The Rise of Asia

The Rise of Asia

The ‘Flying-Geese’ Theory of Tandem Growth and Regional Agglomeration

New Horizons in International Business series

Terutomo Ozawa

Terutomo Ozawa introduces a newly reformulated theory of ‘flying-geese’ economic development, exploring Asia’s dynamic growth and financial development. This unique book shows how the flying-geese theory can be expanded and applied to both the real- and the financial-sector structural transformation of regionally clustered economies.

Chapter 1: Is the Flying-Geese Theory Passé – or Still Relevant?

Terutomo Ozawa

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, economics and finance, asian economics, international economics

Extract

THE ‘FLYING-GEESE (FG)’ ANALOGY Before the Asian crisis broke out in July 1997, the analogy of ‘a flyinggeese (FG) formation’ (ganko keitai in Japanese) had been frequently used with enthusiasm to describe the sequential pattern of rapid growth and structural upgrading in East Asia. The popular description went that Japan led the gaggle, followed by the NIEs, which were in turn pursued by the ASEAN-4 and China – all soaring together up the ladder of economic development. This string of ‘tandem growth’ (Ozawa, 1995, 2005) was once the admiration and envy of the world. The World Bank (1993) even called it ‘the East Asian Miracle’. In the wake of financial turmoil, however, such a metaphor lost its power of depiction. After all, the Asian flock fell from the sky disgracefully. Yet, the crisis-stricken quickly rebounded with burgeoning trade surpluses. Together with the galactic rise of China and India, Asia is presently again the center of attention in the world. The poetic allegory of ‘flying-geese formation’ was originally introduced in the 1930s by Professor Kaname Akamatsu of Hitotsubashi University, Tokyo, to describe his theory of industrialization in developing countries (inter alia, Akamatsu, 1935, 1937). Although the FG theory was already well known in Japan, it only began to be accepted outside the country after East Asian growth had gotten worldwide attention during the 1970s. Above all, it caught the fancy of policymakers, particularly after Saburo Okita, former Japanese Foreign Minister, had made reference to it at the fourth Pacific Economic Cooperation...