A Short Review of Development Thinking and Experiences

2013-11-17 18:37:49

　　The process of sustainable per capita income increase and economic

　　growth, characterized by continuous technological innovation and industrial

　　upgrading, is a modern phenomenon. From Adam Smith to the early

　　twentieth century, most economists believed that laissez-faire was the best

　　vehicle for achieving sustainable growth in an economy. It was assumed

　　that in thriving economies all decisions about resource allocation are made

　　by economic agents interacting in markets free of government intervention.

　　The price system determines not only what is produced and how but

　　also for whom. Households and fi rms pursuing their own interests would

　　be led, “as if by an invisible hand,” to do things that are in the interests

　　of others and of society as a whole. Although the laissez-faire approach

　　was challenged by Marxist economists and others, it became the dominant

　　intellectual framework for the study of growth in all countries and

　　remained so for a long time. It certainly provided many good insights on

　　the process of economic development but it missed the importance of the

　　process of continuous, fundamental technological changes and industrial

　　upgrading, which distinguishes modern economic growth from premodern

　　economic growth (Kuznets 1966).

　　The study of economic development proceeds in two related but separate

　　tracks: growth theories and development theories. While some of

　　the key ingredients of modern growth theory such as competitive behavior,

　　equilibrium dynamics, the importance of physical capital and human

　　capital, the possibility of diminishing returns, and the impact of technological

　　progress can be found in the work of classical economists (Ramsey

　　1928; Schumpeter 1934), systematic modeling only started in the 1940s

　　when some pioneers used primary factors to build generic models based on

　　aggregate production functions. Harrod (1939) and Domar (1946) triggered

　　extensive research along these lines. Following their initial work,

　　the Solow-Swan model sparked the fi rst major wave of systematic growth

　　analysis. The objective was to understand the mechanics of growth, identify

　　its determinants, and develop techniques of growth accounting, which

　　would help explain changes in the momentum and role of economic policy.

　　That fi rst generation of growth researchers highlighted the centrality of

　　capital. One important prediction from these models was the idea of conditional

　　convergence, derived from the assumption of diminishing returns

　　to capital—poor economies with lower capital per worker (relative to their

　　long-run or steady-state capital per worker) will grow faster. While that

　　assumption allowed the model to maintain its key prediction of conditional

　　convergence, it also seemed odd: technology, the main determinant of longrun

　　growth, was kept outside of the model (Lin and Monga 2010).

　　A new wave of growth modeling had to come up with a convincing

　　theory of technological change. Endogenous growth theory, as it came to

　　be known, maintained the assumption of nonrivalry because technology is

　　indeed a very different type of factor from capital and labor—it can be used

　　indefi nitely by others, at zero marginal cost (Romer 1987, 1990; Aghion

　　and Howitt 1992). But it was important to take the next logical step and

　　to understand better the public good characterization of technology and

　　think of it as a partially excludable nonrival good. The new wave therefore

　　reclassifi ed technology not just as a public good but as a good that is

　　subject to a certain level of private control. However, making it a partially

　　excludable nonrival good and therefore giving it some degree of excludability

　　or appropriability was not suffi cient to ensure that incentives for

　　its production and use were socially optimal. The move away from perfect

　　competition was therefore necessary. It has yielded high methodological

　　payoffs. While neoclassical models of growth took technology and factor

　　accumulation as exogenous, endogenous growth models explain why technology

　　grows over time through new ideas and provide the microeconomic

　　underpinnings for models of the technological frontier.

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 framework as well as concrete advice to development practitioners.