Physics

Neoclassical economics

Free market

Government (linguistics)

Politics

Neoliberalism (international relations)

Philosophy

Political economy

Political science

Structuralism (philosophy of science)

Economics

Market failure

Narrative

Government failure

Structural adjustment

Linguistics

Quantum mechanics

Market economy

Industrialisation

Economic system

Industrial policy

China & World Economy

This review paper provides a new narrative by combing through the experiences of structural transformation among developing countries and discussing the roles of government and market in different contexts. Country performance has been influenced by the prevailing development thinking: the structuralism in the 1950s–1970s, which stresses an active government's role to overcome market failures for industrialization, and the neoliberalism in the 1980s–present, which advocates for eliminating government failures to build up a well‐functioning market. We find that almost all countries failing by following structuralism in their industrialization and neoliberalism in their transition to a market economy, and the few countries successful in catching up have a few characteristics that go against the prevailing structuralism and neoliberalism. The new structural economics, generated from the experiences of successful East Asian economies and proposing active facilitating roles of government in a market economy to remove market failures, will gain traction and take root.

Seventy Years of Economic Development: A Review from the Angle of New Structural Economics