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Transitional institutions, institutional complementarities and economic performance in China: A 'Varieties of Capitalism' approach

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  • Ahrens, Joachim
  • Jünemann, Patrick
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    Abstract

    The paper focuses on institutional change and institution building as integral parts of economic transition in China. China's success, particularly compared with other advanced transition economies, implies a puzzling observation: China did not apply theoretically-derived policy recommendations. Instead, authorities followed a gradual, pragmatic approach to reform, decentralize, and transform the economy. Notable examples of non-orthodox policy measures, which worked effectively in China, include so-called transitional institutions such as the dual-track approach to industrial restructuring, anonymous banking, the establishment of special economic zones or the priority given to create competitive structures while postponing large-scale privatization of state-owned enterprises. Hence, it is not evident what kind of market economy will emerge in China in the long run. The paper aims at (i) applying the Varieties-of-Capitalism (VoC) framework to China and assessing its suitability in a transition context; (ii) addressing the question of what kind of market economy is emerging in China; (iii) analyzing the impact which the emerging type of capitalism will have on the economy's allocative and dynamic efficiency; and (iv) elaborating policy implications which may help generate or strengthen potential institutional complementarities in the long run.

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    File URL: https://www.econstor.eu/bitstream/10419/55399/1/685236498.pdf
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    Paper provided by OrdnungsPolitisches Portal (OPO) in its series Discourses in Social Market Economy with number 2010-11.

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    Date of creation: 2010
    Handle: RePEc:zbw:opodis:201011
    Contact details of provider: Web page: http://ordnungspolitisches-portal.de/

    Keywords: institute; China; capitalism;

    Find related papers by JEL classification:

    • H0 - Public Economics - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P2 - Economic Systems - - Socialist Systems and Transition Economies
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions

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