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Comments on “New Structural Economics” by Justin Yifu Lin

Comments on “New Structural Economics” by Justin Yifu Lin Comments on “New Structural Economics” by Justin Yifu Lin Anne Krueger Ever since development economics became a field, there has been a search for “the” key to development. Physical capital accumulation, human capital, indus- trial development, institutional quality, social capital, and a variety of other factors have been the focus at one time or another. As each became the focal point, there was a parallel explicit or implied role of government. If I understand Justin Lin correctly, he is saying that the “new structural econ- omics” (NSE) accepts that earlier thought ignored comparative advantage, which should be market determined, but that growth requires improvements in ‘hard’ (tangible) and ‘soft’ (intangible) infrastructure at each stage. Such upgrading and improvements require coordination and inhere with large externalities to firms’ transaction costs and returns to capital investment. Thus, in addition to an effec- tive market mechanism, the government should play an active role in facilitating structural change (p. 206). He seems also to believe that growth depends almost entirely on industry growth and believes that constant “upgrading” or moving up the value added chain is the central challenge. He says that “the laissez-faire approach ... missed the importance of the process of http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The World Bank Research Observer Oxford University Press

Comments on “New Structural Economics” by Justin Yifu Lin

Krueger, Anne
The World Bank Research Observer , Volume 26 (2) – Aug 12, 2011
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References (2)

Publisher
Oxford University Press
Copyright
© The Author 2011. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com
Subject
Symposium on “New Structural Economics”
ISSN
0257-3032
eISSN
1564-6971
DOI
10.1093/wbro/lkr010
Publisher site
See Article on Publisher Site

Abstract

Comments on “New Structural Economics” by Justin Yifu Lin Anne Krueger Ever since development economics became a field, there has been a search for “the” key to development. Physical capital accumulation, human capital, indus- trial development, institutional quality, social capital, and a variety of other factors have been the focus at one time or another. As each became the focal point, there was a parallel explicit or implied role of government. If I understand Justin Lin correctly, he is saying that the “new structural econ- omics” (NSE) accepts that earlier thought ignored comparative advantage, which should be market determined, but that growth requires improvements in ‘hard’ (tangible) and ‘soft’ (intangible) infrastructure at each stage. Such upgrading and improvements require coordination and inhere with large externalities to firms’ transaction costs and returns to capital investment. Thus, in addition to an effec- tive market mechanism, the government should play an active role in facilitating structural change (p. 206). He seems also to believe that growth depends almost entirely on industry growth and believes that constant “upgrading” or moving up the value added chain is the central challenge. He says that “the laissez-faire approach ... missed the importance of the process of

Journal

The World Bank Research Observer – Oxford University Press

Published: Aug 12, 2011

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