Steven N. S. Cheung - Contribution To Economics and China's Economic Development

Contribution To Economics and China's Economic Development

Chueng's contribution to economics and China's economic development can be roughly grouped in the following areas,

1. New Institutional Economics
   1. how different kinds of contractual arrangement affect transaction costs, which are often ignored by neoclassical economists
   2. realizing the importance of transaction costs (as Cheung often mentions in his writings, if there is no transaction costs (the original starting point assumption by Coase), there is no difference in using different institutional arrangements (e.g. market or government)).
   3. the nature of the firm (a government, to a certain extent, is a firm and can be more efficient than the market in some areas),
2. Methodology
   1. emphasis on economic explanation (according to Cheung, economic explanation is the ONLY objective of the study of economics);
   2. the analysis of relevant and observable real world constraints: Adam Smith's tradition,
   3. downward sloping demand curve: Neoclassical tradition,
   4. theories must be potentially refutable but not yet refuted (Cheung considers many mainstream concepts not observable, leading to the non-refutable nature of many theories (such as utilities, welfare))
   5. focus on capturing the underlying and relevant constraints to explain economic phenomena that might seem odd and strange on the surface.
3. China's economic development
   1. Considerable influence among the Chinese speaking population (most of his work after 1982 are written in Chinese);
   2. Prediction of China's institutional reform (which, in general, has been quite accurate)
   3. Analysis of the deficiencies in the Chinese state owned enterprises