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Development Strategy, Viability, and Economic Convergence

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  • Lin, Justin Yifu

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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  • Lin, Justin Yifu, 2003. "Development Strategy, Viability, and Economic Convergence," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 276-308, January.
  • Handle: RePEc:ucp:ecdecc:v:51:y:2003:i:2:p:276-308
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    Cited by:

    1. 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.
    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. Lin, Justin Yifu & Liu, Peilin, 2006. "Economic Development Strategy, Openness and Rural Poverty: A Framework and China's Experiences," WIDER Working Paper Series 043, World Institute for Development Economic Research (UNU-WIDER).
    4. Ben Fine & Elisa Van Waeyenberge, 2013. "A Paradigm Shift that Never Will Be?: Justin Lin’s New Structural Economics," Working Papers 179, Department of Economics, SOAS, University of London, UK.
    5. Mu, Qing & Lee, Keun, 2005. "Knowledge diffusion, market segmentation and technological catch-up: The case of the telecommunication industry in China," Research Policy, Elsevier, vol. 34(6), pages 759-783, August.
    6. Zhang, Xiaobo, 2006. "Asymmetric property rights in China's economic growth:," DSGD discussion papers 28, International Food Policy Research Institute (IFPRI).
    7. Ju, Jiandong & Lin, Justin Yifu & Wang, Yong, 2015. "Endowment structures, industrial dynamics, and economic growth," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 244-263.
    8. Richard Grabowski, 2010. "A comparison of Latin American and African economic development with an East Asian twist," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 24(2), pages 104-116, November.
    9. 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.
    10. Bigsten, Arne & Durevall, Dick, 2004. "Kenya’s Development Path and Factor Prices 1964-2000," Working Papers in Economics 142, University of Gothenburg, Department of Economics.
    11. Justin Yifu Lin, 2013. "Demystifying the Chinese Economy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(3), pages 259-268, September.
    12. Ka-fu Wong & Miaojie Yu, 2015. "Democracy and Accession to GATT/WTO," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 843-859, November.
    13. 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, vol. 23(3), pages 270-287.
    14. Yu, Miaojie, 2010. "Trade, democracy, and the gravity equation," Journal of Development Economics, Elsevier, vol. 91(2), pages 289-300, March.
    15. repec:wsi:serxxx:v:62:y:2017:i:04:n:s021759081740032x is not listed on IDEAS
    16. Lin, Justin Yifu & Monga, Celestin, 2010. "The growth report and new structural economics," Policy Research Working Paper Series 5336, The World Bank.
    17. Zhiyuan Li & Miaojie Yu, 2009. "Exports, Productivity, and Credit Constraints : A Firm†Level Empirical Investigation of China," Trade Working Papers 22888, East Asian Bureau of Economic Research.
    18. Pi, Jiancai & Chen, Xuyang, 2016. "The impacts of capital market distortion on wage inequality, urban unemployment, and welfare in developing countries," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 103-115.
    19. 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, vol. 96(2), pages 220-238, November.
    20. Mo, Pak Hung, 2011. "Trade Liberalization Sequence for Sustained Economic Growth," MPRA Paper 28917, University Library of Munich, Germany.

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