New structural economics – A framework for a growth miracle

Once upon a time there were a number of Asian countries. They had scarce natural resources, hardly any notable capital accumulation, were heavily overpopulated and most of their people lived in extreme poverty. In fact, the situation of these Asian countries was so miserable, that development economists were betting on South America and Africa for rapid development. But then, one day, came the economic growth fairy and blessed the Asian countries with decade-long, (close to) double-digit growth rates and all was good and everyone was happy – except for the development economists, who didn’t know how this could possibly have happened. And after decades of research, … we still don’t really know. However, there are some new interesting approaches at the frontier of development economics. Justin Yifu Lin’s idea of the new structural economics is one of the ground-breaking ideas that shed some light on how economies develop. In this blog I will outline the main ideas and some personal points of criticism, but if you’re interested in more, you can look at the following paper or, if you need a more integrated perspective, at his newest book: Demystifying the Chinese Economy. Both are highly recommended readings.

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