In Economic Development and Transition, renowned development economist Justin Yifu Lin argues that economic performance in developing countries depends largely on government strategy. If the government plays a facilitating role, enabling firms to exploit the economy's comparative advantages, its economy will develop successfully. However, governments in most developing countries attempt to promote industries that go against their comparative advantages by creating various kinds of distortion to protect nonviable firms in priority industries. Failing to recognize the original intention of many distortions, most governments in transition economies attempt to eliminate those distortions without addressing firms' viability problems, causing economic performance to deteriorate in their transition process. Governments in successful transition economies adopt a pragmatic dual-track approach that encourages firms to enter sectors that were suppressed previously and gives necessary support to firms in priority industries before their viability issue is addressed.

An investigation into why most developing countries have failed to exploit their economic potential by China's most renowned economist.

List of figures List of tables 1 Development, transition and divergence 2 The search for a fundamental and changeable cause of prosperity 3 Aspiration and social thought of modernization 4 Development strategy, viability and performance 5 Viability and strategies of transition 6 Development strategy and development and transition performances: empirical analysis 7 Why are East Asian economies so special? Are there any general lessons to be learned from East Asian development and transition experiences? 8 Toward a right development and transition strategy Appendix I Development strategy and economic institutions in developing countries Appendix II Data description References Index