The Rise of Asia: The ‘Flying Geese' Theory of Tandem Growth and Regional Agglomeration
Reviewer: Adelina Bulak
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Ozawa is, in many ways, a political-economy pioneer and a substantial part of his scholarly life focused on analysing the main impetuous driving Japan's ‘miraculous' post-WWII economic recovery. Looking for a comprehensive answer, he researched different area of Japanese economic growth, which eventually led him to suggest that the ‘Flying Geese' (FG) theory offers a particularly acute explanation for the post-war economic development of an ‘Asian Tiger.' In this work entitled: The Rise of Asia: The ‘Flying Geese' Theory of Tandem Growth and Regional Agglomeration, Ozawa takes a further step and applies FG theory to other Asian, particularly East Asian countries. To use Ozawa's own words the book ‘tells the story of how a cohort of Asian countries led by the US has advanced together, though in a staggered fashion, in structural upgrading and economic growth.'
The book consists of three main parts: 1) Agenda; 2) Real-sector growth: industrial upgrading; and 3) Money/finance. Each chapter is subdivided into smaller, more manageable parts, which facilitates better understandings of the particular problems which Ozawa deems important for the FG theory.
In the first part, Ozawa argues that the ‘FG framework can help us join up the dots to understand the major undercurrent that has been sweeping and shaping the global economy' (p. 11) and engages more popular, but negative, opinions about this subject with the aim of wholly refuting them. Indeed, Ozawa argues that FG theory can be used in relation to any country or region and is therefore not an ‘Asia-only' phenomenon. There are, of course, strict economic laws governing this idea, but they have nothing to do with some master-plan, set and conducted by governments. FG theory is in-sync with the laws of economics.
The second part provides a complete theoretical and empirical account of FG. It commences with explanations of basic patterns developed by Akamatsu and introduced to the general public in 1935. His theory basically articulates that, in economics, there are leaders and followers. In world-economic terms, a leader implies a country which is at the highest end of industrialisation; the state with the highest per capita income. Such a country would require new markets for its high-tech products, but trade would necessarily work in both directions. Such a country would export high-tech products and, the same time, import raw materials. This is the way that economic relations evolve. The more advanced country, in need of raw materials, invests in the less developed country to secure existing contracts with the result that money, technicians and knowledge is being exported as well, bringing profits to the developing country. Due to those investments, the developing country experiences growth - catching-up to the leader country - and establishes its own market with its own needs for trade. Finally, economic development reaches a high enough point to spill-over borders in search for raw materials which again can be found in developing countries. As a result, the economic merry-go-round rotates and as a way of securing the import-export policy, investments are required, people and technologies are exported and the new country begins to profit from the international exchange.
Ozawa explains that this FG model is part one of two more ‘derived' patterns and not what Akamatsu has called [...] basic (p. 17). The complete FG model includes three sub-patterns. ‘The first basic pattern is the sequence of import-domestic production-export.' It is here where that developing country seeks high-tech products to start catching-up growth; the influx of new technologies helps create domestic production, which after some time, is substantial enough to begin exporting abroad. ‘The second pattern is the sequence from consumer goods to capital goods and from the crude and simple articles to complex and refined articles. The third pattern is the alignment from advanced nations to backward nations according to their stages of growth' (p. 18).
Surprisingly, more is considered better in this case and these three sub-patterns of the FG theory boost it to an ideal specimen for a wide variety of economic developmental approaches in developing countries. Ozawa shows his vast understanding of the topic by deconstructing each stage of economic development into smaller, more precise problems. He looks at the Asian experience and explains what, in terms of economic theories, was occurring in those countries at a given time.
Ozawa does not confine his views to purely business/financial models, instead readers are provided a more dynamic vantage. Indeed, Ozawa is convinced that the human factor ranks as central in the process of economical growth. Everything depends on individuals and their will to act and work in relation to their right to increase their quality of life. After all, it is a set of individuals that comprise a nation and endow it with a mode of behaviour and grant the state and its political system, legitimacy. Ozawa frequently notes the importance of human factors, and even, for example discusses Hume's knowledge retrograde and the ‘brain drain-brain gain' problems.
Basically the FG pattern occurs because of wide investments from the leading country; the most important among these is increased access to knowledge and technologies. These are ranked high for developing countries because through them such countries are able to begin to catch-up to other economic players. This would be impossible without people who feel the need to gain such knowledge; who understand and wish to acquire the benefits derived from studying technical sciences. It is observed that private motivations may have the spin-off effect of benefiting a wider population and, with a little protection from governments; even a ruthless economic system may bring benefits for all parts of a society. To show the importance of politics in economic development Ozawa uses the example of China's ‘no-strings-attached' policy and Latin America's dysfunction. Approaching the topic from an interesting point of view, Ozawa considers that a general attitude towards issues of growth and development is more crucial than the political system within any given country. While communist China - a pragmatic actor - has successfully separated its political from its economic life, leading to open borders and an energetic import and export market, Latin American countries tend to be stuck in a quagmire of understanding political-economy and base their discourses on intellectual ideals for dealing with live economics - choosing a closed borders approach, which invariably leads to a degree of isolation and, as a result, brings chaos to the countries' economic systems as they are out-of-touch with international business practises.
The third part of this work finds Ozawa researching new trends that have emerged in the world economy due to US inspired innovations in financial markets. The research centres on and presents many pros and cons of private equity and Ozawa clearly indicates that this approach can increase money inflows to developing countries, and if watched carefully, may prove beneficial.
Ozawa attempts to convince his readership that events which occur in East Asia prove the FG theory, and deploys casework to that end. He reveals that with use of FG theory seemingly disparate events, which are often relegated as unrelated or irrelevant, must be taken together to create a more complete picture.
Ozawa's vast economic, historical and philosophical knowledge shines though in this book, and leaves readers with few doubts as to its accuracy.
Ozawa brings a much needed multi-faceted perspective to the subject of economic development. It is written as clearly as economic theory can be, and although it is clearly intended for an academic (political-economy) readership, it is a useful book for the general public as well.