The Quest for Prosperity

The Quest for Prosperity: How Developing Economies Can Take Off

JUSTIN YIFU LIN
Copyright Date: 2012
Pages: 320
https://www.jstor.org/stable/j.cttq950n
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    The Quest for Prosperity
    Book Description:

    How can developing countries grow their economies? Most answers to this question center on what the rich world should or shouldn't do for the poor world. InThe Quest for Prosperity, Justin Yifu Lin--the first non-Westerner to be chief economist of the World Bank--focuses on what developing nations can do to help themselves.

    Since the end of the Second World War, prescriptions for economic growth have come and gone. Often motivated more by ideology than practicality, these blueprints have had mixed success on the ground. Drawing lessons from history, economic analysis, and practice, Lin examines how the countries that have succeeded in developing their own economies have actually done it. He shows that economic development is a process of continuous technological innovation, industrial upgrading, and structural change driven by how countries harness their land, labor, capital, and infrastructure. Countries need to identify and facilitate the development of those industries where they have a comparative advantage--where they can produce products most effectively--and use them as a basis for development. At the same time, states need to recognize the power of markets, limiting the role of government to allow firms to flourish and lead the process of technological innovation and industrial upgrading. By following this "new structural economics" framework, Lin shows how even the poorest nations can grow at eight percent or more continuously for several decades, significantly reduce poverty, and become middle- or even high-income countries in the span of one or two generations.

    Interwoven with insights, observations, and stories from Lin's travels as chief economist of the World Bank and his reflections on China's rise, this book provides a road map and hope for those countries engaged in their own quest for prosperity.

    eISBN: 978-1-4008-4458-6
    Subjects: Business, Sociology, Economics

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-x)
  3. PROLOGUE
    (pp. xi-xxii)

    When a senior World Bank official phoned me from Washington, D.C., in January 2008 to offer me the position of senior vice president and chief economist of the World Bank Group, I was in the middle of spring break, busy preparing my teaching and research priorities for the next semester and attending to various economic policy matters. I was not expecting the call, but it was not a total surprise—two months before, I had met with World Bank President Robert Zoellick in his hotel room in Beijing for an hour and a half, an hour longer than scheduled, when...

  4. ONE New Challenges and New Solutions
    (pp. 1-12)

    Since becoming the World Bank’s chief economist, I have had Sample opportunity to reflect on an old American saying: “Be careful what you wish for, you might just get it!” For better or worse, the beginning of my tenure coincided with the eruption of the most serious financial and economic crisis, both in magnitude and in scope, since the Great Depression. No country has been immune to the economic slowdown. Most economic and financial experts severely underestimated its timing, speed, and severity. As a result, despite strong macro policy responses, the current situation remains full of uncertainties.

    This crisis, unlike...

  5. TWO A Battle of Narratives and Changing Paradigms
    (pp. 13-48)

    As I was doing my postdoctoral study at Yale’s Economic Growth Center in 1986, I gave a seminar at Harvard University, and while there I visited the Museum of Fine Arts in Boston. Paul Gauguin’s famous paintingWhere Do We Come From? What Are We? Where Are We Going?left a deep impression. Gauguin considered it his masterpiece and the summation of his ideas. In the painting he tried to address the old question of the meaning of life. Sprawled across the wide frame of the painting are various figures, each engaged in a particular and significant act. One of...

  6. THREE Economic Development: Lessons from Failures
    (pp. 49-75)

    As background reading for a World Bank mission to Ghana in August 2008, I got a copy of the audio recording of the six-minute speech by President Kwame Nkrumah on the occasion of the independence of Ghana (the former Gold Coast and the first of the European colonies in Africa to gain independence) in 1957. The sound is scratchy and sometimes mildly distorted, and there are intermittent glitches. But it does not really matter. Listening to the recording today, more than half a century later, one can feel the sense of joy, excitement, and optimism that must have led the...

  7. FOUR Lessons from Successful Catch-up Countries
    (pp. 76-101)

    “The quest for the Grail is not archaeology,” Indiana Jones’s father tells him in the 1989 movieIndiana Jones and the Last Crusade.“It is a race against evil. . . . And in this sort of race, there is no silver medal for finishing second.” After some two hours of high suspense, frightening chaos, unexpected encounters, and charmingly improbable chase scenes, Indiana and his father eventually find the Holy Grail, the cup that Jesus Christ is said to have used at the Last Supper, at the Khaznat al-Faroun temple in the ancient rose-red city of Petra, Jordan. In a...

  8. FIVE A Framework for Rethinking Development: A New Structural Economics
    (pp. 102-120)

    When I did my army training as a young cadet in Taiwan, China, in the mid-1970s, one of the first and most intriguing exercises was take an entire gun completely apart, identify the different pieces, understand their function and importance and the way they all fit together, and then reassemble them to immediately fire a shot. The task was both challenging and exhilarating, especially for someone who had never touched a gun before. It provoked my imagination and gave me some learning and teaching skills. Its main purpose was to help young minds gain the confidence solve apparent mysteries and...

  9. SIX What Would Be Done Differently under the New Structural Economics?
    (pp. 121-146)

    Henry Kissinger, a preeminent U.S. policymaker, once said, “No foreign policy—no matter how ingenious—has any chance of success if it is born in the minds of a few and carried in the hearts of none.” His admonition applies to economic policy as well, especially when it involves a serious change in dominant thinking. Until change is widely shared by the largest group of committed policymakers, who can see its practical implications and benefits, there is little probability that it will be endorsed, let alone have a serious chance of implementation.

    One of the first times I outlined the...

  10. SEVEN Putting the New Structural Economics into Practice: Two Tracks and Six Steps
    (pp. 147-178)

    From anywhere in the world and with a simple click of a mouse, one can instantly visit the jewelry zone in Thailand, the leather zone in Turkey, the single-commodity zone for tea in Zimbabwe, the single-factory export-oriented units in India, or the single-company zones in the Dominican Republic.¹ One can also order soft copies of the nice brochures that business promotion agencies issue, listing the many special incentives each country offers global investors. Skeptical businesspeople who might not want to confine themselves to virtual images or documents on a computer screen and are willing to travel can visit factories in...

  11. EIGHT The Peculiar Identities and Trajectories of Transition Economies
    (pp. 179-208)

    Walter Isaacson, in his elegant and rich biography of Albert Einstein, offers a nice presentation of the two main strategic options from which scientific theorists must choose.¹ Some depend primarily on induction—analyzing a large number of experimental findings and then deriving theories that explain the observed empirical patterns. Others rely more on deduction—starting from some plausible principles and assumptions considered sacred and then deducing logical implications from them. Isaacson notes that these strategic choices are not mutually exclusive and that all scientists tend to blend both approaches to differing degrees. Einstein seemed to have a good feel for...

  12. NINE Fostering Structural Change at Higher Levels of Development
    (pp. 209-233)

    It is difficult for anyone to visit Vietnam even today without having to fight back some elusive memories and thoughts of the 21-yearlong war that tragically put the country on the international agenda in the 1960s and 1970s. The war took place while I was still a young student in Taiwan, China. Like anyone else, I grew up seeing television images and newspaper pictures of the brutality, destruction, and horror, which seem always reemerge subconsciously whenever I am back in Hanoi. When the plane prepares for landing at Noi Bai airport, flying over the plains of North Vietnam, where many...

  13. TEN A Recipe for Economic Prosperity
    (pp. 234-250)

    The field of economics, as defined by the title of Adam Smith’s seminal book, is for inquiring into the nature and causes of the wealth of nations. Yet ironically, in spite of all the time economists spend on their work, economics is still often referred to as “the dismal science.”¹ The recent global crisis, with its heavy financial, economic, and human costs, has not helped the discipline’s cause. The sociopolitical instability across the world is also raising questions about the usefulness of economic knowledge accumulated at least since Adam Smith. Regardless of whether these crises are due to cyclical factors,...

  14. GLOSSARY
    (pp. 251-258)
  15. NOTES
    (pp. 259-286)
  16. REFERENCES
    (pp. 287-308)
  17. INDEX
    (pp. 309-322)