China and India - a Note on the Influence of Hierarchy vs. Polyarchy on Economic Growth
AbstractThis note tries to apply two versions of Sah and Stiglitz's "The Architecture of Economic Systems: Hierarchies and Polyarchies" model (SandS) to highlight some important differences between the development paths of India, the largest democracy, and China, the largest of the few remaining communist ruled economies. It argues that the original SandS model is applicable to private organisations but not to governments, to which a revised model is applied. It is the reliability of the government's decisions and the ability of the investor to rely on them that the modified SandS model tries to capture. As a communist country, China is as centralized as a huge polity of its size can be. A decision of the central authorities, a contract or promise confirmed by Beijing, can be relied upon. This provides a degree of security to the investor that his contract will be honoured and she will not be dispossessed. In the Indian federation the investor has to assure herself that all authorities involved agree to support her project, because any agency that has any say may be able to derail it. These differences are accounted for by the adjusted Sah and Stiglitz model. These differences affect not only the total quantity of investments but also their composition. Clearly, no claim is made or implied that the models introduced below provide the explanation for the differences in the development paths of these two Asian giants in the past few decades. They merely add a new perspective to the economic systems dimension of the development process.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Cattaneo University (LIUC) in its journal The European Journal of Comparative Economics.
Volume (Year): 6 (2009)
Issue (Month): 2 (December)
Contact details of provider:
Postal: Corso Matteotti 22 - Castellanza (VA) 21053
Phone: +39 (0)331-572 1
Fax: +39 (0)331-572 320
Web page: http://eaces.liuc.it/default.asp
More information through EDIRC
Hierarchies vs. polyarchies; Indian development; China's development;
Find related papers by JEL classification:
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laura Alfaro & Anusha Chari, 2009.
"India Transformed? Insights from the Firm Level 1988-2005,"
Harvard Business School Working Papers
10-030, Harvard Business School.
- Laura Alfaro & Anusha Chari, 2009. "India Transformed? Insights from the Firm Level 1988-2005," NBER Working Papers 15448, National Bureau of Economic Research, Inc.
- Qian, Yingyi & Xu, Chenggang, 1998. "Innovation and Bureaucracy under Soft and Hard Budget Constraints," Review of Economic Studies, Wiley Blackwell, vol. 65(1), pages 151-64, January.
- Xu, Chenggang & Zhang, Xiaobo, 2009. "The evolution of Chinese entrepreneurial firms: Township-village enterprises revisited," IFPRI discussion papers 854, International Food Policy Research Institute (IFPRI).
- Angus Maddison, 2009. "Measuring The Economic Performance Of Transition Economies: Some Lessons From Chinese Experience," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(s1), pages 423-441, 07.
- Baek, Jungho & Koo, Won W., 2008. "A Dynamic Approach to the FDI-Environment Nexus: The Case of China and India," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6508, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Weiye Li & Louis Putterman, 2008. "Reforming China's SOEs: An Overview," Comparative Economic Studies, Palgrave Macmillan, vol. 50(3), pages 353-380, September.
- Andrea Boltho & Maria Weber, 2009. "Did China follow the East Asian development model?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 267-286, December.
- Enrico Marelli & Marcello Signorelli, 2011. "China and India: Openness, Trade and Effects on Economic Growth," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(1), pages 129-154, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Piero Cavaleri).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.