The “flying geese” model of Asian economic development: origin, theoretical extensions, and regional policy implications

This paper presents a comprehensive review of the “flying geese” (FG) model, which recently has become well known as a way of explaining rapid economic growth in East Asia. Kaname Akamatsu’s 1930s work introduced the concept. Through statistical analysis of industrial development in pre-war Japan, this author followed Akamatsu in developing a theoretical model called Kojima Model I. Subsequent works produced Kojima Models II and III.The regional transmission of FG industrialization has been noted as an engine of Asian economic growth, due in part to Saburo Okita’s forceful presentation of the theme of the FG model in a 1985 lecture. It is hoped that this paper will help to advance a better understanding of the FG model, its historical origin, its theoretical extensions, and its relevancy, as well as its incompleteness as a model of economic development.     

The “hidden” side of the “flying-geese” catch-up model: Japan’s dirigiste institutional setup and a deepening financial morass

Akamatsu’s original “flying geese” (FG) growth model is often used as a frame of reference for both further conceptual elaborations and empirical explorations. So far, only the positive results of FG development have been focused on and emphasized in connection with Asia’s phenomenal growth in the precrisis period. The Japanese economy, supposedly Asia’s lead goose, is in the eleventh consecutive year of stagnation. How has such a once successful lead goose come to be stricken by financial woes? This paper points out that Japan’s once miraculous FG growth was made possible because it established an effective dirigiste catch-up regime in the early postwar period but that Japan’s present financial predicament is paradoxically a path-dependent outcome of this FG strategy. The institutional, especially financial, dimension of FG strategy needs to be taken into account to explain why such a strategy once proved effective but later culminated in a deepening financial morass. The FG model should encompass not only the industrial dimension of catch-up but also its institutional, particularly financial, dimension.     

Wage comparison by gender and the effect of job segregation: The case of Taiwan

This paper examines the wage differential between the genders in a newly industrialized economy-Taiwan. The objective is to verify the existence and magnitude of the Taiwanese wage differential (or discrimination as some would term it) and contrast it with findings in the United States.The gender gap was estimated for the private sector and the public sector respectively. It was found that wage discrimination against females does exist. The magnitude of the “discrimination” falls within the same range as the empirical estimates for the U.S. In Taiwan, however, the wage discrimination appeared to be slightly more severe in the public sector.A measure for the discriminatory effects of the “occupational segregation” was proposed and implemented. Contrary to common belief, the “occupational segregation” was not an important factor in wage discrimination. Nor did the disparity of jobs distribution in terms of “industry” generate any significant level of wage discrimination. The main source of gender discrimination (in terms of wage rates) came from the lower returns to the “productivity” characteristics (experience, education, tenure, etc.) and not from seemingly popular hypotheses of occupational segregation (or, in more general terms, job segregation). This is in sharp contrast to previous studies.     

From New Order to Regional Autonomy: Shifting Dynamics of “Illegal” Logging in Kalimantan, Indonesia

In recent years there has been a tendency to view the seemingly irremediable spread of “illegal” logging in Indonesia in isolation, or as a result of disassociated and premeditated criminal acts. This paper proposes a different view of the problem by discussing the changing dynamics of the “illegal” logging sector in the two districts of Berau, East Kalimantan and Kotawaringin Timur, Central Kalimantan. It suggests that “illegal” logging is not a simple case of criminality, but a complex economic and political system involving multiple stakeholders. Furthermore, “illegal” logging is not a stationary condition that can be effectively dealt with through coercive or repressive measures alone. Rather, it should be viewed as a dynamic and changing system deeply engrained in the realities of rural life in Indonesia. Regional autonomy has also created a supportive environment for the “illegal” logging trade and allowed it to gain resilience.     

From Linear Fuel Switching to Multiple Cooking Strategies: A Critique and Alternative to the Energy Ladder Model

Promoting sustainable development requires evaluating the technical and policy options that will facilitate the adoption and use of energy efficient and less polluting cooking stoves and practices. The transition from traditional to modern fuels and devices has been explained by the “energy ladder” model that suggests that with increasing affluence, a progression is expected from traditional biomass fuels to more advanced and less polluting fuels. In this paper we evaluate the energy ladder model utilizing data from a four-year (1992–96) case study of a village in Mexico and from a large-scale survey from four states of Mexico. We show that an alternate “multiple fuel” model of stove and fuel management based on the observed pattern of household accumulation of energy options, rather than the simple progression depicted in the traditional energy ladder scenario, more accurately depicts cooking fuel use patterns in rural households. The “multiple fuel” model integrates four factors demonstrated to be essential in household decision making under conditions of resource scarcity or uncertainty: (a) economics of fuel and stove type and access conditions to fuels, (b) technical characteristics of cookstoves and cooking practices; (c) cultural preferences; and (d) health impacts. This model also allows better estimates of the expected fuelwood demand and indoor air pollution in rural households.     

Outsourcing the State? Public–Private Partnerships and Information Technologies in India

This paper examines public–private partnerships (PPPs) for development through the example of telecenters in two Indian states. How might a developmental state position itself with respect to civil society under a PPP model of service delivery? We find that each state’s political economy is reflected in its PPP strategy, but that in both states the emerging middle classes rather than the poor benefit most from ongoing telecenter projects. Outsourcing development services to private entities need not “privatize” the state but does alter the way in which citizens “see” the state. Service delivery through telecenters becomes a symbol of government efficiency and responsiveness.     

A behavioral model of work-trip mode choice in Shanghai

This paper analyzes travelers' choice behavior by using combined revealed preference/stated preference (RP/SP) survey data on work-trip mode choice in Shanghai, taking into consideration different scales across the two data sources. Several versions of a multinomial choice model are specified and estimated. The estimation results suggest that the utility function with money cost divided by income by equivalence scale be chosen as the preferred model. Based on the preferred model, values of time and sample aggregate elasticities of choice probabilities are calculated. The results show that values of “in-vehicle time” and “out-of-vehicle time” are 64 and 82% of the sample mean wage, and that in terms of elasticities, “in-vehicle time”, “out-of-vehicle time” and “money cost” are the most important attributes for bus, subway and taxi passengers, respectively. The conditional elasticities given low, middle and high income levels indicate that bicycles seem to be an inferior good for all income levels. Bus and subway transport are inferior goods for people at middle and high income levels but normal goods for those at a low income level. Taxis are a normal good only for low income levels; for middle and high income levels, they are a luxury good. The results obtained may be used for transportation policymaking in Shanghai.     

Entrepreneurship and business culture in Japan and the U.S.

It seems to me likely that entrepreneurship will take a different path in Japan than it has in the U.S. Given the prominence of large organizations in key areas of Japan's economy and the emphasis its society places on lifetime employment relationships, many of the “startups” of the sort that transformed the American business are more likely to happen within existing firms rather than as new enterprises. Such development, called “intrapreneurship” in the U.S. requires new institutional structures and rewards. Such changes will not come easily, because they run against the grain of Japanese society and business culture, yet I believe that success will come to those who can execute such strategies.     

Europe and East Asia in the context of regionalization: Theory and economic policy

Much academic interest has recently centered on economic regionalism as a framework of international economic relations. The European Community (EC) has been a focal point. Other regional economic organizations (APEC, NAFTA), have been subjects of debate.This paper discusses three principal arguments: (1) the “natural”/“optimal” regional grouping, (2) transaction cost advantage in a regional model, and (3) the balancing of intraregional and extra-regional economies. Indeed, the argument is most certainly for an international regime of an “open,” not a “fortress” economic regionalism.This paper examines the subject relative to economic theory and policy.     

The regional consequences of the Japanese second wave: A case study

This paper examines the Japanese “second wave” sector in the local economy. Following an examination of the development of the second wave Japanese-owned supplier sector in the UK, the paper assesses the role of this sector in the local economy, and questions the policy rationale of attracting this particular type of inward investment.     

Public-private wage comparison: A case study of Taiwan

This paper rigorously examines the public-private wage differential. Two novelties: it deals with a newly industrialized economy-Taiwan, and an attempt is made to isolate out any alleged “favorable” industry/occupation job distribution that may exist for the public sector.Significant wage advantages were found to exists for both genders in the public sector. Both the absolute magnitude of this advantage premium and the relative size between genders were comparable to the estimates for the U.S and for Canada. The often alleged superior industry/occupation distribution of public sector jobs were verified and found to account for a significant portion of the observed sectoral wage differential.     

Reverse imports, foreign direct investment and exchange rates

This paper investigates linkages among “reverse imports”, foreign direct investment and exchange rates. As an example, we have in mind the competition in the Japanese market of a Japanese multinational firm and a Chinese domestic firm. Products are differentiated based on Japanese consumers’ brand name recognition. The model shows that yen appreciation leads to an increase in Japanese production in China and “reverse imports” and a decrease in Japanese domestic production. Due to the barriers in brand name, the exports of the Chinese firm could fall, because the increase of reverse imports may erode the market share of the Chinese firm, even though total exports from China increase. Further, we find that yen appreciation may improve the profits of the Japanese firm and welfare in Japan under reverse imports, against conventional wisdom. The predictions of the model fit well with the actual numbers and shed light on the current debate on the Chinese currency.     

Are Environmental Social Movements Socially Exclusive? An Historical Study from Thailand

Environmental social movements in developing countries are often portrayed as democratizing but may contain important social divisions. This paper presents a new methodology to analyze the social composition and underlying political messages of movements. Nearly 5 000 newspaper reports during 1968–2000 in Thailand are analyzed to indicate the participation of middle and lower classes, and their association with “green” (conservationist) and “red-green” (livelihoods-oriented) environmental values. Results show middle-class “green” activism has dominated forests activism, but lower-class “red-green” activism has grown for forests and pollution. Newspapers, however, portray all environmentalism as “democratization,” suggesting that the possible exclusiveness of some environmental norms is unacknowledged.     

Market supplanting versus market fostering interventions: China, East Asia and other developing countries

The paper investigates the relationship between growth and different types of government intervention by distinguishing “market supplanting” regimes from “market fostering” interventions. A lesson from the East Asian miracle was not that governments necessarily intervened less, but they intervened efficiently in a relatively transparent and flexible way that kept overall distortions in check. China's reforms can be considered a transition from a “market supplanting” regime where market signals are distorted over long periods, to “market fostering” interventions in which government acts like a gardener. Alternative measures of government interventions were used to construct two composite policy indexes. Preliminary analysis suggests that “market fostering” interventions seem to have facilitated growth in productivity, although the result is inconclusive due to data limitations. Compared with the East Asian NIEs, China still has a long way to go in reforming the role of government in the economy.     

The Washington Consensus: A post-mortem

After guiding development policies for nearly 20 years, the “Washington Consensus” lies in shambles. Although selected components remain relevant for development policies around the world, some specifics of the broader policy “package” and, more generally, the concept of a standardized package of policies applicable to all developing countries has clearly been discredited.Criticism has been directed at the assumed link from economic liberalization of international trade and financial flows to more rapid economic growth. Apart from a handful of developing countries, admittedly including some large and important ones, most of the world saw little of the promised economic benefit from widespread and on-going trade and financial liberalization, initially. Many countries actually regressed, when evaluated against broader socio-economic development goals, including income inequality. We conclude that differences in initial conditions (history, culture, geography and levels of industrial and institutional development) preclude any single development policy package from being universally effective.     

Health system reform in China: What role for private insurance?

The purpose of the present paper is to show that much of the literature on health economics and on the international experience with different forms of health system organization can be interpreted as supporting the idea that reliance on an unregulated market mechanism for organizing the production and financing of health services is likely to result in major problems both with respect to efficiency and equity. However, reliance on a centralized “command-and-control” model managed by government has also been shown to entail problems in practice. For this reason I argue that the best option at China's current state of development may be a compromise model in which competing private providers are given an important role, both for the production of health services and in the provision of health insurance, but in which the government intervenes (through regulation and direct provision) in such a way as to attain both a high degree of equity of access to health care, and to avoid the most significant forms of “market failure” that would arise in an unregulated private system.     

Struggling with Sustainability—A Comparative Framework for Evaluating Sustainable Development Programs

“Sustainability” is an inherently dynamic, indefinite and contested concept. “Sustainable development” must, therefore, be seen as an unending process—defined not by fixed goals or the specific means of achieving them, but by an approach to creating change through continuous learning and adaptation. How, then, do we evaluate a development program’s contribution to such a process? This paper constructs a framework for evaluating sustainable rural development programs using both process- and outcome-oriented criteria, and demonstrates its application. The SANREM CRSP/SEA research and development program in The Philippines—including ICRAFs efforts to organize communities around agroforestry and environmental conservation—is assessed.     

Which Way is “Up” in Upgrading? Trajectories of Change in the Value Chain for South African Wine

Global Value Chain (GVC) analysis uses the concept of upgrading to highlight paths for developing country firms to “move up the value chain,” usually through the lenses of four categories—product, process, functional, and inter-sectoral upgrading. The implicit normative expectation is that these firms move toward producing higher value-added products and/or take on more sophisticated functions along a value chain. In this article, upgrading is approached more broadly as “reaching a better deal,” including a balance between rewards and risk. The case study of South African wine shows that better product quality, improved processes, and some functional upgrading have co-existed with processes of “downgrading,” higher risks, and limited rewards, especially in traditional export markets. A reflection on further conceptual development and directions for empirical research is also provided.     

Income, Cohort Effects, and Occupational Mobility: A New Look at Immigration to the United States at the Turn of the 20th Century

How did turn-of-the-20th-century immigrants perform in the American economy relative to native-born Americans? This article reassesses this question using data from the 1900 and 1910 American census files. I find in both cross sections that American immigrants perform well in blue-collar and white-collar occupations, with either faster growth in earnings or an outright earnings advantage over native-born Americans in the same occupational sector. Estimates of within-cohort growth reveal that the cross-sectional results do not overstate immigrant progress due to cohort effects. Immigrants also exhibit a high degree of mobility into the well-paid white-collar sector of the American economy, and the progress of the immigrant population as a whole was not slowed by the emergence of the “new” immigration.