IDEAS home Printed from https://ideas.repec.org/a/kap/revaec/v16y2003i4p327-346.html
   My bibliography  Save this article

Permanency and Flexibility of Institutions: The Role of Decentralization in Chinese Economic Reforms

Author

Listed:
  • Philippe Dulbecco
  • Marie-Françoise Renard

Abstract

The purpose of this paper is to offer a Lachmannian 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 analyzed 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 centralized mechanism of resource allocation. We explain that, in China, this role is played by decentralization. Indeed, we demonstrate that Chinese economic reforms, of which the main institutional vector is decentralization, 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. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • Philippe Dulbecco & Marie-Françoise Renard, 2003. "Permanency and Flexibility of Institutions: The Role of Decentralization in Chinese Economic Reforms," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 16(4), pages 327-346, December.
  • Handle: RePEc:kap:revaec:v:16:y:2003:i:4:p:327-346
    DOI: 10.1023/A:1027345105462
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1023/A:1027345105462
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1023/A:1027345105462?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Yuanzheng Cao & Yingyi Qian & Barry R. Weingast, 1999. "From federalism, Chinese style to privatization, Chinese style," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 103-131, March.
    2. Che, Jiahua & Qian, Yingyi, 1998. "Institutional Environment, Community Government, and Corporate Governance: Understanding China's Township-Village Enterprises," Journal of Law, Economics, and Organization, Oxford University Press, vol. 14(1), pages 1-23, April.
    3. Putterman, Louis, 1997. "On the past and future of china's township and village-owned enterprises," World Development, Elsevier, vol. 25(10), pages 1639-1655, October.
    4. 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.
    5. 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.
    6. Smyth, Russell, 2000. "Should China be Promoting Large-Scale Enterprises and Enterprise Groups?," World Development, Elsevier, vol. 28(4), pages 721-737, April.
    7. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    8. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
    9. 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.
    10. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 889-906.
    11. Caillaud, B. & Jullien, B. & Picard, P., 1996. "Hierarchical organization and incentives," European Economic Review, Elsevier, vol. 40(3-5), pages 687-695, April.
    12. 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.
    13. 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.
    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.
    15. repec:imf:imfops:107 is not listed on IDEAS
    16. Naughton, Barry, 1994. "Chinese Institutional Innovation and Privatization from Below," American Economic Review, American Economic Association, vol. 84(2), pages 266-270, May.
    17. 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 641-661, September.
    18. 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.
    19. Li, Shaomin & Li, Shuhe & Zhang, Weiying, 2000. "The Road to Capitalism: Competition and Institutional Change in China," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 269-292, June.
    20. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Philippe DULBECCO, 2000. "The Dynamics of the Institutional Change and the Market Economy: An Austrian Analysis," Working Papers 200010, CERDI.
    2. Marius Korsnes, 2014. "Fragmentation, Centralisation and Policy Learning: An Example from China’s Wind Industry," Journal of Current Chinese Affairs - China aktuell, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 43(3), pages 175-205.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yingyi Qian, 1999. "The Institutional Foundations of China's Market Transition," Working Papers 99011, Stanford University, Department of Economics.
    2. Chang, Chun & McCall, Brian P. & Wang, Yijiang, 2003. "Incentive contracting versus ownership reforms: evidence from China's township and village enterprises," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 414-428, September.
    3. Jeffrey D. Sachs & Wing Thye Woo, "undated". "Understanding China'S Economic Performance," Department of Economics 97-04, California Davis - Department of Economics.
    4. Li, Hongbin, 2003. "Government's budget constraint, competition, and privatization: evidence from China's rural industry," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 486-502, September.
    5. Hehui Jin & Yingyi Qian, "undated". "Public vs. Private Ownership of Firms: Evidence from Rural China," Working Papers 97047, Stanford University, Department of Economics.
    6. Bischoff, Ivo, 2002. "Efficiency-enhancing effects of private and collective enterprises in transitional China," Discussion Papers 9, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
    7. Sean M. Dougherty & Robert H. McGuckin, 2001. "The Effect of Ownership Structure and Jurisdictional Governance on Productivity in Chinese Enterprises," Economics Program Working Papers 02-01, The Conference Board, Economics Program, revised Jan 2002.
    8. Loren Brandt & Hongbin Li & Joanne Roberts, 2001. "Why do Governments Privatize," William Davidson Institute Working Papers Series 429, William Davidson Institute at the University of Michigan.
    9. Peng, Mike W. & Lu, Yuan & Shenkar, Oded & Wang, Denis Y. L., 2001. "Treasures in the China house: a review of management and organizational research on Greater China," Journal of Business Research, Elsevier, vol. 52(2), pages 95-110, May.
    10. Mario Biggeri & Danilo Gambelli & Christine Phillips, 1999. "Small and medium enterprise theory: evidence for Chinese TVEs," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(2), pages 197-219.
    11. Park, Albert & Shen, Minggao, 2003. "Joint liability lending and the rise and fall of China's township and village enterprises," Journal of Development Economics, Elsevier, vol. 71(2), pages 497-531, August.
    12. Mario Biggeri, 2003. "Key Factors of Recent Chinese Provincial Economic Growth," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 1(2), pages 159-183.
    13. Li Tian, 2014. "Property Rights, Land Values and Urban Development," Books, Edward Elgar Publishing, number 15856.
    14. Qian, Yingyi, 2002. "How Reform Worked in China," CEPR Discussion Papers 3447, C.E.P.R. Discussion Papers.
    15. Massimo Bordignon & Yanhua Deng & Jian Huang & Jin Yang, 2018. "Plunging into the Sea: Ideological Change, Institutional Environments and Private Entrepreneurship in China," DISCE - Working Papers del Dipartimento di Economia e Finanza def074, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    16. Wang, Yijiang & Chang, Chun, 1998. "Economic transition under a semifederalist government: The experience of China," China Economic Review, Elsevier, vol. 9(1), pages 1-23.
    17. Yingyi Qian, 2002. "How Reform Worked in China," William Davidson Institute Working Papers Series 473, William Davidson Institute at the University of Michigan.
    18. Canfei He, 2016. "Economic Transition, Urban Dynamics, and Economic Development in China: An Introduction to the Special Issue," Growth and Change, Wiley Blackwell, vol. 47(1), pages 4-8, March.
    19. Yang, Jin & Huang, Jian & Deng, Yanhua & Bordignon, Massimo, 2020. "The rise of red private entrepreneurs in China: Policy shift, institutional settings and political connection," China Economic Review, Elsevier, vol. 61(C).
    20. Lu, Jiangyong & Tao, Zhigang & Yang, Zhi, 2010. "The costs and benefits of government control: Evidence from China's collectively-owned enterprises," China Economic Review, Elsevier, vol. 21(2), pages 282-292, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:revaec:v:16:y:2003:i:4:p:327-346. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.springer.com .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.