The Critical Evaluation of Flying-Geese Paradigm

The Critical Evaluation of Flying-Geese Paradigm

1.0 Executive Summary

Recently years the rapid industrialization development in East Asia have been explained as the flying-geese (FG) paradigm, which emphasizes the sequential catch-up process and industry upgrading among nations. This paper has drawn a general picture of the nature of development in East Asia and analyzed the explanatory power of FG as well as the contradiction between flying-geese and industry policy. The paper first presents the extend of the development of how and when they developed. It then evaluates the validity and the criticism of the theory. The validity contains the product-cycle pattern, industry upgrading pattern and nation catch-up pattern. On the other hand, the paper also analyzes the limitation of FG which are failure of relocating the whole production, conflicts of ‘reverse import’, incompleteness of IS industrialization, difficulty in regional integration and the break of regional hierarchy. Furthermore, the contradiction between FG and industry policy has been discussed at the end of analysis part. The author then draws the conclusion that although the FG theory has successfully described the early catch-up process of the development in East Asia, it still has some significant limitations on its explanatory power. Also, since FG emphasized the importance of market force, there need to be a balance situation of the state intervention and the market regulation during the catch-up process.

2.0 Introduction 

The development of East Asia has achieved a spectacular progress since 1960s due to a series of complicated reasons. During the golden age of capitalism since the end of WORLD WAR II, East Asia has grown rapidly in tandem—First in Japan, then in newly industrializing economics (NIEs) (Hong Kong (China), Taiwan, Singapore and the Republic of Korea), after that in ASEAN-4 (Malaysia, Thailand, Indonesia and the Philippines) and recently in China and Vietnam (Ozawa, 2003). This ladder sequential development of industrialization has been explained as so-called flying-geese paradigm. The flying-geese paradigm has successfully and gradually described the early catch-up process among East Asia states leading by Japan and first-tier NIEs. However, the debate of the ideal picture it draws has been controversial among academics. This paper contains three parts in the analysis part and will mainly evaluate the explanatory power of the pattern as well as analyze the contradiction between FG paradigm and the active industry policy.

3.0 Analysis

3.1 Nature of Development

The sequential of industrialization in East Asia has made the so-called The ‘Miracle’ (Regnier, 2011). From 1965-1990s the sum of 23 economics in East Asia grew much faster than those all in other areas (Fischer & Rotemberg, 1994). The most notable development may be the full industrialization of Japan in the post-war period. The growth of GDP in Japan kept the rate of 8% a year compared with 4% in West Europe (Maddison, 2001). Japan was then the fastest economics with the rapid increased per capital income, productivity and efficiency. Then the ‘neoliberal order’ happened. ‘Resurgent Asia’ indicated the rapid development of NIEs and ASEAN-4 (Ozawa, 2003). During the late 1970s and 1980s, the four Asian dragons started to take the transformation of comparative advantages from Japan and the west and then achieved huge success(Regnier, 2011). The GNP of NIEs during 1965-1997 has maintain a rate of 6.5%, which was four times larger than world average (World Bank, 1993). In addition, with the upgrading of industries and inward FDI, ASEAN-4 has begun to emulate the achievements of NIEs (Buracom, 2014). And during the recent years, China has also begun to make enormous advances and attracted huge sum of inward  FDI since its economic reform and openness in 1978 (Yao & Zhang, 2010). It is reported that during 1978 and 1995, China has become the second largest destination of inward FDI after the USA (Nolan & Wang, 2000).