The Flying Geese who Shaped Modern Economic Thinking

If you ever see a group of geese flying together, you will notice that the group arranges itself into a V-shape whereby one bird leads at the front, cutting through the air resistance, while the rest stay behind, each benefiting from the draft of the one ahead. Eventually the leader gets tired, drops off, and another takes its place at the front.
Such an image is so common in Japanese art and poetry that Japanese economist Kaname Akamatsu used it to describe his economic theory. When studying graphs about various industries’ imports and domestic production, he noticed a prevailing V shape pattern, which appeared again and again. He named this his “flying geese” model of manufacturing.

Flying Geese Economic Theory

The basic idea is straightforward. A country industrialises by making relatively simple goods such as textiles, toys and basic electronics more cheaply than richer countries. Foreign investment pours in, factories are built, and everyone benefits: the country gets jobs and rising wages, and the rest of the world gets cheap goods. However, as wages start to climb, the country becomes less competitive at the cheap end of manufacturing, and the work moves to wherever labour is now cheaper. The lead goose falls back and a new one picks up the front.

1950s Japan was the original lead goose, building its economy on textiles and simple manufactured goods. By the 1960s, rising Japanese wages pushed that role on to the Asian “Tigers” — South Korea, Taiwan, Hong Kong and Singapore — while Japan moved up into cars and electronics. By the 1990s, the Tigers had grown wealthy enough to price themselves out of the cheapest tier too, and the formation shifted towards China. Now, the geese are moving to Vietnam, Bangladesh and India.

What happens to the lead goose who inevitably drops off?

The consensus among economists is to use the years at the front to build something that doesn’t depend on being cheap. The Japanese government poured money into education and built more sophisticated industries to take over by the time they had priced themselves out of cheap textiles.  The same pattern occurred in South Korea, giving rise to Samsung, Hyundai and LG. The lead goose changed jobs before it had to drop out of formation.

The least fortunate outcome is simply standing still. Indonesia’s manufacturing sector has been shrinking since the early 2000s, but the workforce hasn’t fully found anywhere else to go. Economists have reached a consensus that without serious investment in education, domestic research, and firms capable of owning a global market, a country can be left holding neither the cheap jobs, which have moved on, nor the sophisticated ones, which never arrived. That stagnating middle ground is what development economists call the “middle-income trap.”

The forces out to disrupt the geese

One man’s attempt to overhaul the natural system to bring its geese back to the front again is impossible to escape in world media. Donald Trump and his sweeping tariff regimes are aiming to counter the natural migration of manufacturing. The US has poured over $7 trillion into bringing manufacturing back to the US, as some industries such as semiconductors are seen as too important to leave.

Robotics is also set to disrupt the geese dramatically. A robotic assembly line doesn’t ask for a pay rise (yet), so if the capital cost of automating a plant in a rich country drops off as automation costs fall, it can outcompete a cheap country. The lead geese would then stay at the front forever, with no next country waiting for its turn.

However, all countries have the potential to automate. China now installs more than half of all new industrial robots worldwide, and Vietnam is automating specifically to defend its export industry after growth picked up sharply in the early 2020s. We could see an alternative scenario whereby the geese continue to be replaced, but this time they are all armed with robots, and whoever adopts fastest stays competitive over those who stay cheapest. (I can’t imagine many Japanese poems about that).

So the next time you wonder where your sneakers were made, try some birdwatching (or Japanese poetry) and you may find the answer.

Match each word to its definition and complete the example sentences in the exercise which can be found in the downloadable PDF.

According to the text, what is the “flying geese” model, and how did Kaname Akamatsu come up with the idea?

According to the article, what did South Korea do differently that allowed it to avoid the “middle-income trap”?

What two forces does the article describe as currently disrupting the flying geese pattern?

According to the text, why might automation mean that “the lead geese stay at the front forever”?

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