# TRANSMISSION OF INDUSTRIAL DEVELOPMENT AND INTERNATIONAL INDUSTRIAL ADJUSTMENT

Unique characteristics of the rapid industrial development of the East Asian economies, Japan, Asian NIEs, and ASEAN, for the post World War Two period is the interdependence of the industrial development between individual members. This paper aims to explain this interdependent development in the model of “flying wild-geese” or “catching-up product cycle”. The flying wild-geese symbolizes a sequence of the inverse V-shaped industrial development of the East Asian economies and the terminology has become popular in the discussion of restructuring and industrial adjustment cooperation in the region.

It originally referred to the typical development pattern of modern industries in Japan, which, as a late-starting industrializing country in the late 19th century, introduced modern industries at first through import, then started domestic production to substitute import, and finally exported its product abroad as it became competitive internationally. It focuses on an efficient interaction between international trade and industrial growth and the sequence of inverse V-shaped growth curves of import, domestic production, and export resembles the flying formation of wild-geese returning to the south in late Autumn, which used to be one of the most popular subjects in classic Chinese and Japanese poems. The illustration was extended to describe another sequence of inverse V-shaped growth curves of domestic production of individual modern industries, a diversification of industrial structure in the process of industrialization. The more precise description of this development model is "catching-up product cycle" (CPC) but the "flying wild-geese" has gained greater popularity because of its poetic image.

The CPC model well fitted Japan's industrial growth until the late 1960s, but Japan has already outgrown this catching-up development pattern and been exploring industrial frontiers since the 1970s. On the other hand, the active catching-up industrialization has been observed in the Asian NIEs and ASEAN countries since the late 1960s. It continued throughout the 1970s in spite of the first oil crisis and overcame serious setbacks in the 1980s. The industrial and trade structures of these countries have changed drastically during the past three decades and their catching-up industrialization has been the core of the dynamic growth of the East Asian region. The CPC model is still relevant to these Asian countries and predicts how the industrial development will shift among these countries. (f.n.1)

This paper aims at an overview of inter-related patterns of industrial development among the East Asian countries. Three versions will be distinguished, its basic type and two variations. The Basic Type refers to the sequential development of import, production, and export of an industry, Variation 1 the sequential CPC development of individual industries (or diversification of industrial structure), and Variation 2 the transmission of the CPC development among trading countries. The first two versions are based on Japan's industrial experience, while the last is derived from the ongoing industrial development of the Asian NIEs and ASEAN countries.

We will give theoretical considerations to each of the three versions first, and then review empirical studies of the CPC development related to this development pattern. For