NSE: Structuralism Instead of Free-Market Dogma
Justin Yifu Lin’s New Structural Economics (NSE) serves as a pragmatic alternative to both neoliberalism and old structuralism. Rather than relying on the magical power of deregulation or central planning, NSE examines a country's actual endowments. Here, the state is neither an omnipotent demiurge nor a passive night-watchman, but a facilitator of structural change. This article explains how the theory seeks a dialogue between government and market using tools like the GIF framework, and how its principles are reflected in Poland’s economic reality.
Lin’s Three Pillars: Endowments, Market, and State
The foundation of NSE rests on three axes: endowment structure, industrial endogeneity, and the state as a catalyst. The first pillar is the inventory of land, labor, and capital, which determines a natural comparative advantage. Endogeneity means that optimal industries grow out of local resources and evolve alongside capital accumulation. The state's role is to identify these advantages and remove barriers that the private sector cannot overcome alone. As a result, the economy grows where it "actually stands," rather than where it merely wishes to pose for a portrait of modernity.
The GIF Framework and the Two-Track Model
The operational tool of NSE is Growth Identification and Facilitation (GIF). This six-step procedure allows for the selection of reference countries and the identification of sectors with the highest potential. A symbol of this approach is the Ethiopian cold storage—a precise investment that enabled flower exports, proving that development is often a matter of a specific infrastructural detail. During transformation, NSE recommends a two-track approach: protecting old sectors while simultaneously opening space for new ones, which contrasts with radical "Big Bang" shock therapy.
Fiscal and monetary policies in this model support the endowment structure through infrastructure investment and targeted credit. The Scandinavian and German models illustrate facilitation in wealthy nations, while NSE resolves the subsidy debate by requiring them to be temporary and aligned with comparative advantage. Only support for pioneers blazing new trails is economically justified, preventing permanent dependence on state-provided rents.
Lin’s Theory in the Strategy for Responsible Development
In Poland, NSE became the intellectual backdrop for the Strategy for Responsible Development (2017). It is seen as an adequate response to the middle-income trap, helping the transition from a cost-based advantage to domestic centers of competence. NSE recognizes Foreign Direct Investment (FDI) as a key channel for technology and management knowledge transfer, which requires intelligent state guidance rather than succumbing to neocolonial rhetoric.
The main barriers to implementing Lin’s concepts in Poland include institutional weakness, susceptibility to lobbying, and short election cycles. Nevertheless, in an era of rapid digitalization and technological change, NSE remains relevant. It compels the state to act as an active facilitator that can link local strengths with global value chains, instead of relying on passive drifting and the protection of inefficient structures.
Summary: Between Theory and Practice
New Structural Economics is like a game of chess: the moves seem logical, but the outcome depends on the player's unpredictable decisions. Can we use this knowledge to strategically shape our economy, or are we condemned to drift in an uncertain world? Success requires treating "market failure" as an opportunity and building structures resilient to political clientelism. Ultimately, the best strategy is one that combines rigorous endowment analysis with flexibility and room for improvisation.
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