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Can Communist economies transform incrementally? China's experience

Author

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  • Gelb, Alan
  • Jefferson, Gary
  • Singh, Inderjit

Abstract

The authors try to answer important questions. How important is the phasing of political and economic liberalization and the active (versus passive) role of the state in reform? What lessons can be learned about comprehensive top-down reform as opposed to experimental bottom-up reforms; fast versus slow liberalization and opening up of the economy; the need to establish full private property rights at the beginning of reform; and reform's implications for welfare and distribution? Can China's excellent performance be linked toparticular reform measure, or does it reflect distinctive initial conditions or social or demographic factors? Is China's performance sustainable without more comprehensive transformation, or does it reflect transient gains that are substantially exhausted? Among the lessons China offers are the following. Partial reform can succeed in raising productivity in agriculture and industry; industrial productivity has grown very rapidly in the nonstate sector but also in state enterprises. A"big bang"is not economically necessary unless justified by the need to address macroeconomic imbalances. There may be virtue in a decentralized"bottom-up"approach to reform. Rapid privatization is not necessary for successful reform, but it is important to diversify ownership and encourage the entry of new firms. Small scale privatization and the liberalization of distribution and service sectors are likely to have the fastest payoff in the reform of property rights. China's rapid growth momentum and macroeconomic stability cannot be sustained without further reforms, including the reform of banking, taxation, and property rights.

Suggested Citation

  • Gelb, Alan & Jefferson, Gary & Singh, Inderjit, 1993. "Can Communist economies transform incrementally? China's experience," Policy Research Working Paper Series 1189, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1189
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Shu-Yun Ma, 2010. "Shareholding System Reform in China," Books, Edward Elgar Publishing, number 13243.
    2. Aizenman, Joshua & Yi, Sang-Seung, 1998. "Controlled Openness and Foreign Direct Investment," Review of Development Economics, Wiley Blackwell, vol. 2(1), pages 1-10, February.
    3. 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.
    4. Gordon de Brouwer, 1999. "Deregulation and Open Capital Markets: The Australian Experience Before Wallis," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 6(1), pages 51-68.
    5. Lin He & Calum Turvey, 2009. "Financial repression in China's agricultural economy," China Agricultural Economic Review, Emerald Group Publishing, vol. 1(3), pages 260-274, May.
    6. Pham van Thuyet, 1995. "The emerging legal framework for private sector development in Viet Nam's transitional economy," Policy Research Working Paper Series 1486, The World Bank.
    7. Camilla Jensen, 2003. "Socialism, Spillovers and Markets in Cuba," Post-Communist Economies, Taylor & Francis Journals, vol. 15(3), pages 435-459.
    8. Ajit Singh, 1994. "Du plan au marché : la réforme maîtrisée en Chine," Revue Tiers Monde, Programme National Persée, vol. 35(139), pages 659-684.
    9. Amsden, Alice H. & Dongyi Liu & Xiaoming Zhang, 1996. "China's macroeconomy, environment, and alternative transition model," World Development, Elsevier, vol. 24(2), pages 273-286, February.
    10. Yui Leung, Charles Ka, 2001. "Productivity growth, increasing income inequality and social insurance: the case of China?," Journal of Economic Behavior & Organization, Elsevier, vol. 46(4), pages 395-408, December.
    11. Bildirici, Melike Elif & Kayıkçı, Fazıl, 2013. "Effects of oil production on economic growth in Eurasian countries: Panel ARDL approach," Energy, Elsevier, vol. 49(C), pages 156-161.
    12. AfDB AfDB, 1997. "Working Paper 35 - Privatization of Public Enterprises in Zambia: An Evaluation of the Policies, Procedures and Experiences," Working Paper Series 2253, African Development Bank.

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