More than 70years ago, Akamatsu found a general pattern of industrial development and international trade based on Japan’s case and called the ‘Flying Geese’ model. Wild geese fly in orderly ranks forming an inverse V just like airplanes fly in formation ( Akamatsu Kaname, 1962). This flying geese model is metaphorically applied to the below figured three-time series curves each denoting import, domestic production, and export of manufactured goods in less advanced countries.
The Model recognizes that in regard to the economic development of less advanced countries, for all industrial goods, there exists a sequential order from import to domestic production and further to export. Under this model countries begin by importing; then production of formerly imported goods and finally export as they continue their pass in a catch up with the more advanced countries.
Bruce Cumings applied the analogy of the ‘flying geese’ to the situation in eastern Asia. Countries are said to follow one another in the development trajectory in which the latecomers replicate the development experience of the ones ahead of them in the flying geese formation(2). The form of regional development as postulated by the modern flying geese paradigm presupposes the existence of a hierarchy with the dominant economy acting as the growth center and followed by the developing economies with the increasing interdependence among regional clustered economies in east Asia being interpreted as a sign of integration(3).
The flying geese model highlights elements of regional integration in the pattern of development in which economies depend on one another in the catch-up process to develop. East Africa community in its initial stages can borrow a leaf from the experience in East Asia under the flying geese model for economic development amongst member states including Rwanda, Burundi, Uganda, Tanzania, and Kenya.
Regional integration remains the key strategy that will enable African governments to accelerate the transformation of their fragmented small economies, expand their markets, widen the region’s economic space, and reap the benefits of economies of scale for production and trade, thereby maximizing the welfare of their nations. Regional integration increases competition in global trade and improves access to foreign technology, investment, and ideas.
In East Africa, a case can be made for temporary and limited industry protection based on the historical lessons of previous integration attempts. A USAID study (Fox, 2004) concurs with this view by stressing that the failure of past regional trade agreements to support the infant industry rationale should not be interpreted as a failure in the short run. The experiences of the Asian tigers show how governmental promotion and subsidization of firms can produce dramatic and positive cumulative change over the long term. Shafaeddin (2000) argues that infant industry protection is valid and in present conditions more relevant owing to recent technological changes and innovations in the organization of production. Thus, it is within this context that internal tariffs and non-tariff barriers, that could hinder trade between the partner states, have to be evaluated, in order to facilitate the awareness of their cost to business and investment in the region (7) This argument makes it more profound that even with globalization and liberalization, infant industries’ protection has to be looked into in east Africa. The leading geese Kenya industries through technology and industrial expansion might damage industrial progress in other member countries. This could be damaging industries in the follower economies rather than the expected regional growth as a result of the ‘flight’ as expressed by the model.
Another suggestion is that for Uganda to be able to reap the benefits of regional integration efforts, the existing supply-side rigidities and infrastructural constraints, as well as the non-tariff barriers that at present impede the benefits of liberation under East Africa customs union, need to be addressed. Some of the main examples of supply-side constraints that limit the present capacity of the Ugandan industries are the lack of technical knowledge and expertise to design production structures. Besides, there are institutional weaknesses that lead to transaction costs and impede the incentive structure for regional development. Some of the main supply-side rigidities and institutional weaknesses in Uganda are for instance unreliable business partners, unstable macro-political environment; corrupt bureaucracy; high costs to get access to business development measures like trade finance and limited capacity of the manufacturing plants add to the cost disadvantage of the domestic producers. The infrastructural and energy constraints further restrict the benefits of regional integration. Since Uganda is landlocked the importers have to incur substantial transport costs which place them at a comparative cost disadvantage in terms of the Kenyan or Tanzanian industries. The East African Business survey in 2005 also highlights these issues; it shows that the inability of exporters to provide the relevant customs documentation under the rules of origin requirement; lack of trained staff to certify products at the points of entry; lack of uniform direct taxation policies in the EAC countries; border delays; lack of adequate infrastructure; poor condition of the roads; high tolls for the use of roadways; underdeveloped telecommunications; and, energy restrictions inflate the prices of products for the Ugandan consumers. Addressing the existing non-tariff barriers are a priority since liberalizing tariffs without addressing the existence of NTBs will limit the benefits of regional integration(7)
Japan’s industrialization experience – its catching-up experience reflected in its trade relations with the west and structural changes in late industrialization was expected to be based on stimulating development in other countries in the region (3). This framework is ‘nation’ specific rather than being ‘regional specific’. The replicability of Japan’s experience in other countries in the region or elsewhere is assumed to follow suit. However, this does not address nation-specific differences and locations in the region in the catching-up process. In the case of East Africa, special care has to be put in the regional specific strengths and challenges for the adoption of the flying geese model to meaningfully beneficial in the region.
It is suggested that the ongoing intensification of regional integration efforts will require a thorough assessment of initial economic conditions, bases, processes, and the need to participate in the East Africa regional integration, taking into account new Africa and global realities Adetula (2004) (4). There is evidence to suggest that regional imbalances in particular with regard to industrialization contributed to the collapse of the East African community in 1977 (Newlyn 1971; Nixon, 1973; Maasdrop, 1999; Mair, 2003) (4). There is a fear that trade liberalization would lead to more efficient Kenyan manufacturers displacing domestic producers in Tanzania and Uganda not considering the new entrants in the community of Rwanda and Burundi. Against this background firms and Uganda and Tanzania were offered an adjustment period of 5 years which was believed to allow them to adjust and eventually compete with Kenyan firms EAC (2000)
The flying Model recognizes the free transfer of technology, specialization, and international division of labor as key for follower countries in the catch-up process. The lead country in the lead country, for the case of East Africa – Kenya automatically takes the lead in the flying gaggle while other countries take up the catch-up struggle.
According to Iyoha M.A (2005), it should be pointed out that the increasing marginalization of Africa in world trade has been aggravated by the excessive dependence of African countries on the European export market. In 1988, the European Community alone absorbed over 60% of exports of many commodities from Africa. Yet, intra-African trade accounted for less than 6% of Africa’s total trade. Regional Integrations have still failed to positively affect intra-regional trade which is key for intraregional growth. In the case of East Asia, the flying geese model Japan as the lead was able to import and export the newly industrialized countries in the flight which stimulates regional growth. With the industrialized countries placing more and more tariff and non-tariff barriers on the manufactured exports of developing countries and the attainment of a single European market, it is obvious that continued over-dependence on the European market will become even more unrealistic and counterproductive. In fact, until African countries resolve to increase intra-regional trade, the continent will continue to be marginalized in world trade and become increasingly irrelevant in global economic affairs.
The flying Geese model presupposes that with time in the gaggle, newly industrialized countries importing from the leading geese will finally develop the capacity to produce on their own. That these countries take advantage of specialization and international division of labor to produce consumer goods and export products at reduced production costs. In east Africa community-specific national budgets still do not reflect the need to invest in sectors where they have a comparative advantage for instance the 2011/2012 budget for Uganda does not apportion enough resources to steer the agriculture sector which is the mainstay for Uganda.
Internal barriers to African trade include low per capita incomes, tariff and non-tariff barriers, overvalued exchange rates, inconvertible currencies, poor transport and communications infrastructure, anti-trade biased policies, civil wars, and poor macroeconomic policies. The external barriers to trade are those imposed by foreigners and include lack of access to Western markets and trade-distorting farm subsidies by Japan, the EU, and the US (Iyoha M.A, 2005)
For the east African regional integration to prosper economically, there is a need for the member countries to identify priority sectors that need subsidization for effective competition. As much as Kenya is the lead country in east Africa in terms of trade and industrialization more needs to be done for Kenya to assume its leadership role. More likely than note Uganda is viewed as a key contributor to regional political stability than Kenya due to its involvement in Somalia’s peace efforts, the establishment of South Sudan, and the Democratic Republic of Congo in the past. This threatens the position of Kenya as the lead geese in the development process.
What accounts for Africa’s declining share of world trade and declining market share of agricultural exports? First is the issue of restrictions on market access by the rich countries. This point has been well made by Sharer (2001, p. 15) as cited by Iyoha M.A (2005) who declared that “industrial country protectionism in the agricultural sector is particularly harmful to Africa, much of whose export potential is in agricultural products and processing.” However, even though industrial country trade policies and market access restrictions have played a role, the fundamental cause of Africa’s falling export could be ascribed to lack of competitiveness arising mainly from low productivity, undercapitalization, high transactions costs, inadequate market infrastructure, weak institutions and support services, inadequate diversification, and poor macroeconomic policies (including overvalued exchange rates). Thus, ultimately, it is Africa’s lack of competitiveness that has resulted in the steady marginalization of its agriculture in world trade. This is best demonstrated by comparing the agricultural export performances of Africa and Asia during the last decade of the 20th century. Asia was very competitive — a result of high labor productivity arising from favorable economic and trade policies, high capitalization, use of modern techniques, and abundance of the requisite infrastructure. Consequently, Asia increased its market share in all the main agricultural commodities. For the east African countries to be the development ‘flight’ there is need to address these concerns that have caused Africa’s underdevelopment for so long for instance in Uganda where the economy’s mainstay is agriculture, efforts have to be made to stimulates growth including regional trade in this area.
Increased exposure to foreign technology emanates from the importation of high-tech commodities or from interaction with the sources of innovation due to better international communication and mobility. Such exposure creates a greater capacity to compete with advanced economies on the international market, which leads to the broad transformation of product composition of output and exports from agriculture to heavy industry and finally to high-tech goods. Un fortunately all countries in the East Africa community still import high volumes of cheap and low–tech goods that do not steer innovations for growth in the region. In the East Asia economies led by Japan, newly industrialized countries as expressed in the flying geese model through regional trade are able to import technology through multinational industries and trade that further stimulates growth in their own countries, especially from Japan.
Agriculture is the primary economic activity in many African countries. It employs millions and forms the basis of many other industries. A large proportion of the total African labor force is engaged in agricultural activity. In most African countries, agriculture supports the survival and well-being of more than 70 percent of the population. About 90 percent of the rural population depends directly or indirectly on agriculture, and 60 percent of the total labor force is employed in agriculture. Nevertheless, only 6 percent of arable African lands are irrigated, compared with 40 percent of those of Asia. Agricultural production also is hobbled by drought, floods, the proliferation of pests, and the consequences of these problems, UNECA (2010).
By Laban Atuzarirwe K