The new structural economics: Patient capital as a comparative advantage

Justin Yifu Lin ,Yan Wang

doi:10.24294/jipd.v1i1.28

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The new structural economics: Patient capital as a comparative advantage

Justin Yifu Lin

Yan Wang

Journal of Infrastructure Policy and Development 2017, 1(1), 28; https://doi.org/10.24294/jipd.v1i1.28

Submitted：08 Mar 2017

Accepted：08 Mar 2017

Published：08 Mar 2017

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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.

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