Something strange and unexpected happened in the recent history of economic development: developing countries that succeeded during the second half of the 20th century did not follow the dominant development and policy prescriptions of the first and second wave of development thinking that emphasized structural transformations and market functions. That puzzling fact convinced researchers to revisit some of the big assumptions underlying theories of economic development.
“New Structural Economics”, edited by Justin Yifu Lin and including chapters by leading economists, sets out a third wave of development thinking. Taking into account the lessons learned from the growth successes and failures of past decades, it advances a neoclassical approach for studying the determinants and dynamics of economic structure. It postulates that the economic structure of an economy is endogenous to its factor endowment structure and that sustained economic development is driven by changes in factor endowments and continuous technological innovation.
Justin Lin is the Chief Economist of the World Bank. The book was published in early 2012.