Lin, Justin Yifu

Person:
Lin, Justin Yifu

Last updated: January 31, 2023

Biography

Justin Yifu Lin is the former World Bank Chief Economist and Senior Vice President, Development Economics. In his capacity, Mr. Lin guided the Bank’s intellectual leadership and played a key role in shaping the economic research agenda of the institution. Building on a distinguished career as one of China’s leading economists, Mr. Lin is undertaking an ambitious research program that examines the industrialization of rapidly developing countries and sheds new light on the causes of lagging growth in poor regions. He took up his World Bank position on June 2, 2008, after serving for 15 years as Professor and Founding Director of the China Centre for Economic Research (CCER) at Peking University.

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New Structural Economics : A Framework for Rethinking Development and Policy
(Washington, DC: World Bank, 2012-01-06) Lin, Justin Yifu
The new structural economics argues that the best way to upgrade a country's endowment structure is to develop its industries at any specific time according to the comparative advantages determined by its given endowment structure at that time. The economy will be most competitive, the economic surplus will be the largest, and the capital accumulation and the upgrading of factor endowment structure will be the fastest possible. The 'New Structural Economics' presented in this book is an attempt to set out this third wave of development thinking. Taking into account the lessons learned from the growth successes and failures of the last decades, it advances a neoclassical approach to study the determinants and dynamics of economic structure. It postulates that the economic structure of an economy is endogenous to its factor endowment structure and that sustained economic development is driven by changes in factor endowments and continuous technological innovation. The paper also discusses binding constraints to growth in each of these industries' value chains as well as mechanisms through which governance-related issues in the implementation of industrial policy could be addressed.
Annual World Bank Conference on Development Economics--Global 2010 : Lessons from East Asia and the Global Financial Crisis
(World Bank, 2011) Pleskovic, Boris; Lin, Justin Yifu
The Annual World Bank Conference on Development Economics (ABCDE) is a forum for discussion and debate of important policy issues facing developing countries. The conferences emphasize the contribution that empirical economic research can make to understanding development processes and to formulating sound development policies. Conference papers are written by researchers in and outside the World Bank. This year's ABCDE included sessions on the following themes: industrial policy and development; social capital, institutions, and development; financial crisis and regulation; the road to a sustainable global economic system; and innovation and competition. In light of the global financial crisis, speakers touched on fundamental questions: what caused the current crisis, and how can the world economy recover?Are the standard prescriptions of development economics adequate to the task? Should developing countries alter their basic growth strategies? What is the proper role of the state? Should developing countries reexamine their commitment to free trade? How can global imbalances be rectified (especially between China and the United States)? Within the globalized financial system, how can regulation are improved? In attempting to answer these questions, many of the speakers searched for solutions in the lessons offered by the experience of Korea and other East Asian countries, which reacted with varying degrees of success to the financial crisis of the late 1990s. This volume includes selected papers from the conference as well as keynote addresses by SaKong, chairman of the Korean G-20 summit coordinating committee, and two distinguished economists: Anne Krueger, Stanford University and Johns Hopkins University, and Simon Johnson, Massachusetts Institute of Technology.
Annual World Bank Conference on Development Economics—Global 2011 : Development Challenges in a Postcrisis World
(Washington, DC: World Bank, 2013-10-11) Sepúlveda, Claudia; Harrison, Ann; Lin, Justin Yifu; Sepúlveda, Claudia; Harrison, Ann; Lin, Justin Yifu
This volume presents papers from a global gathering of the world’s leading development scholars and practitioners held May 31 - June 2, 2010. Paper themes include: Environmental Commons and the Green Economy, Post-crisis Development Strategy, the Political Economy of Fragile States, Measuring Welfare, and Social Programs and Transfers. Keynote addresses: Elinor Ostrom: Overcoming the Samaritan's Dlimemma in Development Aid -- Torsten Persson: Weak States, Strong States, and Development -- Joseph Stiglitz: Learning, Growth, and Development -- Partha Dasgupta: Poverty Traps
The Rejuvenation of Industrial Policy
(World Bank, Washington, DC, 2013-09) Stiglitz, Joseph E.; Lin, Justin Yifu; Monga, Célestin
This essay is about an important area in which there has been major rethinking -- industrial policy, by which the authors mean government policies directed at affecting the economic structure of the economy. The standard argument was that markets were efficient, so there was no need for government to intervene either in the allocation of resources across sectors or in the choices of technique. And even if markets were not efficient, governments were not likely to improve matters. But the 2008-2009 global financial crisis showed that markets were not necessarily efficient and, indeed, there was a broad consensus that without strong government intervention -- which included providing lifelines to certain firms and certain industries -- the market economies of the United States and Europe may have collapsed. Today, the relevance and pertinence of industrial policies are acknowledged by mainstream economists and political leaders from all sides of the ideological spectrum. But what exactly is industrial policy? Why has it raised so much controversy and confusion? What is the compelling new rationale that seems to bring mainstream economists to acknowledge the crucial importance of industrial policy and revisit some of the fundamental assumptions of economic theory and economic development? How can industrial policy be designed to avoid the pitfalls of some of the seeming past failures and to emulate some of the past successes? What are the contours of the emerging consensus and remaining issues and open questions? The paper addresses these questions.
New Structural Economics : A Framework for Rethinking Development
(World Bank, 2011-08-01) Lin, Justin Yifu
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."
China and the Global Economy
(Taylor and Francis, 2011-10-07) Lin, Justin Yifu
As a result of the extraordinary performance in the past 20 years, China's status in the global economy has dramatically changed. In this article, I reflect on China's unprecedented growth, examine the reasons for that growth, and discuss promising prospects for the Chinese economy to maintain an 8% annual growth rate in the coming two decades. Although to maintain that growth rate, China will definitely encounter many challenges – both internally and externally. The twenty-first century has witnessed the emergence of a multi-polar growth world, with many of the new growth poles being emerging market economies. China has become the top contributor to global GDP growth in the decade of 2000–2009. If China copes appropriately with its challenges and deepens its structural reforms, it has the potential to continue its role as a leading power in supporting a multi-polar global economic architecture that benefits both developing and high-income countries in various ways.
Reform of the International Monetary System : A Jagged History and Uncertain Prospects
(World Bank, Washington, DC, 2012-05) Fardoust, Shahrokh; Lin, Justin Yifu; Rosenblatt, David
This paper analyzes the historical evolution of the international monetary system in the context of the rising role of developing countries in the world economy and the emerging multi-polar growth setting. It evaluates the stability of the current "non-system" and how the global economic context is likely to affect that stability in the coming years with potential adverse effects on both advanced and developing economies. Given the likely trend toward a multi-polar reserve currency system, the paper evaluates the stability of the emerging system, as well as the current proposals for reform of the international monetary system. The paper concludes that more ambitious reforms of the system may be needed to meaningfully reduce future global economic and financial instability.
Leading Dragon Phenomenon : New Opportunities for Catch-up in Low-Income Countries
(Asian Development Bank and Asian Development Bank Institute, 2013-03) Chandra, Vandana; Lin, Justin Yifu; Wang, Yan
Modern economic development is accompanied by the structural transformation from an agrarian to an industrial economy. Since the 18th century, all countries that industrialized successfully have followed their comparative advantages and leveraged the latecomer advantage, including emerging market economies such as the People's Republic of China (PRC), India, and Indonesia. The current view is that Chinese dominance in manufacturing hinders poor countries from developing similar industries. We argue that rising labor cost is causing the PRC to graduate from labor-intensive to more capital-intensive and technology-intensive industries. This will result in the relocation of low-skill manufacturing jobs to other low-wage countries. This process, which we call the “leading dragon phenomenon,” offers an unprecedented opportunity to low-income countries. Such economies can seize this opportunity by attracting the rising outward foreign direct investment flowing from Brazil, the PRC, India, and Indonesia into the manufacturing sectors. All low-income countries can compete for the jobs spillover from the PRC and other emerging economies, but the winner must implement credible economic development strategies that are consistent with its comparative advantage.
US–China External Imbalance and the Global Financial Crisis
(Taylor and Francis, 2010-06-23) Im, Fernando; Lin, Justin Yifu; Dinh, Hinh T.
This paper advances an alternative explanation of the large external imbalance between the United States and China, and its linkages to the current global financial crisis. We show that US current account deficits dated back long before the emergence of China's recent large trade surpluses, with China accounting at its peak for at most one-third of this deficit. The relative rise in China's savings in recent years can be attributed to an increase in its corporate savings, a trend that reflects distortions arising from the transition process from a planned to a market economy. These distortions exacerbate China's income inequality, causing domestic consumption to remain a small share of GDP. Large recent current account deficits in the United States, on the other hand, can be attributed to public sector disserving and perverse incentives generated by housing and equity bubbles, made possible by loose monetary policy and by “innovative” financial derivatives arising from the financial deregulation in the early 1980s. The paper shows that short-run measures are unlikely to fully address these external imbalances. Both countries require long-run, structural measures to resolve the underlying problems and to restore a sustainable foundation for growth.
China's Integration with the World : Development as a Process of Learning and Industrial Upgrading
(Washington, DC: World Bank, 2008-12) Wang, Yan; Lin, Justin Yifu
The process of development is full of uncertainties, especially if it is a process of transition from a planned economy to a market oriented one. Because of uncertainties and country specificity, development must be a process of learning, selective adaptation, and industrial upgrading. This paper attempts to distill lessons from China's reform and opening up process, and investigate the underlying reasons behind China's success in trade expansion and economic growth. From its beginnings with home-grown and second-best institutions, China has embarked on a long journey of reform, experimentation, and learning by doing. It is moving from a comparative advantage-defying strategy to a comparative advantage-following strategy. The country is catching up quickly through augmenting its factor endowments and upgrading industries; but this has been only partially successful. Although China is facing several difficult challenges - including rising inequality, an industrial structure that is overly capital and energy intensive, and related environmental degradation - it is better positioned to tackle them now than it was 30 years ago. This paper reviews the drivers behind China's learning and trade integration and provides both positive and negative lessons for developing countries with diverse natural endowments, especially those in Sub-Saharan Africa.