Are there “Flying Geese Effects” on the Economies and Real Estate Markets between Japan and Taiwan?

After the Industrial Revolution in Europe in the 18th century, the economic development of Asia was initiated by Japan in the 1900s. As the costs of labor and land escalated, some industries gradually relocated to other Asian countries or regions which Akamatsu (1962) terms the flying geese pattern. To explore the flying geese effect between Japan and Taiwan, this study analyzes data from the gross domestic product and stock and housing markets of both countries from 1975 to 2023. During the pre-bubble and the overall study periods, the Japanese markets significantly influenced the stock and housing markets of Taiwan, thus demonstrating the flying geese effect and reflecting the strong economic performance of Japan. However, in the post-bubble period, the Taiwanese markets diverged from the trajectory of Japan, and developed their independent momentum. These shifts can be attributed to the outward capital and industrial migration of Japan, increasing competition from the emerging markets, and growth of the integrated circuit industry of Taiwan.