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.
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.
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 fr
countries to achieve sustainable growth, eliminate poverty, and narrow
the income gap with the developed countries. The proposed fr
called a neoclassical approach to structure and change in the process of
economic development, or new structural economics, is ba
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 fr
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 ba
on this new approach.
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