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Zhang Jun:Theory Discoverers Are More Needed



 (Jun Zhang, dean of School of Economics at Fudan University, director of China Center for Economic Studies, council member of National Economics Foundation. The following is the keynote speech by Professor Zhang at Great Minds China Forum on 12th Spetember.)


Previous speakers criticized that mainstream economic researches in western countries were fixed with models and stayed more at theoretical level. On the contrary, economic researches in China, (I think), needs more theories. Lacking of theories is the major obstacle that makes Chinese economists fail to lead international researches on Chinese economy. A recent survey collected essays published on international journals and found that less than 30% essays on Chinese economy were from mainland China. That is to say, 2/3 of essays on Chinese economy were from foreign economists. Such phenomenon, to a large extent, exposes the low level and poor quality of China’s economic research.


China has witnessed a rapid but unique development in economic research since the reform and opening up. For instance, school of economics at universities in Southeast Asia or other middle-income countries are highly specialized. Studies of most teachers and economists are highly theoretical and abstract, which contrasts greatly with researches of teachers in China.

While, if in Russia or countries in Eastern Europe, which were the socialist planned economy and now the transition economy, I have an interesting finding that they share similarities with us in terms of economic research. One of the reasons is that we are close in norms of research and thought patterns. But I have to say that the transformation of norms of economic research is faster than that in Russia or countries in Eastern Europe in the period of economic transition.


This is the starting point to observe China’s economic research, and we are indeed experiencing such transition. This leads to the fact that the proportion of well-trained young scholars working on economics is quite small in universities, though the number of young scholars is increasing constantly in recent years.


Since countries in Northern Europe or Southeast Asia haven’t experienced the transition period of researching norms, economic research in those countries are different from us and without the mark of transition. Scholars pay much less attention on empirical evidence or discussions on policies. Nowadays, in Chinese universities, scholars working on economics seem are only incapable of discussing experience and policies, but not that interested in or do not make due efforts on developing theories. Therefore, although I understand and sympathize with professors in economics from developed countries that economic research should be less theoretical and methodologies be more diversifiedthey should not be excuses of the backward level of economic research. I believe the major problem is that the current economic research in China is not theoretical enough.


We have to admit the rapid development of economic research in China since 90s. The past 20 years has witnessed a great improvement in the level of economic research in China. Although empirical research enjoys rapid development, theoretical development lags far behind. Therefore, theories, conceptualization and models, which are criticized by previous speakers, are needed in China. I believe it is the greatest challenge faced by economic research in China, to a large extent, because of the growing demand of policies in the period of economic development of transition. I suppose scholars working on economic theories are more guided and driven by the need of policies, thus devote less time in developing theories or establishing simpler models and theories based on empirical research.


If we want to contribute to the development of economics, economic research in China must be more abstract and theoretical. It is can be said that, at least experience from the past, more abstract and theoretical is the only way to make contributions to economic disciplines, and human knowledge at large.


But I am not sure whether our passion for empirical and policy research will bring in the stage of theoretical innovation. I attended a meeting in the UK and met a professor of management in Cambridge. He talked about the status quo of innovation in Chinese enterprises, based on which, he classified two innovative concepts. He found that many Chinese outstanding enterprises, such as Huawei, Alibaba, Tencent and Xiaomi are successful innovative enterprises, but can not be said to be pioneers. Therefore, he offered two concepts to clarify. One is “pioneering innovation” occurs when a brand new thing is introduced into the market. The other is “best practice innovation”, which is practiced by most Chinese enterprises. But we can not answer if it is a must to go through best practice innovation to pioneering innovation.


Original theories on economic research are relatively rare, sime most of us are doing empirical and policy research. I am not saying these studies are not important. They are important. But if only stay in empirical and policy research, we may not make greater contributions to economics. The value of economics, as a social science, is not only to figure out the relevance and causal relationship among specific empirical variables, but more importantly, to establish general and simple theories. The theory is knowledge that can be shared by mankind. It can produce appropriate conclusions suitable for specific cases by changing initial conditions.


Therefore, we need to pay attention to the current situation and problems, and to step forward based on empirical research. I do not object empirical research, but hope that more people will do theoretical (research) in the near future. I do not know why so many people devote to empirical research but not interested in developing theories. I hope empirical research can promote research on theories, and I suppose such transition is promising in China.


In this respect, economic research in China needs to be more professional. That is to say, more of us should take economics as a career, rather than analyzing policies or offering consulting. Professionalism requires economics and school of economics to be simpler and purer, and teachers of economics teachers more naïve as well. Scholars will only need to devote in establishing better theories based on observation. I believe it is necessary in the future.


On this basis, the development of economics in China is very promising. Coase said that China is endowed with so many excellent young men, thus should have a significant contribution to economics. I do not deny that it is the best time for us to observe China’s experience. But if stop at the stage of empirical research and satisfied with the fact that China is a theoretical laboratory to test existing theories, then we can not make greater contributions to economics.


I talked with Myron Scholes, the Nobel Laureate in Economic Sciences in 1997, who provides a conceptual framework for valuing options, in Shanghai in May. I did not talk finance with him at the beginning, but asked him how did he establish such a great formula, which is regarded as one of the 17 equations that has changed the human society. Moreover, it is the only discovery from social sciences among the 17 equations. He is obviously not an investor or financial buyer, but a pure person. His finding was from his academic curiosity, which deeply attracted me. His experience make I feel pure young men are needed nowadays, who can establish the simplest, and most abstract theories based on more important experience. In short, what we need are theory discoverers than experience observers.





◆please indicate the source if authorized: National Economics Foundation

◆photo:National Economics Foundation