The New Structural Economics: Patient Capital As a Comparative Advantage

Journal of Infrastructure, Policy and Development (2017) Volume 1 Issue 1, pp.4-23.

20 Pages Posted: 22 Jun 2017

See all articles by Justin Y. Lin

Justin Y. Lin

Peking University - China Center for Economic Research

Yan Wang

Cornell University; African Development Bank

Date Written: Feb 20, 2017

Abstract

The world economy needs a growth-lifting strategy, and infrastructure financing seems to hold the key. Based on the New Structural Economics (Lin, 2010; 2012) we discuss the heterogeneity of capital focusing on the long-term versus short-term orientation (STO). Traditional neoliberalism assumes that capital is homogenous, complete capital account liberalization is “beneficial”. However, previous studies have found evidence of long-term orientation (LTO) in the culture of many Asian economies (Hofstede, 1991). In this exploratory paper, we suggest that the LTO can be considered a special endowment which, under certain circumstances, can be developed into a comparative advantage (CA) in patient capital. If these countries can turn their latent CA into a revealed CA in patient capital, and develop the ability to “package” profitable and non-profitable projects in meaningful ways, they would have a “revealed” competitive advantage in infrastructure financing. The ability to “package” public infrastructure and private services is one of the key institutional factors for success in overseas cooperation.

Keywords: patient capital; long-term orientation; infrastructure financing; development

JEL Classification: 000

Suggested Citation

Lin, Justin Yifu and Wang, Yan, The New Structural Economics: Patient Capital As a Comparative Advantage (Feb 20, 2017). Journal of Infrastructure, Policy and Development (2017) Volume 1 Issue 1, pp.4-23.. Available at SSRN: https://ssrn.com/abstract=2989833

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)

Cornell University ( email )

Ithaca, NY 14853
United States

African Development Bank ( email )

Rue Joseph Anoma
Abidjan, Ivory Coast 01 BP 1387
Ivory Coast (Cote D'ivoire)

Register to save articles to
your library

Register

Paper statistics

Downloads
133
Abstract Views
650
rank
217,256
PlumX Metrics