New Structural Economics (NSE) proposes to use the neoclassical economic approach to study the determinants of economic structure, including technology, industry, infrastructure and institution, and its evolution in the process of economic development. NSE underscores that the starting point for a dynamic analysis of an economy’s structure lies in its endowments (the total budget) and endowments structure (factors’ relative price that is endogenously determined), which are given at any specific time and changeable over time. This theory should have been called Structural Economics according to the nomenclature in modern economics, yet it is instead termed “New Structural Economics” for the sake of distinguishing it from the first-generation development economics – “Structuralism”.
The term “New Structural Economics” was first proposed by Professor Justin Yifu Lin, who has been championing its use. In an internal seminar in June 2009, which marked the first anniversary of his appointment as Senior Vice President and Chief Economist of the World Bank, Lin, on the basis of his book The China Miracle: Development Strategy and Economic Reform (1994) and the theoretical framework of his 2007 Marshall Lectures, reflected on the post-WWII theoretical developments of the development economics as a branch of modern economics and the developing countries’ experiences in development and transition. According to Lin, the “structuralism”, or the first version of development economics, advocates the construction of an industrial structure identical to that of developed countries and stresses the role of government while downplaying that of market; the “neoliberalism”, or the second version of development economics, advocates the utilization of institutional arrangements of market identical to those in developed countries and underlines the importance of market while downplaying the role of government. Lin went on to propound the “new structural economics” as the third version of development economics, arguing that economic development is an evolutionary process involving industries, technologies, infrastructure and institutional mechanism, in which a “facilitating government” is also indispensable in addition to an “effective market”.
In March 2011, Justin Yifu Lin was invited to Yale University for Kuznets Annual Lecture where he gave a speech called “New Structural Economics: A Framework for Rethinking Development”, which was published in Issue 2 of Volume 26 of World Bank Research Observer (2011) and proclaimed the birth of New Structural Economics. The NSE has won high praise from the international economics community represented by more than 10 Nobel Laureates in Economics such as Joseph Stiglitz and Michael Spence, as well as the attention of the governments and intelligentsia of many developing countries. As the third wave of development thinking, NSE will advance theoretical innovations in economics discipline by systematically analyzing structural differences between advanced economies and developing economies.
* The papers below may facilitate your understanding of NSE:
1. Justin Yifu Lin: New Structural Economics: A Framework for Rethinking Development
2. Jiandong Ju , JustinYifuLin , YongWang: Endowment structures, industrial dynamics, and economic growth
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