Publication: Comments on “New Structural Economics” by Justin Yifu Lin
Ever since development economics became a field, there has been a search for “the” key to development. Physical capital accumulation, human capital, industrial 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 economics” (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 effective market mechanism, the government should play an active role in facilitating structural change.
“Krueger, Anne. 2011. Comments on “New Structural Economics” by Justin Yifu Lin. World Bank Research Observer. © World Bank. http://openknowledge.worldbank.org/entities/publication/be84f44c-c3a7-51f2-a422-215c9e9b139b License: CC BY-NC-ND 3.0 IGO.”
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