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Permanency and flexibility of institutions : the role of decentralisation in Chinese economic reforms

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  • Mary-Françoise RENARD

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • Philippe DULBECCO

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

Abstract

The purpose of our paper is to offer a new analysis aimed at studying the coherence and the efficiency of reforms in China in terms of institutional change. The idea is that transition dynamics cannot be analysed by reference to market criteria only; transition is, above all, a change in institutions. Every transition economy thus faces the problem of creating a new institutional framework which associates the co-ordination of activities by the market with the preservation of a centralised mechanism of resource allocation. We explain that, in China, this role is played by decentralisation. Indeed we demonstrate that Chinese economic reforms, of which the main institutional vector is decentralisation, show the particularity of reconciling, within one single logic, the permanency of a well-established institutional order required for the co-ordination of individual plans, and the flexibility of institutions necessary for the move towards the market. We then defend the theory that both the success and the originality of Chinese economic reforms rest on their capacity to resolve the permanency-flexibility dilemma.

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File URL: http://publi.cerdi.org/ed/1999/1999.24.pdf
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Bibliographic Info

Paper provided by CERDI in its series Working Papers with number 199924.

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Length: 28
Date of creation: 1999
Date of revision:
Handle: RePEc:cdi:wpaper:123

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Keywords: decentralisation; transition; Institutional change and market process;

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  1. Michael W. Bell & Kalpana Kochhar & Hoe Ee Khor, 1993. "China at the Threshold of a Market Economy," IMF Occasional Papers 107, International Monetary Fund.
  2. Gary H. Jefferson & Thomas G. Rawski, 1994. "Enterprise Reform in Chinese Industry," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 47-70, Spring.
  3. Li, Shuhe & Lian, Peng, 1999. "Decentralization and coordination: China's credible commitment to preserve the market under authoritarianism," China Economic Review, Elsevier, vol. 10(2), pages 161-190.
  4. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-68, June.
  5. Jiahua Che & Yingyi Qian, . "Institutional Environment, Community Government, and Corporate Governance: Understanding China's Township-Village Enterprises," Working Papers 97043, Stanford University, Department of Economics.
  6. Caillaud, B. & Jullien, B. & Picard, P., 1996. "Hierarchical organization and incentives," European Economic Review, Elsevier, vol. 40(3-5), pages 687-695, April.
  7. Li, David D., 1996. "A Theory of Ambiguous Property Rights in Transition Economies: The Case of the Chinese Non-State Sector," Journal of Comparative Economics, Elsevier, vol. 23(1), pages 1-19, August.
  8. David D. Li, 1996. "A Theory of Ambiguous Property Rights in Transition Economies: The Case of the Chinese Non-State Sector," William Davidson Institute Working Papers Series 8, William Davidson Institute at the University of Michigan.
  9. Shahid Yusuf, 1994. "China's Macroeconomic Performance and Management during Transition," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 71-92, Spring.
  10. Yifu Lin, Justin & Nugent, Jeffrey B., 1995. "Institutions and economic development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 38, pages 2301-2370 Elsevier.
  11. Kozul-Wright, Richard & Rayment, Paul, 1997. "The Institutional Hiatus in Economies in Transition and Its Policy Consequences," Cambridge Journal of Economics, Oxford University Press, vol. 21(5), pages 641-61, September.
  12. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Preserving Market Incentives," Working Papers 97042, Stanford University, Department of Economics.
  13. Richard E. Ericson, 1991. "The Classical Soviet-Type Economy: Nature of the System and Implications for Reform," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 11-27, Fall.
  14. Dwight H. Perkins, 1994. "Completing China's Move to the Market," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 23-46, Spring.
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