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How Reform Worked in China

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  • Qian, Yingyi

Abstract

China’s reform worked and produced some 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.

Suggested Citation

  • Qian, Yingyi, 2002. "How Reform Worked in China," CEPR Discussion Papers 3447, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3447
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    References listed on IDEAS

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    Cited by:

    1. Jentzsch, Nicola, 2008. "An economic analysis of China's credit information monopoly," China Economic Review, Elsevier, vol. 19(4), pages 537-550, December.
    2. Wei, Chu & Löschel, Andreas & Liu, Bing, 2015. "Energy-saving and emission-abatement potential of Chinese coal-fired power enterprise: A non-parametric analysis," Energy Economics, Elsevier, vol. 49(C), pages 33-43.
    3. Eggleston, Karen & Wang, Jian & Rao, Keqin, 2008. "From plan to market in the health sector?: China's experience," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 400-412.
    4. repec:ces:ifodic:v:2:y:2004:i:2:p:14567799 is not listed on IDEAS
    5. Gérard Roland, 2004. "Institutions and Economic Performance - Fast-moving and Slow-moving Institutions," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(2), pages 16-21, October.
    6. Chen, Yiu Por (Vincent), 2015. "Fiscal Decentralization, Rural Industrialization, and Undocumented Labor Mobility in Rural China (1982-87)," IZA Discussion Papers 9024, Institute for the Study of Labor (IZA).
    7. Marcelo de Paiva Abreu, 2005. "China´s emergence in the global economy and Brazil," Textos para discussão 491, Department of Economics PUC-Rio (Brazil).
    8. Wang, Yuanyuan & You, Jing, 2012. "Corruption and firm growth: Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 415-433.

    More about this item

    Keywords

    china; institution; reform; transition;

    JEL classification:

    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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