The Flying Geese Model in the Development of the Economies of the North East of Asia - Case Study Example

The Flying Geese Model in the Development of the Economies of the North East of Asia Name Institution Instructor Course Date of Submission Abstract More often, it is claimed that the "flying geese paradigm" with dynamic comparative goodness has truly depicted the take-off of the north East Asian region. The critical study of this paradigm is presented better in this paper, together with its application to then situation in north East Asia, economic hierarchy. This paper first and foremost it presents the various versions of the model, and discusses differences and similarities among them. Then it critically examines the application of the paradigm to the north East Asian regional whole development context by pin pointing major conceptual, theoretical and empirical problems which come with it. It is my hope that, the arguments presented here will contribute much to the further enrichment and development of future discussions and research on the north East Asian, development experience.   Introduction The economic development of the north East Asia is characterized by different member countries developing in separate times.  For instance, Japan ‘take-over’ succeeded after Meiji revolution. The Japans’ economic modernization was during the last half of the 19th century. The development in this country continued for a century even with the destruction of the world war two, becoming the only country in Asia which has developed. This was then followed by the four Asian tigers namely, South Korea, Taiwan, Singapore and Hong Kong. Malayia, Philppines, Indonesia and Thailand followed later. China leads the third wave of industrialization after the opening of the economy in 1994.This kind of economic development is the one termed as the ‘flying geese’ (Akamatsu, K. (1961). This paper will check the validity of the paradigm flying Geese the third flying geese model explains the transfer of division of labour, it talks a bout the division of labour horizontally and vertically. Former is the movement of division of labour in countries that are economically same and vertical transfer is between countries that are deferent in their economic development, for example between colony and its colonial power.   Development   The ‘flying geese’ paradigm has several stages i.e. it had its original concept, the modern product-cycle theory then lastly the modern multi-sequencialist version (Burkett & Hart-Landsberg, 1998). This  paradigm has very much been applied in the development of the east Asian countries, first and foremost it is in country capacity-building and the ability of the nation catching up. Like the Korean experience in the industrialization process is seen in its trade relations with the western countries, on specifically imported manufactured goods (Ramburuth & Welch, 2005). The model is presenting Japan as the central giant and it is suppose to hold the responsibility of having demand and supply sides. Japan is expected to be the provident of both physical and investment capital to its surrounding countries. This is when you look on the supply side of view. This had the aim of structuring and facilitating the manufacturing sector of japans’ neighbor (Arase, 1995). On the side of demand, Japan and its allies NIM are to be labor-intensive outlet in the region, and facilitate technological transfer to third world countries and deepen their trade relationship with these less developed countries. The core channels of technological transfer. It explained much on the sector of trade and more specifically on the importation of industrial manufactured goods. They are tying to justify the importation as being a key factor in the catch-up process. But this is exposed as the impoverishing agent in countries which are less developed in the region. The imported technology being much advanced or cheaper will reader the local industries domand (Bernard, and Ravenhill, 1994). It impoverishes the manufacturing economies of the importing countries. Sub-contract and licensing are same of the crucial channels for technological transfer and production. Japan and the Asia tigers have developed their neighbors’ by being the main exporters of technology (Sonia El Kahal, 2004). The stability of the regional hierarchy, the countries which are stable developed faster than others. For instance, after the world war two the hierarchical position of the FG countries is much dynamic, the taking over challenges the order of development. This means that at a times the less developed economy bumped foreword before its forerunners. The regional development hierarchy is put in clusters, Japan on top, followed by the Asian tigers and the rest. This regional hierarchical clustering can be seen as also dynamic but yet international stable. This phenomenon of economic regional clustering has brought higher degree ideal harmony (Gianea, 2005). It is evident that FG model has been seen in the economic growth of the north east countries like Thailand. The transfer of labor from more advance country like Japan has helped a great deal to its growth and development economically. First class technology has been transferred to this economy boosting it much. The stability of regional hierarchy is evident too. The ‘flying Geese’ paradigm is not practical currently because of various reasons; first and foremost is the ambiguity on the technology mechanism transfer (Cronin, 1992). The idea of demonstration effects of trade, more specifically, of imported industrial manufactured goods, can activate effectively the sense of urgency to the catch up among local producers. Yet it remains unclear on how local firms, that have been impoverished because of the competitive pressures of imports may overcome their overwhelmingly and unfavorable condition. According to Haley Usha (2000) While imported products could expand consumer tastes, and local firms finds new niches. The negative effects of competition brought about by imported products, can be so much devastating causing local firms became totally crowded in the market, hence leading to monopolization by the imported products. Subsequently, when the local industries are totally removed or the local market is much small and can not be able to create same room for local industry, a question of who, in the local market can undertake this possibility arises. The modern Flying geese paradigm exclusively places a strong emphasis on TNCs as the main providers of technology. However, it is can be understood that the idea of technology transfer also known as spillovers, does not automatically happen for all the cases of FDI (Ramburuth & Welch, 2005). It has been found relatively weak with the idea of the spillover on the FDI has little positive impact on the productivity the limited positive effects. It is theorized and at times empirically demonstrated that, spillovers can be positively associated to the level of intense competition which pushes firms making them to adopt improved and sophisticated technology and negatively zeroed with the productivity loop hole between both foreign and domestic industries. The reversed importation based on the maturation pattern of technology and productivity.  Modern FG paradigms, predict that ,in the final stage cycle of  life each of the product of the exporting economy  is rendered less cost competitive, beginning to extinguish from its market and leaving local demand  be met Partly or later fully. One crucial assumption here is that there is definitive and a clear maturation pattern in production of a product such that analysis of the spillovers existence is usually undertaken in the framework of econometric, in which productivity of labor or domestic firms total factor of productivity is regressed on a various  independent variables believed to affect productivity (Clark, 1975). For FG paradigm to exist as valid, the international relocation for production of a particular product, from a national economy should coincide with gradual reduction of its domestic production. The production of kind same defined product groups, for example black-and-white television sets and transistor radios have been completely shifted abroad. The more dependence of the north East Asian economies, on extra-regional markets, may indicate industrial weakening of extra-regional industries, and not of the Japanese industries, because the products of the Japan are more extensively replaced compared to those of the market of USA by north East Asian products. Transistor radios, low quality word-processor and black-and-white TV sets etc. are liked just because they can be imported cheaply?   The general identification between industry and product, national economy and International economies as unit of analysis. The coming up of strong regional production in networking.  The continued innovation in the process of production and introduction of the new Kind of existing products make this argument not convincing. Also the rising importance of intra-industry trade of intermediate commodities means that trade occurred increasingly between different parts within large firms (Sonia El Kahal, 2004). Regional integration in north East Asia is portrayed by the continued dependence of foreign parts on technology, capital and component inputs from foreign countries and not developing linkages with local suppliers. The situation indeed shows doubt about the validity of the FG paradigm. Trade is a flow of goods and services within production networks which are organized globally and not nationally rather than being considered as an exchange of commodities between local productions systems. Goods are created through integration of the processes of production performed in a multiplicity of states territories. Whether any given region is included in world production networks or not included from them depends on the private actors’ decision. Government can try to create their own territories attractive, but they cannot control the structure of commodity production network. Furthermore, export-oriented manufacturing that are characterized in the second-tier NIEs depends on abroad technology and components, is considerably undertaken with subsidiaries of foreign firms. In much relative terms, national economies are producing and at the same time exporting increasingly incomplete products than before. Also the degree of incompleteness is higher in the very sophisticated products. However, incompleteness is an arbitrary concept. Same complete products for instance, containers with beverages, and toners for printer, automobiles tyres, etc, are still used as inputs and parts for another product (Chen, 1995). Conclusion and summary of critical discussion     FDI flows and recent trade among national economies .Within north East Asia exhibit increasing interdependence or what they call integration. Notwithstanding the fact that some investment channel and bilateral trade, like that involving China, have grown very faster than others. This trade of manufacturing in this region is considerably intra-firm trade exhibiting the vertical division of labor, means that the PC theory which is ultimately the horizontal division of labor can not explain effectively the situation. This is simply because intra-firm trade shows that IS industrialization hasn’t widely and fully occurred. The FG model does not justify that, the regional system need to be self-contained; instead, it can fit with the believe of "open regionalism".  Japan, Taiwan and the Republic of Korea do not import manufactured products in large quantities from china and second-tier NIEs. Consequently, much of the economies in this region have been externally and heavily dependent on their export markets. It is noted that such kind of a reliance on extra-regional markets, makes external shocks very damaging to the co-existing development pattern portrayed by the FG paradigm. Under the weakening of Japanese leadership and  China of its expanse, diversity and strong business linkages overseas ,Chinese within the region may become a most destabilizing factor to the current existing ,regional industrial hierarchy. Due to this respect China is likened to a Black Hole (Gore, 1996). China’s economic reforms had decentralized economic management of the local provinces and the availability of its open Policy, has encouraged various provinces to strengthen their very cross-border ties, directly with their neighboring national economies. Decentralization can be said to have made possible for China to exercise economic cooperation widely on a sub-regional basis. China absorbs an increasing big portion of the entire private financial flow into the region. This situation can lead to the total marginalization of much smaller economies in the region possible solution to avoid marginalization can be for these smaller economies establishing integrative linkages with China, as its stipulated in 2001, the Asean countries form a free trade area.   References Akamatsu, K. (1961), "A theory of unbalanced growth in the world economy," Weltwirtschaftliches Archiv – Review of World Economics. No. 86, pp. 3-25. Akamatsu, K. 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