IntroductionII
Development economics fi rst became an independent subdiscipline of
modern economics after World War II. Various schools of fi rst-generation
development economists in fact emphasized the importance of structural
change and saw structural differences as a result of market failures. Not
surprisingly, they proposed to use government interventions to facilitate
structural change through import substitution and gave priority to modern
advanced industries. It was a period when new protective devices such
as quantitative restrictions on imports and exchange controls to manage
the balance of payments were fi rst used on a large scale by most countries.
Using Keynesianism as the main intellectual foundation for their
analyses, early development economists advocated a “dirigiste dogma”
(Lal 1983), positing as the central tenant of their theories that developing
countries were irremediably different from industrial countries. Most
developing countries and multilateral development institutions followed
these policy recommendations. From Latin America to Europe, Asia, and
Africa, results were disappointing, and the gap with the industrialized
countries widened.
The failure of the government interventions inspired by the fi rst-wave
development thinking generated a new wave, which highlighted government
failures and adopted an astructural approach toward economic
development that emphasized the essential function of markets in allocating
resources and providing incentives for economic development, ignored
the structural differences among countries at different levels of development
in their policy recommendations, and expected the structural change
to happen spontaneously in a country’s development process.
Keynesian macroeconomics was also challenged by the emergence of
stagfl ation in the 1970s, the Latin American debt crisis, and the collapse
of the socialist planning system in the 1980s. The rational expectations
theory became the dominant intellectual framework for development and
helped refute the structuralist theoretical foundation for the state’s role in
using fi scal, monetary, and trade policy for economic development. The
new development thinking emphasized getting the price right, creating a
stable market environment, strengthening the institutions necessary for
markets to function well (property rights, good governance, business
environment, and the like), and building human capital (education and
health) to supply the increasingly skilled labor required by advances in
technology.
Economic development is a process of continuous technological innovation and structural transformation. Development thinking is inherently tied to the quest for sustainable growth strategies. This book provides a neoclassical approach for studying the determinants of economic structure and its transformation and draws new insights for development policy. The market is the basic mechanism for effective resource allocation at each level of development. However, economic development as a dynamic process entails structural changes, including industrial upgrading and diversification and corresponding improvements in hard and soft infrastructure. Such upgrading and improvements require coordination and go hand in hand 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 changes. The book provides empirical evidence in support of this framework as well as concrete advice to development practitioners.
modern economics after World War II. Various schools of fi rst-generation
development economists in fact emphasized the importance of structural
change and saw structural differences as a result of market failures. Not
surprisingly, they proposed to use government interventions to facilitate
structural change through import substitution and gave priority to modern
advanced industries. It was a period when new protective devices such
as quantitative restrictions on imports and exchange controls to manage
the balance of payments were fi rst used on a large scale by most countries.
Using Keynesianism as the main intellectual foundation for their
analyses, early development economists advocated a “dirigiste dogma”
(Lal 1983), positing as the central tenant of their theories that developing
countries were irremediably different from industrial countries. Most
developing countries and multilateral development institutions followed
these policy recommendations. From Latin America to Europe, Asia, and
Africa, results were disappointing, and the gap with the industrialized
countries widened.
The failure of the government interventions inspired by the fi rst-wave
development thinking generated a new wave, which highlighted government
failures and adopted an astructural approach toward economic
development that emphasized the essential function of markets in allocating
resources and providing incentives for economic development, ignored
the structural differences among countries at different levels of development
in their policy recommendations, and expected the structural change
to happen spontaneously in a country’s development process.
Keynesian macroeconomics was also challenged by the emergence of
stagfl ation in the 1970s, the Latin American debt crisis, and the collapse
of the socialist planning system in the 1980s. The rational expectations
theory became the dominant intellectual fr
helped refute the structuralist theoretical foundation for the state’s role in
using fi scal, monetary, and trade policy for economic development. The
new development thinking emphasized getting the price right, creating a
stable market environment, strengthening the institutions necessary for
markets to function well (property rights, good governance, business
environment, and the like), and building human capital (education and
health) to supply the increasingly skilled labor required by advances in
technology.
本文摘自《新結構經濟學》
Economic development is a process of continuous technological innovation and structural transformation. Development thinking is inherently tied to the quest for sustainable growth strategies. This book provides a neoclassical approach for studying the determinants of economic structure and its transformation and draws new insights for development policy. The market is the basic mechanism for effective resource allocation at each level of development. However, economic development as a dynamic process entails structural changes, including industrial upgrading and diversification and corresponding improvements in hard and soft infrastructure. Such upgrading and improvements require coordination and go hand in hand 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 changes. The book provides empirical evidence in support of this fr