A Neoclassical Approach to Structure and Change

　　The starting point for the analysis of economic development is an economy’s

　　endowments. Endowments are a given in an economy at any specifi

　　c time and are changeable over time. Following the tradition of classical

　　economics, economists tend to think of a given country’s endowments as

　　consisting only of its land (or natural resources), labor, and capital (both

　　physical and human).2 These are in fact factor endowments, which fi rms

　　in an economy can use in production. It should be noted that the analysis

　　of new structural economics focuses on the dynamics of the capital/labor

　　ratio. This is because land is exogenously given in any realistic discussion of

　　a country’s development and natural resources, such as mining resources,

　　exist underground in fi xed quantity and their discovery is often random.

　　Conceptually, it is useful to add infrastructure as one more component

　　in an economy’s endowments. Infrastructure includes hard (or tangible)

　　infrastructure and soft (or intangible) infrastructure. Examples of hard

　　infrastructure are highways, port facilities, airports, telecommunication

　　systems, electricity grids, and other public utilities. Soft infrastructure consists

　　of institutions, regulations, social capital, value systems, and other

　　social, economic arrangements. Infrastructure affects the individual fi rm’s

　　transaction costs and the marginal rate of return on investment.

　　Countries at different levels of development tend to have different

　　economic structures due to differences in their endowments. Factor

　　endowments for countries at the early levels of development are typically

　　characterized by a relative scarcity of capital and relative abundance of

　　labor or resources. Their production activities tend to be labor intensive

　　or resource intensive (mostly in subsistence agriculture, animal husbandry,

　　fi shery, and the mining sector) and usually rely on conventional, mature

　　technologies and produce “mature,” well-established products. Except for

　　mining and plantations, their production has limited economies of scale.

　　Their fi rm sizes are usually relatively small, with market transactions often

　　informal, limited to local markets with familiar people. The hard and soft

　　infrastructure required for facilitating that type of production and market

　　transactions is limited and relatively simple and rudimentary.

　　At the other extreme of the development spectrum, high-income countries

　　display a completely different endowment structure. The relatively

　　abundant factor in their endowments is typically capital, not natural

　　resources or labor. They tend to have comparative advantage in capital

　　intensive industries with economies of scale in production. The various

　　types of hard infrastructure (power, telecommunication, roads, port facilities,

　　etc.) and soft infrastructure (regulatory and legal frameworks, cultural

　　value systems, etc.) that are needed must comply with the necessities of

　　national and global markets where business transactions are long distance

　　and large in quantity and value.

　　Economic development requires continuous introduction of new and

　　better technology to an existing industry. Most people in low-income

　　countries depend on agriculture for their livelihood. Improvements

　　in agricultural technology are key to increasing farmers’ income and

　　reducing poverty. However, economic development also requires continuous

　　diversifying and upgrading from existing industries to new, more

　　capital-intensive ones. Without such a structural change, the scope for

　　sustained increase in per capita income will be limited. Therefore, the

　　discussion in this paper will focus mostly on issues related to industrial

　　upgrading and diversifi cation.

　　Developing countries have the advantage of backwardness in the

　　upgrading process and a whole spectrum of industries with different levels

　　of capital intensity available for them to choose. However, they must fi rst

　　upgrade their factor endowment structure, which requires their stock of

　　capital to grow more rapidly than the labor force (see Ju, Lin, and Wang

　　2009). When they move up the industrial ladder in the process of economic

　　development, they also increase their scale of production—because of the

　　indivisibility of capital equipment. Their fi rms become larger and need a

　　bigger market, which in turn necessitates correspondent changes in power,

　　transportation, fi nancial arrangements, and other soft infrastructure.

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.