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Growth Identification and Facilitation : The Role of the State in the Dynamics of Structural Change / Lin, Justin Yifu
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Lin, Justin Yifu
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Achieving Shared Growth.
- Comparative advantage.
- Comparative advantages.
- Debt.
- Debt Markets.
- Development Economics.
- Development strategies.
- Economic growth.
- Economic theory.
- Economic Theory & Research.
- Emerging Markets.
- Environment.
- Environmental Economics & Policies.
- Exports.
- Externalities.
- Externality.
- Finance and Financial Sector Development.
- GDP.
- Gross domestic product.
- Growth rate.
- Income.
- Industrialization.
- Macroeconomic management.
- Macroeconomics and Economic Growth.
- Poverty Reduction.
- Private Sector Development.
- Structural Change.
- Unemployment.
- Wealth.
- Wealth creation.
- Local Subjects:
- Achieving Shared Growth.
- Comparative advantage.
- Comparative advantages.
- Debt.
- Debt Markets.
- Development Economics.
- Development strategies.
- Economic growth.
- Economic theory.
- Economic Theory & Research.
- Emerging Markets.
- Environment.
- Environmental Economics & Policies.
- Exports.
- Externalities.
- Externality.
- Finance and Financial Sector Development.
- GDP.
- Gross domestic product.
- Growth rate.
- Income.
- Industrialization.
- Macroeconomic management.
- Macroeconomics and Economic Growth.
- Poverty Reduction.
- Private Sector Development.
- Structural Change.
- Unemployment.
- Wealth.
- Wealth creation.
- Physical Description:
- 1 online resource (32 pages)
- Other Title:
- Growth Identification And Facilitation
- Place of Publication:
- Washington, D.C., The World Bank, 2010
- System Details:
- data file
- Summary:
- Active economic policies by developing countries' governments to promote growth and industrialization have generally been viewed with suspicion by economists, and for good reasons: past experiences show that such policies have too often failed to achieve their stated objectives. But the historical record also indicates that in all successful economies, the state has always played an important role in facilitating structural change and helping the private sector sustain it across time. This paper proposes a new approach to help policymakers in developing countries identify those industries that may hold latent comparative advantage. It also recommends ways of removing binding constraints to facilitate private firms' entry into those industries. The paper introduces an important distinction between two types of government interventions. First are policies that facilitate structural change by overcoming information and coordination and externality issues, which are intrinsic to industrial upgrading and diversification. Such interventions aim to provide information, compensate for externalities, and coordinate improvements in the "hard" and "soft" infrastructure that are needed for the private sector to grow in sync with the dynamic change in the economy's comparative advantage. Second are those policies aimed at protecting some selected firms and industries that defy the comparative advantage determined by the existing endowment structure-either in new sectors that are too advanced or in old sectors that have lost comparative advantage.
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