FLYING GEESE DEVELOPMENT MODEL

1. FLYING GEESE DEVELOPMENT MODEL Dr. Kristiina Korhonen Center for Markets in Transition of the Helsinki School of Economics

2. Average annual growth in selected Asian countries, 1974-2003

3. The flying geese development model • explains how East and Southeast Asian economies initiated their industrialisation strategies in tandem • focus on foreign trade, foreign direct investment, and technology transfer • economic development through stages

4. The flying geese development model states that Japan has led the economic growth in East Asia (Tokyo, Japan)

5. The flying geese development model • explains how East and Southeast Asian economies initiated their industrialisation strategies in tandem • focus on foreign trade, foreign direct investment, and technology transfer • economic development through stages

6. Development stages • a traditional country starts as an exporter of primary products and an importer of simple manufactured goods, • it becomes an exporter of the simple manufactured goods, • it starts to import more sophisticated industrial products, and • finally, it starts to export the advanced products

7. Along with the ”flying geese” development, a country develops from agriculture to industrialisation (Gumi, South Korea)

8. Development process • as the leading country progresses to higher niches in the international market system, the following countries take its place, leapfrogging each other along the way as each moves up the chain • boomerang effect; eg. if Japan exports capital, technology, and advanced equipment to Newly Industrialised Economies, it eventually makes new competitors for itself • the V-formation of flying geese should gradually become a straight-line pattern as late starters catch up with early starters

9. The East Asian NIEs followed in Japan’s lead (construction site in Singapore)

10. Development process • as the leading country progresses to higher niches in the international market system, the following countries take its place, leapfrogging each other along the way as each moves up the chain • boomerang effect; eg. if Japan exports capital, technology, and advanced equipment to Newly Industrialised Economies, it eventually makes new competitors for itself • the V-formation of flying geese should gradually become a straight-line pattern as late starters catch up with early starters

11. Hierarchy of economic development • Exemplary Model: Japan • First tier NIEs: South Korea, Taiwan, Hong Kong, Singapore • Second tier NIEs: Thailand, Malaysia, the Philippines, Indonesia? • Third tier NIEs: China, Vietnam, Laos? • Fourth tier NIEs: North Korea?, Myanmar? 

12. Vietnam is one of the third tier NIEs (Hanoi, Vietnam)

13. GDP per capita in 1995 and 2005 in selected Asian economies Source: Statistics Finland

14. Criticism against the model • Japanese view to the economic development of Pacific Asia • attempt to justify Japan’s economic presence in the region • Japan is not reluctant to transfer its high technology to other nations • in the Southeast Asian countries, the economic development has differed from that of East Asia