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Development Strategy, Viability, and Economic Convergence

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  • Justin Yifu Lin

Abstract

The paper argues that an economy's industry/technology structure is endogenously determined by the economy's endowment structure. For the convergence to occur, the government of an LDC should target the upgrading of endowment structure instead of the industry/technology structure in its development strategy. If the government chooses to pursue an industry/technology structure, which is inconsistent with the comparative advantage determined by the economy's endowment structure, the firms in the government's priority sectors will be nonviable and the government needs to suppress the function of market and distort all kinds of prices as a way to protect the nonviable firms. Convergence will fail to occur as a result. Regression results from cross-country panel data are consistent with the predictions of the above arguments.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp409.pdf
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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 409.

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Length: pages
Date of creation: 01 Oct 2001
Date of revision:
Handle: RePEc:wdi:papers:2000-409

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Keywords: economic development; development strategy; role of government; institution;

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References

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Citations

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Cited by:
  1. Bigsten, Arne & Durevall, Dick, 2004. "Kenya’s Development Path and Factor Prices 1964-2000," Working Papers in Economics, University of Gothenburg, Department of Economics 142, University of Gothenburg, Department of Economics.
  2. Justin Yifu Lin & Peilin Liu, 2005. "Development Strategies and Regional Income Disparities in China," Development Economics Working Papers 21984, East Asian Bureau of Economic Research.
  3. Yu, Miaojie, 2010. "Trade, democracy, and the gravity equation," Journal of Development Economics, Elsevier, Elsevier, vol. 91(2), pages 289-300, March.
  4. Justin Yifu Lin & Miaojie Yu, 2008. "The Economics of Price Scissors : An Empirical Investigation for China," Governance Working Papers 22019, East Asian Bureau of Economic Research.
  5. Lin, Justin Yifu & Liu, Peilin, 2006. "Economic Development Strategy, Openness and Rural Poverty: A Framework and China's Experiences," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2006/43, World Institute for Development Economic Research (UNU-WIDER).
  6. Ben Fine & Elisa Van Waeyenberge, 2013. "A Paradigm Shift that Never Will Be?: Justin Lin’s New Structural Economics," Working Papers, Department of Economics, SOAS, University of London, UK 179, Department of Economics, SOAS, University of London, UK.
  7. Zhang, Xiaobo, 2006. "Asymmetric property rights in China's economic growth:," DSGD discussion papers, International Food Policy Research Institute (IFPRI) 28, International Food Policy Research Institute (IFPRI).
  8. Mu, Qing & Lee, Keun, 2005. "Knowledge diffusion, market segmentation and technological catch-up: The case of the telecommunication industry in China," Research Policy, Elsevier, Elsevier, vol. 34(6), pages 759-783, August.
  9. Yong Wang & Justin Yifu Lin & Jiandong Ju, 2010. "Endowment Structure, Industrial Dynamics, and Economic Growth," 2010 Meeting Papers, Society for Economic Dynamics 679, Society for Economic Dynamics.
  10. Holz, Carsten A., 2011. "The unbalanced growth hypothesis and the role of the state: The case of China's state-owned enterprises," Journal of Development Economics, Elsevier, Elsevier, vol. 96(2), pages 220-238, November.
  11. Mo, Pak Hung, 2011. "Trade Liberalization Sequence for Sustained Economic Growth," MPRA Paper 28917, University Library of Munich, Germany.
  12. He, Xiyou & Mu, Qing, 2012. "How Chinese firms learn technology from transnational corporations: A comparison of the telecommunication and automobile industries," Journal of Asian Economics, Elsevier, Elsevier, vol. 23(3), pages 270-287.
  13. Lin, Justin Yifu & Monga, Celestin, 2010. "The growth report and new structural economics," Policy Research Working Paper Series 5336, The World Bank.
  14. Zhiyuan Li & Miaojie Yu, 2009. "Exports, Productivity, and Credit Constraints : A Firmâ€ÂLevel Empirical Investigation of China," Trade Working Papers 22888, East Asian Bureau of Economic Research.
  15. Lin, Justin Yifu & Li, Zhiyun, 2008. "Policy burden, privatization and soft budget constraint," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 90-102, March.

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