The Failure of Flying Geese Economic Development Model - Case Study Example

Name Tutor Title: The Failure of flying Geese Economic Development Model Institution Introduction The flying geese model was first established during the late 1930s by Akamatsu Kaname who was an economist in Japan. Akamatsu’s aim was to try and explain the process of industrialization in East Asia. He proposed that economic development in North East Asia could only be understood if the background of the fundamental integrity and harmony of the regional struggle which started with Japanese colonialism is taken into consideration (Kasahara 2004). Since then, many other Japanese economists, such as Vernon and Cumming as well as Western political scientists and economist including Petri, Chan and Clark, have come up with varying application of the flying geese analogy (Schroppel and Nakajima, 2002). The flying geese model suggests that developing nations follow the path taken by the developed nations. These economists claim that other countries and sectors will replicate the Japan’s development experience. This model perceives economic development of nations as a process which is strongly associated with the rise, evolution and failure of specific industrial sectors. This paper will evaluate the claim that while the Flying Geese model of development might explain the early post World War II experience of the economies of North East Asia it is no longer relevant for the region in era of globalization that characterizes the early part of this century. The fact postulated by the flying geese model that a regional view is critical to understanding the form of industrialization in modern North East Asia cannot be disputed. However, this model does not capture the intricacy of the area political economy that is gradually controlled by the regionalization of industrial production. This paper will propel the argument that the economic integration in North East Asia is driven by three forces: the globalization of manufacturing networks; the high rate of technological change and the heightened intergovernmental disagreements over bilateral economic relations (Hayashi 2010). The friction between the territorially established regional network and the globalized systems of manufacturing and exchange has created a dynamic interaction between politics and economics that has a great impact on the political economy’s structure of the region as tensions increase over imbalances in regional trade. Moreover, the intricate and rapid characteristic of industrial revolution has fragmented product market, regionalized the locus of production activity and done away with the organizational setting whereby manufacturing takes place in the organization to the network (Park 2009). The diffusion of production in North East Asia has not replicated the experience of Japan development in nation after nation all over the region as suggested by the flying geese analogy. Rather, it has progressively been marked by fluctuating hierarchical systems of manufacturing connected backward to Japanese revolution and onward to American marketplaces for exchange of processed products. These systems give access to some organizations and activities and reduce the prospects for other. Structurally and spatially the systems are not static or closed. Hence, it is an exaggeration to assert that these systems can be the cornerstone for the formation of a newfangled Co-Prosperity Sphere in this region. Elites in this region are increasingly worried about the level of technological reliance on Japanese organizations and are keen to expand the sources of technology in the region. Thus, the creation of a yen partnership is stalled by these concerns, worsened by the sustained reliance on American markets for industrial exports and rising tension over entry into the Japanese market (Beeson 2007). The uncritical application of the flying geese analogy to relate to the experience of modern North East Asia is misleading for various reasons. To start with, the model makes assumptions as regard the evolution of technology and products as industries advance through the product cycle; however, these do not apply in most sectors whereby production has been decentralized in East Asia (Burkett and Hart-Landsberg 2000). Moreover, Akamatsu and Vernon claimed that those nations in which production shifted to would have their production for export shift to import-substituting production just as it happened with other developed countries. But these assumptions have decreasing relevance to the experience of East Asia. Again, this model assumes that in the product cycle’s final stage, organizations in the originating nation will leave the market, implying that domestic demand will be met by the production exports of the nations in which manufacturing shifted to. Nevertheless, this phase of inverse exporting has generally failed to take place (Ozawa 2008). Let first scrutinize the assumptions surrounding technological development. The flying geese model proposes that production will shift to less industrialized nations as soon as the technology and the products for manufacturing them inside the sector have developed. Proponents of this model argue that developing nations use obsolescent technology in their production process (Hatch 2010). Conversely, studies of technology transfer have largely questioned the accurateness of this assumption. For example, a survey on numerous machinery industries found little evidence which supported product and technology standardization; instead, it discovered that there has been constant and rapid technical change. Hence, the study drew the conclusion that product steadiness is very unique as the existence of many organizations relies on product innovation (Schroppel and Nakajima, 2002). Another study discovered that when purportedly industrially mature products groups like TVS and automobile started to be manufactured during the 1960s in Japan, product and technological development continued at a high rate (Yun 2005). Researches on technological change suggest that whereas technology and manufacturing processes may be steady for a specific generation of products, drastic change may occur in a relatively short period of time whereby one products group is succeeded by another (Weiss 2011). The speed of technological maturation has been greatly accelerated by the microelectronic revolution. Microelectronic technology involves a basic innovation that can be applied in nearly every aspect of product as well as process design. Its relevance allows the use of flexible production methods which, in turn, reduce the importance of large production. As a result, it has enabled short production using non-standardized products for particular markets, empowering smaller firms to have a foothold in manufacturing chains (Routley 2012). Although the microelectronics revolution has presented opportunities for some types of entry into manufacturing for international markets, it has barred others. Heightened technological complexity has created greater obstacles to entry, increased specialization, steeper learning curves, and an increasing reluctance by firms to transfer expertise. These trends make it very hard to establish backward links with original firms as it was during the first stages of development in Korea and Taiwan. The usefulness of reverse production as a catch-up manufacturing strategy has been reduced by the ever more complicated manufacturing processes, the increasingly complex epitomized technologies which sprout from research and development as well as the growing rate at which products are getting introduced (Yoshimatsu 2003). Technological diffusion in this region has been partial, differs from nation to nation and has continued to be linked all through to a supply structural design based on continuing Japanese innovation of technology, components and materials. It has not been a process of duplication and homogenization of manufacturing structures as suggested by the flying geese model. As a consequence, the growth of a wide variety of productions in North East Asia has not been the same as Japanese experience, where considerable indigenous capability for technological improvement had already been established during the interwar period (Hayashi 2010). The assumption that the mushrooming production activity in North East Asia need to be understood in the framework of the flying geese model as a duplication of what occurred in Korea or Taiwan is an uncivilized oversimplification. Reasonably, the partial technological diffusion in this region has led to an intrastate hierarchy of manufacturing. The new production for export in this region does not form on any considerable establishment of import-substituting development. There has not been any noteworthy growth in indigenous capital goods productions as postulated by the flying geese model. Export production depends almost wholly on imported machinery and components. Moreover, it is subsidiaries of multinational corporations that are responsible for this export production (Park 2009). The use of microelectronic technologies has facilitated the ongoing product innovation in Japanese firms and this has ensured that companies in Japan have the capacity to supply the basic technologies for a large percentage of the region’s production in industries including automobile and consumer electronics. In addition, it has ensured that in most sectors, Japanese firms have not withdrawn from manufacturing of finished goods as predicted by the flying geese model (Kasahara 2004). This leads to another way in which the modern regionalization of manufacturing in North East Asia contrasts the flying geese predictions. Contrary to the flying geese theory, regionalization has not led to substantial reverse exports to Japan in this 21st century. Instead, it has resulted in trade triangles whereby machinery and components are obtained from Japan whereas the processed goods are exported to developing nation markets, mainly to America and Western Europe (Beeson 2007). Furthermore, the flying geese theory is made deficient by its lack to analyze the shifting contexts in which industrialization takes place. Economists have a tendency to employ ceteris paribus hypotheses to ignore such contextual impacts. Environmental changes have a strongly influence on the path of development and should be integrated into a more detailed model of interstate economic development. It is important to include geopolitics and world ancient time as core instead of exogenous components of the industrialization process. Additionally, it is critical to emphasize the importance of the change to manufacturing based on interstate networks in understanding the modern North East Asian political economy (Ozawa 2008). Production has failed to shift across nation in a homogenous way. Production structures vary across space and time as influenced by local structures of power, past trajectories and the leading technologies of specific periods. In short, products are produced using different techniques and in different environments at different historical eras. These differences apply comparatively to the way manufacturing differs between particular places as well as relationally to how manufacturing connects places together. For instance, while export-centered manufacturing of consumer electronic during the 1950s was structured internally in the political economy of Japan, Malaysian production in the beginning of 1990 can be said to be a trans-nationalized process which could be viewed as local in the shallowest sense (Hatch 2010). The flying geese model views individual products as not being part of the larger industrial structures in which the production of each product can be viewed without taking into account the many other goods and the structural foundations that originally produced it. Modern production should be viewed in terms of interconnected complexes of production activity comprising networks of companies and ongoing innovation of a variety of major inputs in a myriad of interrelated industries rather than viewing it as an ahistorical diffusion of one product. The trans-nationalization of manufacturing has been characterized by a spatial separation of continuous innovation as well as the location of ultimate assembly. The view that the flow of production from one nation to another will predictably re-create the countless backward links into the national economy visualized by the flying geese analogy as regard the textile industry in Japan prior to the World War II is undermined by this separation (Burkett and Hart-Landsberg 2000). Conclusion The flying geese model does not effectively capture the major characteristics of the modern interstate political economy in North East Asia. In fact, the evolving structural and spatial variations in manufacturing undermine many of the key assumption of the flying geese model. The rise of the interstate production networks have plays a significant role when it comes to understanding the political economy of this region. The flying geese perspective of Northeast Asia does not grasp the intricacies of technological revolution and the way technology is essentially transferred. The same problems emerge with this model’s understanding of manufacturing as a homogenous shift from nation to nation. This model asserts that the political economy is the right unit of examination and that the nature of manufacturing is ascertained by analyzing the flow of products between nations. This state-centric perspective perceives national economy as a firmly combined process between the fall and rise of goods and the growth of national economies. However, the regionalization of manufacturing in this region has turned out to be structured in ways that call into question the preciseness of the flying geese analogy. Bibliography Beeson M (2007). Regional and globalization in East Asia: Politics, security and economic development. New York, Palgrave MacMillan. Burkett P and Hart-Landsberg M (2000). Alternative perspective on late industrialization in East Asia: A of critical Survey. Review of Radical Political Economics, 32 (2): 222-264. Hatch W (2010). 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