. In other words, transnational corporations will still stay in the market, but they are only one of the players, and have to be equal, fair, healthy, ethical, and productive players as well. In a mature economy, which Macau is not yet, the market will no longer be dependent on any one player. Dependent development will have finished its historical task, and the goals of local economic, social, cultural, and political development will have been achieved.