The central idea in of Richard Rosecrance’s book entitled, The Rise of the Virtual State, is that power is shifting once again, this time to nations whose people are most adept at summoning global financial capital and turning it into conceptual insights for sale around the world. Rosecrance calls these new centers of power virtual states, because their wealth and influence depend on intangible flows of money and ideas. The new virtual state does not need a lot of exports to finance their imports and their foreign investments. However a trained workforce is imperative for these virtual state to generate research, software designs, entertainment, engineering concepts, advertising, marketing, styling, legal and financial innovations.

In the second half of The Rise of the Virtual State, Rosecrance examines several nations and comments on how they relate to the virtual state concept. He also generalizes about the relationships and characteristics of what he calls a new system of international politics and economics.

Rosecrance, in latter part of his book the Rise of the Virtual State considers three Asian nations to be examples of virtual states: Hong Kong, Singapore,

China, with a trained labor force can attract foreign investment in production. In Rosecrance’s view “China may become the production plant for the world, but China’s industries would only attain completeness when mated to research, development, product design, marketing, and financing provided by other nations.” (171) The developing world continues to rely on the products of land, and thus remains the least stable set of nations. However, to the extent China and the developing world will be willing to join in production interdependence, the less likely they are to become involved in unproductive, violent conflict.

Finally, Part II and Part III of the Rise of the Virtual State demonstrates how countries can work together and become increasingly interdependent and stable. For example, countries endowed with a lot of capital don't have to conquer countries with a lot of labor; they can just admit more immigrants. Nations with a lot of well-trained but poor workers don't have to pillage their neighbors for capital; they can rely on global capital markets to transfer money to them from capital-rich places, so long as nations on the receiving end remain open and friendly. Developing countries no longer nationalize foreign plants, because that would stem the flow of foreign capital, and flow is more important than any physical plant. The rise of the virtual state will inaugurate 'a new epoch of peaceful competition among nations, promising a cooperative transition to the new millennium.

The relationship between Russia and Europe is complex. Russia has tended to dominate the continent militarily while Europe has tended to dominate economically. Closer association with Europe could motivate Russia to modernize its economy. Russia tends to rely on products of land, so that in Rosecrance’s model it remains vulnerable to conflict over territory. However, he believes by drawing Russia into an encompassing coalition with Europe and other powers, the chance of conflict will be diminished.

Furthermore, he asserts that the virtual state increasingly relies on foreign factors of production to keep populations at work. This notion would then imply a mar

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