Justin Yifu Lin: Principles of new structural economy promise bright future for Russia

Justin Yifu Lin: Principles of new structural economy promise bright future for Russia

Russian-Chinese conference "From Вiscussions About Shock Therapy to Search for Optimal Economic Model" was held yesterday in the Institute of Asian and African Countries of the MSU. It was attended by economists, political scientists, international affairs specialists and orientalists of the two countries. Justin Lin Yifu, former Vice-President of the World Bank, one of the founders of the Chinese Economic Research Center at the Peking University, answered questions of Vestnik Kavkaza at the sidelines of this event.

- Economists define "new structural economy" as somethings built based on "factor of ownership of resources" and taking "advantage of underdeveloped state". What does this mean in practice?

- The new structural economics is the third generation of developing economics.

The first generation was structuralism, which allowed developing countries' governments to use direct resource mobilization and giving them opportunity to build up capital. It’s like Russia in the Soviet Union period.

The second generation of developing economics is neoliberalism - developing countries remove all government integration through privatization, liberation, and stabilization to build up advanced market institutions like in developed countries. That’s Russia in the transitional period.

And the third generation is the new structural economics. The reason we need to have a new version of developing economics is because even though intensions of older developing economics like structuralism or neoliberalism were certainly good, but overall, results of those kind of ideas brought all kinds of challenges and difficulties to developing countries or transition economies. So this theory helps us to understand economic development better, and even more importantly, this theory can help us to improve economic performance. It gives us better understanding of successes and failures of developing countries. Advanced countries were always used as a reference in the past. But as historical materialism taught us, economy is the foundation of every country, and development at different stages is different. That's why approaches to it should also be different. Market and government should perform in an organic way in order to improve the economic performance. And the new structure economics can help with that.

- What do you think about prospects of economic cooperation between Russia and China?

- I think that China and Russia certainly have various competitive advantages, but their economies are complementary to each other. So economic cooperation would be beneficial to both Russian people and Chinese people. And all our people hope that we can have peaceful, friendly, and cooperative relations to achieve common goal of improving wellbeing both in Russia and China. In the new structure economics, government can help private sectors to develop their economies based on their competitive advantages in the market system. This way any country is able to grow economically for several decades, especially countries rich with natural resources.

If you have good management, you can use recourses with transparency and even lend natural resources to facilitate structural transformation from resource to non-resource industry and support continuous structural transformation through technological innovations and industrial improvement. As resource rich country, Russia should be able to perform better than resource poor country. I think that as long as there will be right ideas, Russia can expect bright future.

Justin Yifu Lin is one of the most famous Chinese economists. He got his dgree in economics at the University of Chicago. In 2008–2012, he served as chief economist and Vice President of the World Bank, developing recommendations on monetary policy, conditions of China’s accession to the WTO, solving food, land and housing problems. He's a co-author of the "New Socialist Village" development program, founder and first director of the Chinese Economic Research Center at the Peking University. His works were also published in Russian.