The paper 'Flying Geese Model in the Development of North East Asian Economies' is a great example of a Macro and Microeconomics Case Study. The fundamental of flying the geese model (FG) and its concept was developed by Akamatsu in 1962. As a matter of fact, the flying geese model was initiated as a “ one-country with one product” pattern that describes the production of one specific commodity, import, and exports (Akamatsu 1962, p. 08). Akamatsu expounded this basic paradigm by illustrating it with flying pattern of wild geese forming three series curves, each designating domestic production, import and export of manufactured goods in under-developed countries to overseas countries which have admirable best economies (Akamatsu 1962, p.
11). The FG model is the main basis of restructuring of modern pattern of expansive economic development. This essay compares and contrasts the role of the FG Model in the development of North-East Asian economies. It also includes how international enterprises have evolved in this region. As Akamatsu stated in his research, “ the economic growth of the developing countries in the 20th century was impossible to study and analyze without considering the mutual interactions with economies of advanced countries” (Akamatsu 1962, p. 1).
In this context, his assertion still holds true in that the economic development of the modern world can never be self-sufficient but will depend on interactions between advanced states and developing states. In essence, the growth on the economic status of states lies in the steps of climbing the ladder of comparative advantage (Ozawa 2001, p. 478). The commodity makeup of the exchange of goods in the Asia-Pacific regional countries is undergoing radical changes. Asia's developing countries' manufactured export have grown drastically leading to growth on the traditional arrangement of intra-regional trade dominated by the exchange of primary commodities with manufactured ones in between low earning countries and economically well off countries like Japan(intra-industry trade) (Ozawa 2011). Composition of commodity trade in North-East Asia Life cycles of industries in the process of economic development can be best described through the flying -geese model (Akamatsu 1962, p. 23).
The expansion of economic dynamism over the region made countries specialize in the production of the export products in which they enjoy an enormous comparative advantage which they upgrade industrial structures via augmenting technological and capital endowment.
The process is sustained through foreign direct investment by more advanced nations to less developed ones basically through relocating firms from the former to the latter. The representation of a life cycle of a particular industry can be traced by the trends in the volume of primary production, imports, and exports. For instance, in a particular industry, the level of domestic production first rises and declines. The same scenario is a witness to both imports and exports.
When these factors (production, imports, and exports) are plotted on a graph paper against time, they form a standard inverted pattern of overlapping V-shaped curves the same as wild-geese flying in organized ranks, Fig (1). A comparative advantage indicator is a simplified analysis of production, imports, and exports (Widodo 2009, p. 58). There are five stages that each industry passes in the life cycle. The first stage is the introduction stage (domestic production) which starts with transfer of technology through imports dominate the domestic market. In the import-substitution stage, imports start to fall due to faster expansion on domestic production as compared with demand in the market.
At this stage, the industry moves to the export stage as domestic demand falls as compared with production which expands thus production surpass domestic demands hence surplus for exports. The next stage is the maturity stage whereas both production and exports starts to decline as a result of escalating production costs and investment in under-developed countries accelerates. The reverse-import stage is the final stage and entails the industry being the net importer again, getting imports from overseas subsidiaries of the country concern.
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