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Top1. Introduction
According to the old saying “Birds of a feather flock together”; so, too, do investors. As such, nowadays, it seems as if “animal spirits”, (the “animal spirits” coined by John Maynard Keynes) is reshaping the patterns of the global economy as well as economic growth.1 Speaking of “animal spirit” in relations to the geese flying in formation, the successive waves of Asian nations achieving economic takeoff and emerging or developed market status, has been likened to those migratory birds in flight. The “Flying Geese Paradigm” or ganko keitai (a flock of flying geese), a phenomenon of industrial development in catching-up economies was first conceived of by Japanese economist, Kaname Akamatsu in the 1930s as a way of clarifying East Asian industrial development. According to Akamatsu, the lead goose in the formation was Japan. The second tier consisted of newly industrialized economies – South Korea, Taiwan Province of China, Singapore, and Hong Kong SAR. Following hot on their tails were the ASEAN nations such as Indonesia, Malaysia, the Philippines and Thailand. The most recent inclusion to the flock are India and China.
According to this model, economies tend to be leaders or followers in particular parts of global value chains depending on their level of costs and skills (Akamatsu, 1962). The flying geese theory describes the sequential order of the catch-up process of industrialization of latecomer economies. The theory involves a process where one economy can lead other economies towards industrialization, passing older technologies down to the followers as its own incomes soar and as it shifts into newer technologies (Akamatsu, 1962, p.11). More so, the flying-geese theory stresses interactive growth through emulative learning among nations operating at diverse phases of growth along the ladder of economic development – a powerful catalyst for industrial upgrading (Ozawa, 2011). Similar patterns of industrial transformation and formulations are found across theories (see Table 1).
Table 1. Comparisons of Model –Summary Table
| Flying Geese Theory | Product Cycle Theory | Neoclassical Theory | The Economic Geography Approach |
| Akamatsu | Kojima | Vernon | (Generally) | Puga &Venables |
| Main Concept | Linkages at industry and country level | Factors of production at country level | Innovation of resources at firm level | Factors of production at country level | Linkages at firm and country level |
| Driving Force of Development | Demand | Supply | Supply | Supply | Supply and Demand |
| Country Development | Dynamic:
Changing comparative advantage through industrial upgrading | Dynamic:
Changing comparative advantage through changes in factor proportions and specialization | Static:
Technological and industrial level are static and exogenously given | Static:
Technological and industrial level are static and exogenously given | Dynamic:
Forward and backward linkages at firm level interacting and creating dynamics |
| Product Development | Static:
No focus on product innovation | Static
No focus on product innovation | Dynamic:
Innovation at firm level creates a dynamic product development path | Static:
No focus on product innovation | Static:
No focus on product innovation |
| International trade | Moderate protectionism | Free trade | Moderate protectionism | Free trade | Free trade |
Source: Mee Lie (2012)