The Fundamental Institutions of China's Reforms and Development

2011/12/01 by Chenggang Xu · 21 citations
Social Sciences · Economics, Econometrics and Finance · #Local Government Finance and Decentralization #China's Socioeconomic Reforms and Governance #Fiscal Policy and Economic Growth

paper · doi:10.1257/jel.49.4.1076

Abstract

China's economic reforms have resulted in spectacular growth and poverty reduction. However, China's institutions look ill-suited to achieve such a result, and they indeed suffer from serious shortcomings. To solve the “China puzzle,” this paper analyzes China's institution—a regionally decentralized authoritarian system. The central government has control over personnel, whereas subnational governments run the bulk of the economy; and they initiate, negotiate, implement, divert, and resist reforms, policies, rules, and laws. China's reform trajectories have been shaped by regional decentralization. Spectacular performance on the one hand and grave problems on the other hand are all determined by this governance structure. (JEL O17, O18, O43, P21, P25, P26)

Citations

• The Nature of the Firm
• The Effects of Privatization and Ownership in Transition Economies
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