government-led economic development strategies

　　The results were disappointing in many cases. In many developing countries,

　　well-intended government interventions failed. This was the case

　　across Latin American, African, and South Asian countries in the 1960s

　　and 1970s when import substitution and protection were essential features

　　of the development strategy. One of the main reasons for the failure of

　　many former socialist and developing countries to achieve dynamic growth

　　in their transitional processes was the fact that they attempted to defy the

　　comparative advantage determined by their endowment structures and

　　gave priority to development of capital-intensive heavy industries when

　　capital in their economies was scarce. In order to implement such strategies,

　　developing-country governments had to protect numerous nonviable

　　enterprises in their priority sectors (Lin 2009a; Lin and Li 2009).

　　By shielding unsustainable industries from import competition, developing

　　countries also imposed various types of other costs on their economies.

　　Protection typically led to: (i) an increase in the price of imports and

　　import-substituting goods relative to the world price and distortions in

　　incentives, pushing the economy to consume the wrong mix of goods from

　　the point of view of economic effi ciency; (ii) the fragmentation of markets,

　　as the economy produced too many small-scale goods, which resulted

　　again in loss of effi ciency; (iii) decreased competition from foreign fi rms

　　and support for the monopoly power of domestic fi rms whose owners were

　　politically well connected; and (iv) opportunities for rents and corruption,

　　which raised input and transaction costs (Krueger 1974; Krugman 1993).

　　As government-led economic development strategies based on the

　　structuralist teachings failed in many countries, the free market approach

　　appeared to triumph and infl uence development thinking. This trend

　　was reinforced by a new revolution in macroeconomics. The prevailing

　　Keynesian macroeconomics was challenged by the stagfl ation in the 1970s,

　　the Latin American debt crisis, and the collapse of the socialist planning

　　system in the 1980s. The so-called rational expectations revolution emerged

　　and refuted the structuralist theoretical foundation for the state’s role in

　　using fi scal and monetary policy for economic development.

　　The Latin American debt crisis began in 1982 when international fi nancial

　　markets realized that the collapse of the Bretton Woods system had put

　　some countries with unlimited access to foreign capital in a situation where

　　they could not pay back their loans. The crisis was precipitated by a number

　　of interrelated exogenous shocks that toppled the Mexican and several

　　other Latin American economies, which were already overburdened with

　　a substantial percentage of the world’s outstanding debt (Cardoso and

　　Helwege 1995). It prompted multilateral lending institutions and bilateral

　　lenders—especially the United States—to call for a comprehensive set of

　　reforms of Latin American economies and to advocate a set of free-market

　　policies that followed the canons of the neoclassical paradigm, later known

　　as the Washington Consensus (Williamson 1990).

　　The Washington Consensus quickly came to be perceived as “a set of

　　neoliberal policies that have been imposed on hapless countries by the

　　Washington-based international fi nancial institutions and have led them

　　to crisis and misery” (Williamson 2002). It promoted economic liberalization,

　　privatization, and the implementation of rigorous stabilization

　　programs. The results of these policies in terms of growth and employment

　　generation were at best controversial (Easterly, Loayza, and Montiel

　　1997; Easterly 2001). By the end of the 1990s and parallel to the dismissal

　　of structuralism and the prevalence of the free market approach, the

　　development economics research community was witnessing the end of an

　　era dominated by cross-country regressions, which attempted to identify

　　growth determinants. That approach had been to focus on the independent

　　and marginal effects of a multitude of growth determinants. This led to the

　　linearization of complex theoretical models. Yet, the general view was that

　　growth determinants interact with each other. To be successful, some policy

　　reforms must be implemented with other reforms. There was a general

　　perception that the policy prescriptions stemming from such regressions

　　did not produce tangible results.

　　

本文摘自《新結構經濟學》

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　　 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.