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)

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