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The Quest for Prosperity: How Developing Economies Can Take Off
Lin, the former chief economist of the World Bank, makes a case for what he calls a “new structuralist” approach to economic development. Drawing on the experience of many countries, especially China, he argues for an active role for government in fostering development, not only through the traditional provision of infrastructure and the enforcement of rules but also in identifying and supporting industries that contribute to growth. But Lin’s embrace of that latter, more controversial form of government involvement comes with a critical proviso, one that has too often been ignored by past development planners: the industries a government chooses to support must exploit a country’s latent comparative advantage, as determined mainly by its endowments of land, labor, capital, and resources. A government can often select the appropriate industries to support by following the lead of similarly endowed countries that enjoy roughly twice the per capita income. Lin presents a thought-provoking argument. The book surprisingly contains no equations or tables, although it draws on a rich academic literature on development.