New Structural Economics : A Framework for Rethinking Development
As strategies for achieving sustainable growth in developing countries are re-examined in light of the financial crisis, it is critical to take into account structural change and its corollary, industrial upgrading. Economic literature has devoted a great deal of attention to the analysis of technol...
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| Online Access: | http://hdl.handle.net/10986/13508 |
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okr-10986-135082021-04-23T14:03:08Z New Structural Economics : A Framework for Rethinking Development Lin, Justin Yifu classical economists development agencies diminishing returns economic development economic growth economic historians economic theories Economics economists externalities financial crisis growth theories growth theory human capital income industrialization marginal cost per capita income production functions structural change As strategies for achieving sustainable growth in developing countries are re-examined in light of the financial crisis, it is critical to take into account structural change and its corollary, industrial upgrading. Economic literature has devoted a great deal of attention to the analysis of technological innovation, but not enough to these equally important issues. The new structural economics outlined in this paper suggests a framework to complement previous approaches in the search for sustainable growth strategies. It takes the following into consideration. First, an economy's structure of factor endowments evolves from one level of development to another. Therefore, the optimal industrial structure of a given economy will be different at different levels of development. Each industrial structure requires corresponding infrastructure (both “hard” and “soft”) to facilitate its operations and transactions. Second, each level of economic development is a point along the continuum from a low-income agrarian economy to a high-income industrialized economy, not a dichotomy of two economic development levels (“poor” versus “rich” or “developing” versus “industrialized”). Industrial upgrading and infrastructure improvement targets in developing countries should not necessarily draw from those that exist in high-income countries. Third, at each given level of development, the market is the basic mechanism for effective resource allocation. However, economic development as a dynamic process requires industrial upgrading and corresponding improvements in “hard” and “soft” infrastructure at each level. Such upgrading entails large externalities to firms' transaction costs and returns to capital investment. Thus, in addition to an effective market mechanism, the government should play an active role in facilitating industrial upgrading and infrastructure improvements." 2013-05-21T20:52:23Z 2013-05-21T20:52:23Z 2011-08-01 Journal Article World Bank Research Observer 1564-6971 doi:10.1093/wbro/lkr007 http://hdl.handle.net/10986/13508 en_US World Bank Research Observer;26(2) CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ World Bank World Bank Journal Article South Asia Brazil China India |
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Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
classical economists development agencies diminishing returns economic development economic growth economic historians economic theories Economics economists externalities financial crisis growth theories growth theory human capital income industrialization marginal cost per capita income production functions structural change |
| spellingShingle |
classical economists development agencies diminishing returns economic development economic growth economic historians economic theories Economics economists externalities financial crisis growth theories growth theory human capital income industrialization marginal cost per capita income production functions structural change Lin, Justin Yifu New Structural Economics : A Framework for Rethinking Development |
| geographic_facet |
South Asia Brazil China India |
| relation |
World Bank Research Observer;26(2) |
| description |
As strategies for achieving sustainable growth in developing countries are re-examined in light of the financial crisis, it is critical to take into account structural change and its corollary, industrial upgrading. Economic literature has devoted a great deal of attention to the analysis of technological innovation, but not enough to these equally important issues. The new structural economics outlined in this paper suggests a framework to complement previous approaches in the search for sustainable growth strategies. It takes the following into consideration.
First, an economy's structure of factor endowments evolves from one level of development to another. Therefore, the optimal industrial structure of a given economy will be different at different levels of development. Each industrial structure requires corresponding infrastructure (both “hard” and “soft”) to facilitate its operations and transactions.
Second, each level of economic development is a point along the continuum from a low-income agrarian economy to a high-income industrialized economy, not a dichotomy of two economic development levels (“poor” versus “rich” or “developing” versus “industrialized”). Industrial upgrading and infrastructure improvement targets in developing countries should not necessarily draw from those that exist in high-income countries.
Third, at each given level of development, the market is the basic mechanism for effective resource allocation. However, economic development as a dynamic process requires industrial upgrading and corresponding improvements in “hard” and “soft” infrastructure at each level. Such upgrading entails large externalities to firms' transaction costs and returns to capital investment. Thus, in addition to an effective market mechanism, the government should play an active role in facilitating industrial upgrading and infrastructure improvements." |
| format |
Journal Article |
| author |
Lin, Justin Yifu |
| author_facet |
Lin, Justin Yifu |
| author_sort |
Lin, Justin Yifu |
| title |
New Structural Economics : A Framework for Rethinking Development |
| title_short |
New Structural Economics : A Framework for Rethinking Development |
| title_full |
New Structural Economics : A Framework for Rethinking Development |
| title_fullStr |
New Structural Economics : A Framework for Rethinking Development |
| title_full_unstemmed |
New Structural Economics : A Framework for Rethinking Development |
| title_sort |
new structural economics : a framework for rethinking development |
| publisher |
World Bank |
| publishDate |
2013 |
| url |
http://hdl.handle.net/10986/13508 |
| _version_ |
1764423646034526208 |