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Lin Yifu: Better Manage One’s Own Affairs Well than Learn from the West Well

Source: People’s Daily Date: 2017-04-28
How should developing countries pursue development?

How one thinks determines the way out. The most important contribution China makes to other developing countries is not only the opportunities for outbound investment and industrial transformation, but also the approaches to promote economic restructuring and development. The Institute of South-South Cooperation and Development (ISSCAD) aims to train government officials and social elites of these developing countries as they develop such ideas on development. Ideas are developed from theories and experiences. Whether theories and experiences are applicable depends on whether conditions are similar. If developing countries make their own policies with reference to the theories and experiences of developed countries, the results may not be as desirable as expected and make developing countries frustrated. Even in developed countries, as conditions are changing, so are theories. Past theories and experiences often fail. Since developed countries’ theories and experiences may not work for these countries and developing countries are different from developed countries, it may be futile to apply developed countries’ theories and experiences to developing countries.

After the Second World War, developing countries got independent politically and started to pursue modernization, many elites of those countries went to study at Harvard Kennedy School and other first-class Western universities. But after these people went back to their own countries, they were unable to apply what they had learned to deliver prosperity to their countries. The World Bank statistics show that, among over 200 developing economies, only South Korea and Chinese Taiwan managed to grow from low-income to high-income economies. China may be the third to realise such a transition by the year 2025. In 1960, only 13 out of the 110 middle-income economies became high-income ones, among which 8 are either on the periphery of West Europe with a not big gap or oil producing countries. Still another five are Japan and the four Asian Tigers. That said, the development policies of the five economies implemented seemed wrong from the viewpoint of the main stream western theories. Therefore, one may not get what really works for them from the West. Developing countries must establish theoretical frameworks in keeping with their own experiences for real development.

China and other developing countries share similar conditions. The experiences and theories of China and other developing countries will be more valuable reference for developing countries to solve their problems and seize the opportunities. The SSCAD aims to summarize the experiences and lessons of developing countries and establish theoretical systems different from those based on developed countries’ experiences. This is part of the training at SSCAD to help developing countries tackle their challenges and strengthen South-South cooperation.

The new structural economics I have been advocating in recent years is a new theoretical system with reference to the successes and lessons of China and other developing countries. The current mainstream economic theories refer to developed countries as models and maintain that developing countries should model on developed countries. New structural economics, however, holds that developing countries should focus on what they have and what they can do well and turn it into their advantages in development.

For the past 30 plus years, China has sustained an annual growth of 9.7%. One important reason is that China has been good at using its own comparative advantages based on its own resources endowment to set priorities in its industries and technologies. The government has played its part on market principles to tackle infrastructure bottlenecks. This has translated into China’s advantages in competition. In fact, each developing country has its own resource endowment, such as rich labor and natural resources. If such comparative advantages in resource endowment can be turned into advantages for competition, it would help create jobs, expand exports, accumulate capital and foreign exchange reserves, and thus create conditions for industrial upgrading and fast growth. We want to help trainees from developing countries come to recognize their comparative advantages and increase their confidence in the economic development of their own countries.

Through interaction with these outstanding young government officials from developing countries, SSCAD can improve its teaching. We could put China’s experiences in a global context to see whether China’s theories can help developing countries leverage their own advantages and achieve high-speed growth. This will also contribute to China’s theoretical innovation in China’s philosophy and social sciences and the improvement of China’s soft power. In the meantime, we should aslo learn from other developing countries’ successes and failures to inform China’s policy making and avoid mistakes.

Looking forward, there is enormous space for South-South cooperation. We hope that SSCAD, through experience and theory sharing, can help developing countries in Africa, Latin America, South Asia and Central Asia modernize and achieve prosperity together.

  (The author is the Director of the ISSCAD.)