The ‘Flying Geese’ Paradigm of Catch-up Growth
New Horizons in International Business series
Preface/Acknowledgments Japan’s postwar economic growth in that space-confined, mountainous, and resource-scarce archipelago, about the size of the State of Montana in the US, but with almost a half of America’s population, is nothing but a story of great structural transformation, a transformation that has made Japan join the ranks of the advanced economies as the world’s second largest economy over as short a span of time as less than three decades after World War II. It has been nearly four decades since I began to study some early phases (1950–75) of Japan’s transformation and the roles of foreign direct investment (FDI) and knowledge transfer as facilitators of industrial upgrading. With an eye to achieving the national goals of caching up with the advanced West, Japan created a unique set of institutions in the early postwar period, and actively employed industrial – and other macro-organizational (Dunning, 1992) – policies to assist its private sector to gain international competitiveness in a number of high-productivity manufacturing sectors. The upshot was high growth throughout the 1960s. As the decade of the 1960s drew to its close, furthermore, Japanese multinational corporations’ (MNCs) activities began to become noticeable worldwide. In the early 1970s, their overseas investment grew very rapidly in both numbers and value, against a backdrop of rising labor shortages at home, the ever-expanding need to secure overseas supply sources of industrial resources, and the appreciation of the yen that made home-based production and exports increasingly more costly but overseas production more profitable. These early phases...