Development Strategy, Viability, and Economic Convergence
Author(s)
Lin, Justin Yifu
Abstract
I argue here that the failure of most LDCs (Least Developed Countries) to converge with DCs (Developing Countries) in terms of economic performance can be explained largely by their governments’ inappropriate development strategies. I argue that the government of an LDC should focus development efforts on upgrading endowment structure instead of on upgrading industry/technology structure. I first present, in Section II, a brief overview of recent theoretical developments and debates on economic growth and convergence. In Section III, I discuss the determinants of a firm’s viability and an economy’s comparative advantages and their relations to the economy’s factor endowments. Section IV provides analyses of a government’s alternative development strategies, and Section V presents the statistical measurement of a development strategy and the econometric estimation of the impact of the development strategy on economic growth. The policy implications of the analyses are set forth in Section VI.
