IMF’s latest Finance and Development (Sep-12) issue is out. As always terrific articles (wish most papers could be as short and precise).
In its people section, we have profile of Justin Lin ex-chief econ of World Bank. The title is “ The Man with the Patience to Cook a Stone”. As always an amazing read.
How did Lin become a top econ? Because of his translation skills:
His admission to the citadel of free-market thinking was another example of the happy good fortune that has periodically blessed his existence. Within a year of his arrival in China, by dint of his English language skills learned in Taiwan, Lin was recruited as a translator for visiting economist Theodore Schultz. Schultz had, that year, been awarded the Nobel Prize for economics for his pioneering research into the problems faced by developing countries.
So impressed was Schultz with his young interpreter—who was by then studying Marxist economics at Peking University—that on his return to his teaching post at the University of Chicago, Schultz offered to arrange a scholarship for the young Lin.
How long did Lin spend with the top economist to have elicited such a generous offer? Just one day, “but I was a very impressive translator,” says Lin. His smile does not waver. Schultz had a reputation for intuitively identifying young talents, having mentored Nobel laureate George Stigler and a former president of the American Economic Association, D. Gale Johnson, for example.
Once enrolled at Chicago, the young Lin embarked on a Ph.D. in economics. He was later joined by his wife, Chen Yunying, and two children. While Lin studied for his Ph.D., and then went on to Yale as a postdoctoral student, his wife earned a Ph.D. at George Washington University.
And how did he acquire those skills? Via his military training in Taiwan from where he famously escaped:
Lin’s modest background—he was born one of six children into a poor family in Yilan County, northeastern Taiwan Province of China, in 1952—may distinguish him from his predecessors, but undoubtedly he is the only World Bank chief economist with an arrest warrant hanging over his head.
In 1979, the 26-year-old, who then went by the name Lin Zhengyi, a model officer in the Taiwanese army stationed on the politically sensitive island of Kinmen, decided to swim across the 2,000-meter tidal strait to the Communist-controlled mainland to start a new life.
Following his disappearance, the Taiwanese authorities who declared him “missing” compensated his wife with the equivalent of more than $30,000; much later, they charged him with desertion.
Ask Lin about his decision today and the economist bats away further inquiries—the only time during the whole interview his ever-present smile freezes and he betrays a hint of irritation. Lin left behind his three-year-old son and wife, Chen Yunying, who was then pregnant with their daughter.
Asked about his wife’s reaction to his defection, Lin says,“She supported me. As long as I am happy, she is happy.”“So did you tell your wife you were going to leave?”
The profile also discusses his work on new structural economics which is basically using industrial policy based on comparative advanatage:
A key tenet of his “new framework for development” is the critical role of government in supporting selected industries in order to trigger structural transformation. This practice, often colloquially referred to as “picking winners and losers,” or industrial policy, has had a checkered history, but in the aftermath of the financial crisis has been enjoying something of a revival.
The leading criticism remains that the government’s imperfect judgment and distorted interests displace the cold, clear decisions of the market. For example, Japan’s much-lauded Ministry of Trade and Industry once opposed the plans of domestic car manufacturers to export and tried to prevent Honda expanding from motorbikes into cars because it did not want another company in the industry.
To avoid such mistakes, the secret of success, suggests Lin, is identifying industries appropriate for a given country’s endowment structure and level of development. He points to Chile, for example, which moved from basic industries such as mining, forestry, fishing, and agriculture, to aluminum smelting, salmon farming, and winemaking, with the backing of the government. Lin says, in the past, industrial policy often failed because government tried to impose the development of industries that were ill-suited to the country’s endowment. That is, they “defied” their comparative advantage.