What is New Structural Economics?
Proposed and championed by Prof. Justin Yifu Lin and his collaborators, New Structural Economics is a theory of economic development, transition and operation. The starting point of analysis is factor endowments and their structure which is given at any specific time and changable over time. Guided by historical materialism, NSE applies the neoclassical approach to the study of the determinants of economic structure and their evoluation. It studies forces and relations of production (the base), including technology and industry, and their impact upon hard infrastructure and institutions (the superstructure) which determine the transaction costs. NSE maintains that developing countries or regions should develop industries that conform to their comparative advantages based on their factor endowments structure. It seeks synergies between an effective market and a facilitating government in an effort to achieve economic transformation and upgrading as well as economic and social development.