Domestic economists should develop own innovative theories

Editor's note: Justin Yifu Lin, an economist with Peking University and former chief economist and senior vice-president of the World Bank, gave a speech on China's economy at the ceremony to mark the founding of the School of Economics at Beijing-based Renmin University of China late last month. The following are excerpts from his speech:

China launched its reform and opening-up in the late 1970s according to its practical national conditions, not modern economic theories. Some developing countries made their policies according to the theories, but most of the policies proved to be failures, because the theories, born in developed countries, ignore the differences between developed and developing economies.

The neoliberalism theories advocated marketization, privatization and macro stability, so that all kinds of protective subsidies must be canceled. Some developing countries followed these suggestions, which stifled the otherwise comparatively advantageous labor and resource-intensive industries, causing unemployment issues and social and political chaos.