How Reform Worked in China

Yingyi Qian ()

No 473, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: China's reform worked and produced one of the most impressive growth in the largest developing and transition economy in the world in the past twenty-two years. That China has managed to grow so rapidly despite the absence of many conventional institutions such as rule of law and secure private property rights is puzzling. To understand how reform works in a developing and transition economy that has great growth potential, it is not enough to study the conventional "best-practice institutions" as a desirable goal. One should also study how feasible, imperfect institutions have evolved to complement the initial conditions and to function as stepping stones in the transition toward the goal. Underlying China's reform is a serial of institutional changes concerning the market, firms, and the government in the novel form of "transitional institutions." These institutions succeed when they achieve two objectives at the same time: to improve economic efficiency by unleashing the standard forces of incentives and competition on the one hand, and to make the reform a win-win game and thus interest compatible for those in power on the other.

Keywords: China; institution; reform; transition (search for similar items in EconPapers)
JEL-codes: P20 P26 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2002-09-01
New Economics Papers: this item is included in nep-dev and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

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