In this paper my main empirical data are taken from the East Malaysian state of Sarawak, but much of what I say applies equally to the other East Malaysian state of Sabah. What is more, my argument is relevant in large part to the southern two-thirds of the island of Borneo—that is, to the four provinces of Indonesian Borneo or Kalimantan. For the purposes of this discussion I have to treat the small, newly independent oil-rich sultanate of Brunei Darussalam on the north-west coast of Borneo as an exception. My general concern is with the peripheral position of the Borneo territories, economically and politically, in relation to the developed core areas of the nation-states of Malaysia and Indonesia. As a result of its environmental and demographic characteristics, its historical experiences under British protection and then colonialism in the north, and Dutch colonialism in the south, and its subsequent post-independence experience, Borneo is admirably suited to perform the role of a natural resources area for the national development programmes of Malaysia and Indonesia (Avé and King, 1986). For Indonesian Borneo there is an additional issue; it is also an area for the resettlement of some of the excess population from the densely populated islands of Indonesia's heartlands, especially from Java and Madura. Fortunately, Malaysian Borneo has no need to fulfil such a role in relation to West Malaysia.