Case Study China Economic Growth

We then talked about the remarkable globalization

of the Chinese economy, that has occurred over these past three decades.

Especially with China's entry into the World Trade Organization.

Without a doubt China's connection to the rest of the world through trade an for

an investment has played a critical role in transferring

technologies to China to support higher productivity.

And higher rates of economic growth.

Now at the heart of our story of China's economic reform

has been the role of institutions.

So with institutions at the center we have explored

how they have influenced the political economy of transition.

We noted that many of the early reforms, the returned to household farming.

The rise of TVE's really were bottom-up reforms

that were initiated by local households.

By rural households.

Or by rural enterprises in China.

And this created momentum for further reform.

We also found that at various points political opposition to reform

was an important factor influencing the pace of reform.

And that China came up with innovative ways to essentially

provide resources to those who might oppose reforms.

So that more of the reforms could be win-win propositions that

were more acceptable.

This helped support the continuation of economic reform in China.

We have noted that institutions

have many different influences on economic performance.

In China they were key reforms that introduced markets into the economy.

And the competition and discipline of competition that markets created

has been a key driving force for improved economic performance.

We also found that in different sectors of the economy, and

also in terms of the government fiscal system,

China decentralized decision-making authority down to lower level down actors.

To give them a more power and incentives.

To try to improve their production and productivity.

Many of these factors also contributed to economic growth.

Markets increased allocation efficiency,

better incentives increase technical efficiency.

Globalization provided new sources of technology

that China could adopt relatively quickly and improve productivity.

Recently China has created institutions to support

greater firm innovation with government support.

And this has helped develop a more innovative economy.

All of these different factors

that relate back to institutions also create winners and losers in the economy.

And in part two of the course, we will explore in more depth.

The social consequences of reform.

The human dimension of economic reform in China.

The challenges that face such a populous and

complex country like China remain immense.

But I'm quite confident that Chinese leaders will continue to cross the river

by filling in the stones.

Taking a pragmatic approach to economic reform.

I hope that in the future together we will be able to see what lies on

the other side.

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