Structural Transformation Chain

The East Asian development experience is unique in that countries with different levels of economic development form a collective production network, in which leading countries pass industries to latecomers as they shift to the production of newer industries. Such industrial passing is realized through foreign direct investment of multinational corporations. There is a clear order and structure among these countries, but such order and structure may shift over time, as new countries join and old ones slow down. Each country, sandwiched by early comers and latecomers, is under constant market pressure to do better. They are competitive rivals as well as production partners with each other. Industrialization spreads to an increasingly larger geographical area, while each country deepens its technical level by moving from low-tech to high-tech products. East Asia is the only developing area which exhibits such mutually linked economic dynamism. It is often called the flying geese pattern. We prefer to call it Asian dynamism.

Photo by Saizou Uchida (location: Sakai-gun, Fukui Prefecture, Japan)