The Flying Geese Theory of Development, Its Development in South East Asia - Case Study Example

The Flying Geese Theory of Development Name Professor Institution Course Date Abstract The flying geese theory of development was applied by Akamatsu Kaname in interpreting the development of the Japanese economy. The theory was developed in the 1930s and explains how a careworn country can be comparatively quick in its progress (He, 2009). The underdeveloped economy adopts labor-intensive techniques in the production of goods and provision of services. The techniques are greatly borrowed from developed countries and applied to underdeveloped countries in order to boost their capacity and compete with the developed economies. Industries in the underdeveloped economies mainly concentrate on producing for the domestic market, and eventually start exporting their products after their industries are strong (Thorbecke & Nissanke, 2010). This cycle is continuously repeated leading to a faster development and growth in economic matters. After the first and second world wars, Japan adopted industrial policies which were borrowed from the developed economies. These policies designated some industries as active and others were considered dormant (Thorbecke & Nissanke, 2010). Active industries received massive support from the government in terms of finances and research whereas the dormant ones were neglected. The government provided less support to the dormant industries because they were losing their comparative advantage, and resolved to move them to the less developed Asian countries (He, 2009). Introduction The projection if this report is to highlight on the key theoretical aspects of the flying geese model of development. The theory was developed by Akamatsu Kaname in Japan. The theory is widely known and applied in Japan but it is unfamiliar outside Japan. This is because the Japanese Great East Asian Sphere used the theory to legitimize themselves during the Second World War. However, the theory was developed in 1932, long before the war (Thorbecke & Nissanke, 2010). The theory is excellent in ensuring the development of economies and is a driving force in the economic relations in Asia. Asian economies have achieved great success in terms of exports and economic growth. The countries have been able to reduce levels of poverty and created competitive economies in the world. The success of Asian economies has been attributed to the flying geese theory that emphasizes on high work ethics, savings, and high investments in human capital and infrastructure (He, 2009). The flying geese model and its roots The flying geese model explains a catch up process of industrialization in the economies of East Asia. The flying geese pattern explains the trend of three sectors namely imports, exports and domestic production. Schroppel and Mariko indicate that the sectors resemble “wedges of flying wild geese chasing each other” when plotted against time (Reid & Gatrell, 2006). The original flying geese model had three aspects of intraindustry, interindustry, and intercountry. The rise and fall of the three aspects led to a cycle that explained the intraindustry aspect through the invention of new products in the existing industries. There was an emergence of industries in developing countries, explaining the aspect of interindustry. These industries were heavily borrowed from the developed countries with an aim of boosting the existing industries that had weak structures. The new industries brought capital goods and machines to be used in their production processes. The intercountry aspect is explained by the shift of industries from developed countries to the underdeveloped countries. This was caused by the rise in production costs in the developed countries, causing a decline in the quantity of goods exported (Chen & Morita, 2010). Japan was the first country to establish industries that produced nondurable goods, followed by durable goods, and finally capital goods. Second tier countries (Taiwan, Hong Kong, Singapore and South Korea) followed Japan and the third tier countries (ASEAN countries) followed the second tier (Reid & Gatrell, 2006). Another important aspect of the flying geese model is the presence of military power used in maintaining and reinforcing the model. A good example is the use of military power in the first and second gaggles of the flying geese model. Many Asian countries were invaded by Japan in the First World War, and claimed to liberalize the countries from western powers. Japan claimed further that it was ensuring a regional integration that would ensure prosperity in their economies. Japan was very powerful and used its sophisticated economic policies to establish an improved economic network in Asian countries (Chen & Morita, 2010). This led to the second gaggle of the flying geese model. The First Gaggle of the Flying Geese Model The first gaggle of the flying geese model came into operation after the Meiji Restoration in 1868. Japan strengthened its diplomatic relations with western countries and its military power. Japan modernized its economic mechanisms and spread is policies to other Asian countries by subjugating its neighbors through military force. Japan was able to catch up with the western economies (Chen & Morita, 2010). Japan started to expand its territories in the late nineteen century in order to counter stiff competition from western countries. It started by conquering Taiwan, Manchuria and Korea, and gained control of the conquered territories. This was a very fast step to counter the surging imperialist competition. Japan forced the second and third tier countries to adopt their leadership systems and economic policies (Chen & Morita, 2010). It went further to exploit their natural and human resources which were used in the Japanese industries for production. Characteristics of the First Flying Geese Model The main features of the model are the use of military force and the imposition of Japanese ideologies and policies on other Asian countries. Before the Second World War, Japan adopted military and national policies that aimed at expanding its territories (Hatch, 2010). The country further adopted strong sentiments that were against policies from the western countries. Japan started to experience economic success and felt the urge to spread its policies and political ideologies. It considered its policies as superior to those of the rest of the world, and used force in imposing the policies and ideologies on its neighboring countries. The Japanese considered these policies as a development vehicle for economies in Asia (Chen & Morita, 2010). The first gaggle of the fly geese model came to an end in 1945 when Japan surrendered to the allied powers in the Second World War. The country was devastated and almost all of its industries had collapsed due to bankruptcy. The collapse of industries and businesses led to high levels of unemployment and poverty (Chen & Morita, 2010). The one time powerful economy became one of the poorest countries in the world and relied heavily on foreign aid from western countries. Japan’s economy was greatly affected by a series of wars leading to the destruction of industries and businesses. Asian countries were also affected by the war since most of the countries were under the control of Japan (Hatch, 2010). The Second Gaggle of the Flying Geese Model Japan experienced a new awakening by abolishing its anti-western policies and use of military force on other countries. The country decided to pursue a peaceful approach in dealing with its neighbors (Reid & Gatrell, 2006). The United States of America and Japan signed a security pact that enabled the latter to concentrate on its economic interests. United States and Japan had created a relationship, which enabled them to have an economic platform of increased exports for Japan due to the exposure to the large US market. Japan embarked on creating another production network in East Asia, which was regarded as the second attempt to create integration in East Asia (Chen & Morita, 2010). Japan started the second gaggle of the flying geese model by establishing industries borrowed from western countries and establishing them in the country. The government heavily invested in well performing industries by injecting funds, and abolished underperforming industries. The established produced large quantities of goods that were exported to the second tier countries. The second tier countries were later to be known as Asian Newly Industrializing Economies (Thorbecke & Nissanke, 2010). Japan provided international aid to the NIEs increasing their production capacity. The second-tier countries were able to produce high quality products that were competitive in the international market. The NIEs eventually started exporting their goods to third tier countries. The third tier countries consisted of China and ASEAN countries including Thailand, Malaysia and Indonesia. The NIEs assisted the third tier countries improve their economies by investing in large amounts of money in those countries. Japan once again become independent and led other Asian countries in gaining economic growth and development (Thorbecke & Nissanke, 2010). Characteristics of the Second Gaggle of Flying Geese In the second gaggle, Japan heavily relied on its economic power as opposed to military force; used aid in boosting economic power and consolidated its production network in East Asia; and its government was involved in less political initiatives. Japan established a close economic relationship with East Asian countries to gain the confidence and lead them to economic success. The country provided aid in form of reparations paid to the countries that suffered from its militarism (Reid & Gatrell, 2006). Application of the Flying Geese Model of Development in South East Asia The flying geese model is equally applicable in economic development of South East Asia as it was North East Asia. Japan invested capital and technology in most of the industries in the developing countries (Hatch, 2010). In addition, the Japanese government invested large sums of money in form of financial aid to the third tier countries through the Official Development Assistance. This financial assistance was made in form of war reparations to South East Asian countries which were under the reign of Japan in the Second World War. They aids was in form of private and public investment. Most of the aid aimed at development projects unlike humanitarian programs. The leading beneficiaries of Japanese aid included China, Indonesia, Thailand, India, and the Philippines. The Japanese government promoted economic development through the Japan International Cooperation Agency. The agency dispatched a team of experts to the third tier countries to offer technical advice ranging from effective methods of applying fertilizer to strategies to improve production in manufacturing (Reid & Gatrell, 2006). In the early 1990s, the Japanese government had a main objective of creating division of labor in the Asian region based on the different levels of technology in Asian countries. The government attempted to promote economic integration by use of capital, technology, and flow of merchandise (Hatch, 2010). The flow of such resources indicates the different levels of economic resources in member countries, and their comparative advantages. Division of labor ensured that advanced economies passed down industries to underdeveloped countries that did not have comparative advantage (Fukasaku et al, 2005). The south East Asian countries experienced an increase in exports and growth of trade activities in the 1980s. This explains the increasing emphasis on and improvement of external trade. The improved performance in exports clearly indicates an improved structure in export trade. Exports of textiles have been significant in the South Eastern countries with readymade garments as the main products (Fukasaku et al, 2005). The boost in exports is as a result of the established industries from the second tier countries. Flying geese model is a concept that is behind industrial development in South Eastern countries by influencing industrial restructuring. Strategies on improving the levels of export have led to reduction in costs of production and efficient use and management of resources. The policies that are aimed at improving the competitiveness of industrial firms have been adopted by many countries (Hatch, 2010). Policies of the flying geese model Influence of geography and security- Geography and security have an influence in economic development. A wide variety of factors such as climate, health, and proximity to markets affect the development of a given country (Fukasaku et al, 2005). Countries in the tropical zones have greater prospects of economic development than those in temperate zones. Prevalent of diseases are considered to be less, which boost their human labor, and this is one of the reasons as to why there are high prospects for economic development. Also the accessibility of fertile soils that increase agricultural productivity is another reason. Security had a direct effect on the development of South East Asian countries (Fukasaku et al, 2005). This was evidenced by the signing of security treaties by Philippines and Thailand which ensured that industries were protected from war. Security forums have been developed in ASEAN countries. Such forums have led to the mutual understanding and trust among countries (He, 2009). Macroeconomic and technological vectors- imply that the economies experienced major economic transformations. In the 1970s, countries experienced changes in their economic systems. In addition, the countries adopted easy monetary policies that led to low real interest rates. Low interest rates consequently led to heavy borrowing from western countries to finance their investments. Trade and financial linkages had a positive impact on the development of economies of Southeast countries (Fukasaku et al, 2005). International aid- international aid played a crucial role in Southeastern economies by supporting the development projects after the world war. The countries’ industries were destroyed by the Second World War and they relied on the western countries for financial support (Fukasaku et al, 2005). Various economies used the aid in improving economic and social infrastructure. Official Development Assistance programs provided assistance for human and institutional capacity building. Through policy dialogue and consultation, the Southeast countries were able to develop and implement their own development policies (He, 2009). Conclusion The flying geese model was popular in Japan compared to other Asian countries, and aimed at leading other Asian countries to economic growth and development. The model applied a system of gradual growth where the Asian economies improved to a better position and used the same position in improving the economies of less developed countries (He, 2009). The model equally improved the economies of the Southeast countries like the Northeastern countries. It also applies the policies of international aid; influence of geography and security; and macroeconomic policies Bibliography Carbaugh, R 2008, International economics, Cengage Learning Publishers, New York. Chen, Y. & Morita, K 2010, Transition, regional development and globalization in China and Central Europe, World Scientific Publishers, Chicago. Fukasaku, K. Zaimu, Z. & Kenkyūjo, S 2005, Policy coherence towards East Asia, development challenges for OECD countries, OECD Publishing, Tokyo. Hatch, W 2010, Asia's flying geese, how regionalization shapes Japan, Cornell University Press Publishers, Ithaca, New York. He, K 2009, Institutional balancing in the Asia pacific, economic interdependence and China's rise, Taylor & Francis Publishers, Texas. Reid, N, & Gatrell, J 2006, Enterprising worlds, a geographic perspective on economics, environments & ethics, Springer Publishers, Tokyo. Thorbecke, E. & Nissanke, M 2010, The poor under globalization in Asia, Latin America, and Africa, Oxford University Press, Oxford, United Kingdom. Read More