Modernization in Mainland China

Chen‐Hsun Chen

American Journal of Economics and Sociology, 1992, vol. 51, issue 1, 57-68

Abstract: Abstract. After 1949, mainland China, a developing socialist country, adopted an inward‐looking policy with emphasis on self‐reliance and economic independence. However, in their drive for economic reform that began in 1978, mainland China drifted to the new doctrine of “taking self‐reliance as the principal means and external assistance as a subsidiary.” A version of the two‐gap model is constructed to test the hypothesis that both domestic capital accumulation and foreign capital inflows affect economic development in mainland China, the latter being an indicator of modernization. Due to insufficient data, pooled cross‐section and time‐series data for the period 1984–1986 are employed. The quantitative evidence suggests that foreign capital inflows, instead of domestic capital accumulation, have importantly affected the modernization drive of mainland China. The recent political turmoil in mainland China has slowed down foreign capital inflows which in turn may retard its modernization.

Date: 1992
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