New Structural Economics and Resource Financed Infrastructure

16 Pages Posted: 29 Feb 2016

See all articles by Justin Y. Lin

Justin Y. Lin

Peking University - China Center for Economic Research

Yan Wang

Peking University

Multiple version iconThere are 2 versions of this paper

Date Written: February 2016

Abstract

The world economy needs a growth‐lifting strategy, and infrastructure financing appears to hold the key. Two new development banks have been established: the New Development Bank and the Asian Infrastructural Investment Bank (AIIB). However, what conceptual framework will they formulate? This paper addresses infrastructural financing issues from the angle of structural transformation as a strategy for global development. Based on the new structural economics (Lin, [Lin J. Y., 2010], [Lin J. Y., 2012a]) we stress the ‘real’ side of transforming natural resources to productive assets using the resource financed infrastructure. As one of the innovative instruments, this approach could, first, combine two otherwise isolated supply chains, resource extraction and infrastructure building, and, thereby, bring developmental results many years ahead of what other conventional approaches could. Second, this could serve as one of the ‘least‐cost’ options for developing countries, and benefit borrowers disproportionately due to its feature of ‘non‐recourse’ loans. Finally, in a low‐yield environment, the rate of return from investing in bottleneck‐releasing infrastructure could be attractive to many investors. Future prospects of development financing, including the ‘one belt one road’ initiative are discussed.

Suggested Citation

Lin, Justin Yifu and Wang, Yan, New Structural Economics and Resource Financed Infrastructure (February 2016). Special Section: China's Growing Trade and its Role to the World Economy, Vol. 21, Issue 1, pp. 102-117, 2016. Available at SSRN: https://ssrn.com/abstract=2738932 or http://dx.doi.org/10.1111/1468-0106.12154

Justin Yifu Lin

Peking University - China Center for Economic Research ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Yan Wang (Contact Author)

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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