Innovation Clusters from Flying Geese for ASEAN – 3 of 3
From Part II, the path to a richer, stronger and united ASEAN is long. The members are too economically diverse (see Table above) to unite quickly.
Two strategies for convergence are possible. Firstly, a customs union on new, globally important products can link members up via trade for chosen products (see Post #20). Secondly, trade-oriented investments can unify commercial interests across ASEAN. This post is about the second strategy.
Flying Geese. The success of Japan in moving up the technology ladder from basic industries is best told through the story of the “flying geese.’
In the 1930s, Kaname Akamatsu set forth the concept of dynamic comparative advantage in trade. In 1962, he published, “A Historical Pattern of Economic Growth in Developing Countries, Journal of Developing Economies. When drawn, this division of labor among countries looks like Ganko Keitai, the V-shaped flight of wild geese.
I found Professor Teofilo C Daquila of the National University of Singapore while researching Akamatsu. Professor Daquila shared with me a chapter on FDI from his book “The Transformation of Southeast Asian Economies.” Thank you, Professor.
The Professor quotes Kiyoshi Kojima on the ‘trade-oriented nature of Japanese FDI … where [Japan] disinvests from a comparatively disadvantaged, marginal domestic industry, in order to produce the same product in a host country at costs much lower than in Japan. The product can then be exported to the investing country (Japan) as well as to other markets.”
For ASEAN, the lead goes to Singapore. The EDB can make a new category of incentives for those firms leaving Singapore and moving to other ASEAN countries. The other ASEAN countries can create a counterpart category. Incentives can be given for these same firms to move operations there. A train of incentives can be set up to benefit from “dynamic comparative advantage” through the echelons.
An innovative ASEAN adaptation of the flying geese is thus developed.
Together with a closer trade from the special customs union, this trade-oriented investment plan should boost convergence. It will promote ASEAN wealth, strength and finally unity.
Click here for Part 1 of 3 and here for Part 2 of 3.
(Notes: Data from the CIA Factbook were current as of February 4, 2009 I first read about Kawamatsu Akame’s flying geese from a Kodansha-published book I borrowed from the Japanese embassy library, Buendia, in 1989.)
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