Post 2015: Global Action for an Inclusive and Sustainable Future

Box 8.1 Joining the flying geese
Kaname Akamatsu postulated that as
economies advanced, the production of certain
goods would shift to less advanced economies
where producing those goods would be
relatively price competitive (Akamatsu, 1962).
Widely known as the ‘flying geese model’, it
has been used to explain the experience of the
industrialisation process in East Asia, from
Japan to South Korea to China (Kasahara, 2004).
If the ‘flying geese model’ holds true as a process
for economic development, what spaces do lateindustrialisers
have to join and benefit from such
formations?
Technological capacity will be a key element
if LICs are to benefit when the production of
certain goods moves downstream (Lall, 2004) –
unless, of course, technology also accompanies
the shifts in the location of production, in
which case factors such as infrastructure and
institutions become important. In most LICs
and LDCs all three requirements (technology,
infrastructure and institutions) are likely to be
underdeveloped.
The case of Nepal, an LDC, provides interesting
insights. Bordering the two emerging economic
giants of China and India, it has not benefited
from their economic growth. Pandey et al.
(2012) argue that underdeveloped technological
capabilities are an important factor in Nepal’s
inability to increase its productive capacity and
integrate into regional value chains, and that
market-based mechanisms, with the exception
of the banking sector, have not provided for
technology transfer. In Nepal’s case, technologies
that have increased productive capacities and
transformed people’s lives were transferred
through what they call ‘development pathways’
– for example, the transfer of photovoltaic
energy and bio-briquetting technologies from
Japan, biogas technology from the Netherlands,
high-yielding varieties (HYVs) of seed from
the International Rice Research Institute
(IRRI), technology for the conversion of waste
agricultural biomass into energy from India,
and threshing and rice-milling technology from
China. Apart from these few examples, however,
the field of technological capabilities and transfer
in Nepal remains largely barren.
Pandey et al. (2012) point to a number of
areas for encouraging technology transfer.
For instance, effective coordination between
the private sector, government and academic
institutions in LICs can improve both the
transfer and the absorption of technology. But
they also highlight the limitations in the WTO
rules relating to technology transfer. On the
one hand, these call on developed countries to
encourage their enterprises and institutions
to transfer technology to LDCs (Article 66.2
of the Agreement on Trade-Related Aspects
of Intellectual Property Rights). A study
undertaken by the International Centre for Trade
and Sustainable Development, which examined
79 reports submitted by developed countries
between 1999 and 2010, found that business
remains as usual (Moon, 2011). On the other
hand, WTO rules prohibit LDCs from making
technology transfer a performance requirement
for foreign investors.
poSt-2015: Global actIon For an IncluSIvE anD SuStaInablE FuturE
The more recent
debate not only
argues that the
most productive
firms within an
industry focus
on exports, but
also that they
are likely to have
been the most
productive within
an industry before
exporting.
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