The Development Of Economics

In the history of the Development Economics, there have been two major thoughts: First one is the Old Structural Economics. Based on the economic structure difference between developing countries and developed countries, it takes the attitude of the market failure, and emphasis that the government has to control the national economy and change the national economic structure as soon as possible, so as to catch up with the level of developed countries. The second is the new liberalism revival movement, which is mainly supported by the new classical economics theoretically. It proposed the Washington Consensus, which suggested that developing countries should completely transplant the mature market economy system of developed countries. It believed that the market mechanism based on liberalism, openness, and private ownership will inevitably lead to economic prosperity, and all people will share the fruits of economic development. Unfortunately, the two waves of thoughts did not solve the problem of economic development; neither did they achieve the original intention of economists.Given the situation above, Lin J. Y. puts forward a new thought of the Development Economics---New Structural Economics, which can be regarded as the summary of his research career. NSE not only adheres to the analysis methods of NCE, but also attaches great importance to the specific economic structure and economic reality of developing countries. This new methodology provides a new idea for the economic development theory, and brings forward a set of more pragmatic economic development strategies. NSE also recognizes the co-existence of market failure and government failure, so it tries to formulate development strategies through integrated functions of both sides.Compared with NCE, NSE has three innovative points. Firstly, loosing the implicit assumption that enterprises inherently have viability, which makes enterprises survive in the competence without any government’s subsidies. Secondly, redefining and re-distinguishing the relationship between the government and market. Thirdly, promoting a step-by-step strategy when it refers to economical reformation and transformation. Meanwhile, NSE surpasses OSE in four respects both theoretically and practically. First, as to the origin and classification of economic structure differences between countries, NSE raises a new view corresponding with factor endowment and comparative advantage theory. Second, it emphasizes that the market is the best way to allocate resources, and the government only play a facilitating role in providing infrastructure and addressing other aspects of externalities. Third, NSE lays emphasis both on capital accumulation and human development. Fourth, in terms of policies on foreign capital, foreign trade and finance, NSE comes up with some totally distinct proposal. In addition, NSE makes new contributions to the Development Economics that previous theories never do, including the cognition of the nature of modern economic growth, the optimal financial structure theory, and GIFF.Besides, this paper analyses the current criticism on NSE from domestic and foreign scholars, and objectively proposes NSE’s shortcomings and further improvement proposals. Factor endowments, comparative advantages’ strategies, and GIFF are three main aspects subjected to question. Therefore, it will be beneficial to NSE if it takes spatial dimensions, non-market factors, dynamic comparative advantages and institution system construction into consideration.