A framework for Rethinking Development

　　Several decades from now, when economic historians look back on the

　　story of the past hundred years, it is very likely that they will be intrigued

　　by the mystery of diverging performances by various countries, especially

　　during the second half of the twentieth century. On the one hand, they

　　will be amazed by the rapid growth path followed by a small number of

　　countries such as Brazil, Chile, China, Indonesia, India, Korea, Malaysia,

　　Mauritius, Singapore, Thailand, and Vietnam, where the industrialization

　　process quickly transformed their subsistence, agrarian economies

　　and lifted several hundred million people out of poverty in the space of

　　one generation. On the other hand, they will be puzzled by the apparent

　　inability of many other countries, where more than one-sixth of humanity

　　remained trapped in poverty, to generate sustainable growth. They will

　　also notice that with the exception of a few successful economies, there

　　was little economic convergence between rich and poor countries in spite

　　of the many efforts made by developing countries and despite the assistance

　　of many multilateral development agencies.

　　Long-term sustainable and inclusive growth is the driving force for

　　poverty reduction in developing countries, and for convergence with

　　developed economies. The current global crisis, the most serious one since

　　the Great Depression, calls for a rethinking of economic theories. It is

　　therefore a good time for economists to reexamine development theories

　　as well. This paper discusses the evolution of development thinking since

　　the end of World War II and suggests a framework to enable developing

　　countries to achieve sustainable growth, eliminate poverty, and narrow

　　the income gap with the developed countries. The proposed framework,

　　called a neoclassical approach to structure and change in the process of

　　economic development, or new structural economics, is based on the following

　　ideas:

　　First, an economy’s structure of factor endowments evolves from one

　　level of development to another. Therefore, the industrial structure of a

　　given economy will be different at different levels of development. Each

　　industrial structure requires corresponding infrastructure (both tangible

　　and intangible) 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 postindustrialized

　　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 entails structural changes, involving industrial

　　upgrading and corresponding improvements in “hard” (tangible)

　　and “soft” (intangible) infrastructure at each level. Such upgrading and

　　improvements require an inherent coordination, with large externalities to

　　fi rms’ 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 remainder of the paper is organized as follows: the next section

　　examines the evolution of development thinking and offers a critical review

　　of some of its main schools of thought. I then outline the basic principles

　　and conceptual framework of the new structural economics, the function

　　of the market, and the roles of a facilitating state. In the next section I

　　highlight similarities and differences between old and new structural economics,

　　and discuss some preliminary insights on major policy issues based

　　on this new approach.

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.