Refinancing and decentralization: Evidence from China

Decentralization can complement market liberalization by strengthening incentives of agents to respond to market signals. However, in China banks centralized lending authority following financial reforms in the mid-1990s. We present a new theory of financial decentralization in which centralization provides a credible commitment not to refinance bad projects by reducing available information. Using data from Chinese rural financial institutions, we empirically assess the determinants of decentralization and the likelihood of collateral seizure, strongly confirming the predictions of the refinancing model. We conclude that weak institutional environments may limit the efficiency of financial intermediation despite financial market liberalization.     

Engines of Growth in China: The Limits of Informal Institutions

Abstract:

Since the 1978 reforms, China has experienced rapid economic and social development. GDP growth has been in the double digits on average yearly, creating the fastest sustained economic growth recorded by a major economy in history. Not only did this transform the economy and society at large, China reached important milestones in terms of reducing poverty and creating prosperity in a short period of time. This article uses the conceptual framework of new institutional economics to examine China’s economic growth and how growth has been achieved largely by ‘informal institutions’ that are grounded in culture, customs, and private interactions that emerge spontaneously. The trajectory by which these informal institutions left their imprint on China’s complex economic landscape and how they can constrain future economic growth are also of central importance. After examining decentralization and risk management practices, property rights, and the legal system, we emphasize the importance of creating formal institutions necessary for long-term growth, most importantly innovation. Preliminary evidence shows total factor productivity is tapering off which may reflect the constraints of China’s institutional environment. This ought to be reversed if China is to enjoy long-term sustained growth.     

Why China's approach to institutional change has begun to succeed

In the constantly changing modern economic environment, a country's ability to implement institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. Unfortunately, it can be difficult to persuade institutional stakeholders that the change is necessary, and as a result, efforts at institutional change often fail. To avoid situations in which change is sudden and disruptive, China has chosen a more cautious approach of gradual institutional change leading to smooth reform, which Deng Xiaoping referred to as “crossing the river by stepping from stone to stone” — a metaphor that translates into doing a careful experiment before broad application of an approach for which you lack prior experience. This approach allows adaptation to local conditions during subsequent broader adoption of a new approach, and can thereby decrease the risks and costs of adopting a new strategy by first testing the change and then demonstrating the potential benefits to local residents and governments. This innovative approach has been a key component of China's economic reforms since 1978, and the Chinese experience shows how adapting programs to local natural and social conditions can help to motivate change and sustain the implementation of new institutions.     

China's transition to markets: market-preserving federalism,chinese style

This paper studies the relationship between decentralization and the success of reform in China. We argue that a particular form of decentralization—called market-preserving federalism Chinese style—provides the critical foundations for market success. China's form of decentralization has served the critical purpose of creating markets at a time when political resistance to economic reform remained strong and when the durability of the reforms was important. Nonetheless, federalism, Chinese style, lacks some national public goods, and the new system needs to be institutionalized. We also highlight some parallels between the United States under the Articles of Confederation (1781-1787) and those of modern China.     

Decentralization,social capital,and regional growth: The case of the Italian North-South divide

This paper aims to show how a region's constant level of social capital may have a very different impact on its economic growth depending on whether the central or the local level of government is responsible for regional policy.Our case study is the economic performance of Northern and Southern Italy in the post-World War II period, when a long phase of regional convergence came to a sudden halt in the early 1970s. We focus on the economic effects of the 1970s institutional reforms on government decentralization and wage bargaining. Our main hypothesis is that decentralization allocates the provision of public capital to institutions, the local ones, more exposed to a territory's social capital. Since social capital is lower in the Southern regions, decentralization made their developmental policies less effective from 1970 onwards, and regional inequality increased.We build an endogenous growth model augmented to include the interaction between social capital and public investment as well as the reform of the Italian labour market. We calibrate our model using data of the Italian regions for 1951–71. Our quantitative results indicate that decentralization triggered the influence of local social capital on growth and played a central role in halting the convergence path of the low-social-capital regions.     

四十年我国市场化进程的经济学分析*——兼论中国模式与中国经济学的构建

过去40年，我国在坚持社会主义基本经济制度条件下努力让市场机制在资源配置中发挥决定性作用。中国模式的特有内涵决定了我们无法在传统政治经济学逻辑或西方主流制度变迁理论中找到答案，唯有坚持直面现实的分析方法，通过对现象的深入剖析来检验和发展现有理论，推进中国经济学研究范式的创新。本文提出了我国制度变迁方式三阶段转换假说，即一个中央集权型计划经济国家可能成功地向市场经济渐进过渡的现实路径是，由改革之初的供给主导型制度变迁方式逐步向中间扩散型制度变迁方式转变，并随着排他性产权的逐步确立，最终过渡到需求诱致型制度变迁方式，从而完成向社会主义市场经济体制的过渡。这证明了中国改革开放伟大实践为经济学理论的发展提供了前所未有的机遇和挑战，中国模式是中国经济学的创新源泉。     

Groping for Stones to Cross the River versus Coordinated Policy Reforms: The Case of Two Reforms in China

Abstract

China’s economic transition has reached a stage where the past experimental approach is no longer sufficient. Future policy reforms need to be carried out in a holistic rather than a piecemeal manner. This paper analyzes the reforms of two related institutions in China: the household registration system and the rural land system. We argue that further institutional changes warrant national initiatives and coordinated reforms rather than merely drawing on local pilot experiences. A holistic policy package that can simultaneously promote the reforms of the household registration and the rural land system is proposed. We use fiscal simulations to illustrate the feasibility of the proposed holistic policy package.     

The Nature of Institutional Change in Transition

Contemporary empirical evidence of transition in Central and East European countries proves the importance of institutional change, as was claimed by advocates of this field of transition. The article assesses institutional change in the first phases of transition from the perspective of competing strategies: rapid changes versus gradualism. After pointing to some inconsistencies in this debate, the article discusses the possibility and prospects for development of a market for institutions in European transition countries. The main criterion which is used is the requirement for the rule of law as one of the foundations of a market economy. It concludes that undeveloped endogenous factors of institutional change still do not enable development of markets for institutions. Reluctance of national governments to act according to a long-run perspective is at present to a certain extent compensated by the presence of external factors of institutional change.     

Understanding china's economic performance

Broadly speaking, two schools of thought have emerged to interpret China's rapid growth since 1978: the experimentalist school and the convergence school. The experimentalist school attributes China's successes to the evolutionary, experimental, and incremental nature of China's reforms. Specifically, the resulting non-capitalist institutions are claimed to be successful in (a) agriculture where land is not owned by the fanners; (b) township and village enterprises (TVEs) which are owned collectively by rural communities; and (c) state owned enterprises (SOEs) where increased competition and increased wage incentive, but not privatization, have been emphasized.

The convergence school holds that China's successes are the consequences of its institutions being allowed to converge with those of non-socialist market economies, and that China's economic structure at the start of reforms is a major explanation for the rapid growth. China had a high population density heavily concentrated in low-wage agriculture, a condition that was favorable for labor-intensive export-led growth in other parts of East Asia. The convergence school also holds that China's gradualism results primarily from a lack of consensus over the proper course, with power still divided between market reformers and old-style socialists; and that the “innovative” non-capitalist institutions are responses to China's political circumstances and not to its economic circumstances.

Perhaps the best test of the two approaches is whether China's policy choices are in fact leading to institutions harmonized with normal market economies or to more distinctive innovations. In this regard, the recent policy trend has been towards institutional harmonization rather than institutional innovation, suggesting that the government accepts that the ingredients for a dynamic market economy are already well-known.     

经济转型理论评析

经济转型之初 ,一些经济学家基于新古典经济学信条提出 ,可以通过“激进”措施将原来的计划体制一次性破除而重建一个全新的市场经济。但迅速私有化并没有带来企业治理结构的改善和原国有资产的有效重组。与此形成鲜明对照的是 ,中国的渐进改革却取得了成功 ,并得到了越来越广泛的认可。 2 0世纪 90年代中期以来 ,经济转型理论开始发生变化 ,“制度演进主义”的影响日渐扩大 ,经济学家开始强调市场经济支持性制度的重要性以及制度变革的长期性 ,认为分权、激励、竞争、良好的司法和会计制度等比私有化更重要 ,并在政治经济学层面上分析了不确定性、利益集团、政府、改革秩序与步骤对制度变迁的影响。     

产业组织分散化:我国经济发展过程中的一个必经阶段

本文对我国产业组织分散化现象作了分析。文章认为产业组织分散化是我国经济发展过程中的一个必经阶段，是产业组织成长的具体表现。产业组织分散化改善了我国工业的市场结构和市场行为，也提高了工业的市场绩效。     

财政规模决定:一个经验模型

在借鉴国外财政规模实证分析建模方法的基础上,我们重新澄清了研究中国财政规模决定的逻辑起点和理论建模方向.我们认为,工业化、城市化、人口结构等市场内生变量不能较好地解释20世纪70年代末以来我国财政规模的演变,相反,揭示我国经济社会转型的外生制度变量--经济分权和财政分权,连同显示市场交易总规模的国民收入变量,能够较好地解释这种变化.理论上,作者所构建的简单计量模型分离出了市场与政府之间的替代效应和互补效应,前者反映了市场边界与政府边界的重新渐进界定,后者反映了财政学中广为人知的"瓦格纳定律".诚然,沿着这一基本思路还有大量的工作要做.     

财政分权、腐败与治理

财政分权对经济发展的影响已经成为转轨经济学研究的重要问题之一。大多数经济学家往往只看到财政分权对经济发展的促进作用,却忽视了在制度供给失衡的情况下,尤其是对像中国这样的转轨经济而言,它对长期经济发展是不利的,会产生诸如腐败等问题。文章运用中国省级面板数据检验了财政分权与腐败之间的关系。结果表明,财政分权恶化了腐败问题。因此,有必要通过完善财政分权体制来缓解其负面效应,这将有利于中国经济健康发展。     

中国制度变迁的演进论解释

:本文在哈耶克的社会秩序二元观的基础上 ,提出一个分析中国制度变迁的初步的演进论框架 ,然后证明 ,中国的改革过程交织着政府选择外部规则和社会成员选择内部规则的双重秩序演化路径 ,前者是表面上的主线 ,实际的主线则是后者 ;并且两种规则之间的冲突与协调贯穿整个制度变迁过程 ,在这个过程中 ,中央政府更多地起法官裁决作用 ,而地方政府更多地从事制度企业家活动。总的来看 ,改革经历了政府逐步退出直接的制度创新领域及外部规则逐步缩减作用范围的过程 ,也就是内部规则的逐步发育和强大的过程 ,这是中国市场化的本质。     

The sequencing of reform policies in China's agricultural transition*

This paper provides evidence regarding gains due to agricultural market liberalization in China. We empirically identify the different effects that incentive and farm restructuring reforms and gradual market liberalization have on China's agricultural economy during its transition period. We find that average gains within the agricultural sector due to reforms that improved incentives and increased decision‐making authority of producers exceed gains due to market liberalization by a large margin. Our method of analyzing the effects of transition policies on economic performance can be generalized to other reform paths in other transition economies.     

寻求更有效的财政政策——中国宏观经济分析

宏观财政政策是一种公共物品 ,其有效性的标准是 ,在实现政府利益的同时 ,能够增进社会的福利。面临通货紧缩 ,政府将继续实施以财政政策为主导的扩张性宏观政策 ,在财政支出空间有限的情况下 ,就要选择能够作大投资乘数 ,提高市场效率的措施 ;同时要考虑调整税制结构 ,改变对投资征高税的税制 ,逐步变生产型增值税为收入型增值税和消费型增值税 ,并通过把内资企业税负降至外资企业的水平 ,一方面提高企业的利润预期 ,另一方面 ,消除税负不公 ,提高社会经济效率和减少资本外流 ;在运用国债政策时 ,既要重视国债的发行和使用 ,更要重视国债的交易和流通 ,推进我国金融市场的发育和功能的发挥以及促进公用事业的企业化 ,转换资源配置方式 ,从政府配置转向市场配置 ,从集中配置转向分散配置。总之 ,在体制转轨时期 ,推行一种与市场化改革相结合的财政政策 ,把短期的政策操作和长期的制度调整结合起来 ,实现政策和体制联动。     

地区放权与经济效率:以计划单列为例

中国的经济改革始于放权,尤其是对地区的放权。本文以计划单列为例,研究整体性行政放权对经济效率的影响并通过构造省内与省外城市的对比组来估计计划单列的因果效应。研究结果表明:从总体上,放权确实有助于计划单列市提高其经济效率。本文对此结论进行了一系列的稳健性检验。     

Review essay

Regulatory reforms which are implemented in many developing countries after market reforms constitute a conflict-ridden process generating complex tensions between governments, independent regulatory agencies, international institutions and private interest groups. By criticising the mainstream a-historical approaches, which reduce those tensions to the reluctance of interest-maximising politicians to delegate power, this article locates current reforms within the historical context of the trajectory of neoliberalism. In the case of Turkey, rather than undertaking comprehensive regulatory reform, the governments of the 1980s implemented ad-hoc strategies within the existing system, which corroded and de-legitimised the old institutional structures and facilitated market reforms. Yet, the same strategies created an institutional structure producing its own vested political and economic interests which gave its specific colour to the form and pace of current regulatory reform. The article derives insights from the Turkish case in order to re-think the crucial relation between politics and regulation, and between choices available to and constraints faced by policy makers and to re-conceptualise the role of unintended consequences by refuting any ideal typical understanding of neoliberalism.     

市场互联性、关系型合约与经济转型

本文通过将单一市场的关系型合约推广到互联的关系型合约,刻画了社会分工程度(市场范围)与微观治理机制(基于关系型合约的治理还是基于正式合约的治理)之间的互动关系:基于何种合约来治理受市场范围的影响,市场范围越小,关系型合约越重要,正式合约越不重要;反之则反是。特别地,从这个视角看,计划经济向市场经济转型的过程,是劳动分工不断深化和市场范围不断扩大的过程,在微观治理上是一个从互联的关系型合约不断向正式合约过渡的过程。中国的渐进式改革之所以成功,很大程度上是由于渐进式改革使原来自我实施的关系型合约没有受到很大程度的破坏,在正式合约缺位时,关系型合约仍然能够维持社会经济的运行;俄罗斯的激进式改革几乎在一夜之间破坏了自我实施的关系型合约的可维持性,而短期内又不可能建立依赖正式合约的治理模式,出现了微观治理失效。本文还解释了中国经济在缺乏正式的法律和产权体系下取得骄人绩效的“悖论”,即由于关系型合约的自我实施性,因而并不需要相应的正式制度安排。本文总体上支持“后华盛顿共识”的渐进改革路径,并为其提供了动态的微观机制。     

Alcohol consumption in the UK, 1955–85: a system-wide analysis

As a consequence of economic reforms in China, firms have ben affected by three essential changes. First, instead of surrendering all profits to the Government, firms now pay tax on their profits according to a contract between them and the Government and retain the balance as their own controllable surplus. Second, the central economic plan determines only part of firms' production. After fulfilling the command plan, firms are allowed to adjust their production scale by the availability of inputs and the profitability of production. Third, most consumer and investment goods have two prices, a plan price and a market price. As most of the plan prices are always lower than the market prices, the latter play a basic role in determining firms' profits. After a decade of economic reforms, the important question is: can Chinese state enterprises perform like market entities? The analysis shows that Chinese firms in transition domimic the production behaviour of market-based, efficiency-oriented firms.