What Geese Tell Us About Asia's Growth

Japanese economist and scholar Kaname Akamatsu predicted the growth of Asia’s economies in the 1930s with remarkable accuracy.
His most famous work, the ‘Flying Geese Paradigm’, is largely unknown to today’s economists. Nevertheless, I believe it remains a powerful analogy that can help explain Asia today.


Akamatsu was born in 1912 to a poor family in the most destitute prefecture of Japan. Growing up in poverty, he was fascinated by how the economy worked.

Why did some have so much while others had so little?

He was so interested in the topic, he dedicated his life to developing economic theories  and studying Asia’s position on the global economic playing field.

The Flying Geese Paradigm predicted that East Asian nations would ‘catch up’ with the West... and that the production of goods would move from the more advanced to less developed Asian economies, i.e. reflecting the ‘division of labor’ across Asia.

One economy, like the first goose in a V-shaped formation, can lead other economies toward industrialization, passing older technologies down to the followers as its own incomes rise and it moves into newer technologies.

The underdeveloped nations in the region could be said to be ‘aligned’ behind the advanced industrial nations in the order of their different stages of growth.

The Pecking Order

Japan was the leading goose in Asia for most of the 20th century. It was the first to industrialize, and then following WWII, it quickly bounced back as a low-cost manufacturer of consumer goods. 

By the late 1970s, it had moved on into more capital-intensive and technologically advanced products and services, passing on its lower-end manufacturing to...

The then newly-industrializing economies - South Korea, Taiwan, Singapore and Hong Kong.

The third group of geese to emerge in the 1980s were the main ASEAN countries - Indonesia, Thailand and Malaysia. 

And finally, in the 1990s, the least developed major nations in the region began to join the flock - China, Vietnam, Myanmar, and the Philippines.

However, things have changed drastically in less than two decades. What we’re witnessing today is a new ‘goose’ taking the lead… China.

The world’s most populous nation is set to become its biggest economy by 2032. In this highly dynamic economic environment, we’re tracking three indicators that can give us concrete insights into the health of its market, as well as into investment opportunities:

1. Trade surpluses

China has run a massive trade surplus and has accumulated large foreign reserves over the past 20 years.

2. Chinese tech IPOs

The majority of China’s 10 biggest tech firms are listed on U.S. exchanges, and their average market capitalizations are much larger than those listed in China - $10.4 billion versus $1.9 billion market capitalization as of Q3 2018.

3. American Depository Receipt (ADR) listings

Chinese ‘ADRs’ account for a lion’s share of the ADR market. We’ll be releasing a free Special Report on the benefits of ADRs in your investment strategy in the near future, and as a subscriber, you’ll be the first to receive a copy.

All of our research points to the clear conclusion that China is ‘extracting’ capital from the West, and as the paradigm predicted, East Asian countries are indeed ‘catching up’ with the West.

In the 1980s, some economists had predicted that Japan would overtake the U.S. as the world’s leading economy. 

That never happened. So is China really poised to finally tilt the balance of global power back to Asia and become the leading goose, not just in its neighborhood, but internationally?

Peter Pham