China’s reform and opening process: a new model of political economy?

The reform and opening process has led to an impressive economic development which saw China becoming the second-largest economy in the world. This development resulted in an ongoing discussion about the nature of the Chinese state and reinvigorated the discussion of the role the state plays in national development. Addressing the challenges of how to interpret the contemporary Chinese state, it will be argued that a particular institutional setting has a strong impact on future developments, and China’s reform process provides an insightful example in this regard. Indeed, we should remember that in the aftermath of the Cultural Revolution the Communist Party of China faced both a fundamental political crisis and an economic crisis of underperformance. In order to develop a deeper insight into the political-economic changes, we can observe during the reform process, a comprehensive analysis is required, one which focuses on the changes in China’s political-economic regime.     

Why did the industrial diet triumph? The massification of dairy consumption in Spain, 1965–90

The rise of a mass, agri‐industrial diet after the Second World War was crucial for the culmination of the nutritional transition that western countries had been involved in since the second half of the nineteenth century—but why did the industrial diet triumph? This article takes the massification of dairy consumption in Spain 1965–90 as a study case. Using a newly constructed database and qualitative material within an evolutionary socio‐economic framework, the article reaches two conclusions. First, the massification of dairy consumption was linked to most households’ transition to a softer budget constraint, which was driven mainly by increasing household incomes (and only secondarily by consumer price reductions caused by food industrialization). Second, the reason why the softening of the budget constraint played such a major role was that it was joined by a substantial increase in consumer trust in dairy products, which in turn resulted from industrial standardization. The article is in line with recent work that underlines the dietary change brought about by food industrialization, but questions whether the latter's major contribution was of a quantitative, price‐related nature and suggests that more attention should be paid to the qualitative, preferences‐related dimension.     

The making of a liberal education: Political economy of the Austrian school reform, 1865 – 1880

The rise of mass schooling is an important contributor to modern economic growth. But its form, content, scale and manner of provision are all matters of public policy. The rise of modern schooling is frequently cast as a product of broadened suffrage and stronger political voice of the masses, which overcame the political opposition from old ruling elites. We investigate this hypothesis, using the case of a school reform undertaken in Imperial Austria in 1869. We show that large landowners were mildly in favor of school modernization, albeit less than urban and business interests. The strongest opposition came from the rural areas where the suffrage was in fact most numerous. The reform passed in spite of their opposition but, interestingly, post-reform developments suggest that passive resistance to it continued in the countryside in spite of the alleged benefits that education was billed to bring the masses.     

How much slack was there in the Chinese economy prior to its economic reform of 1978?

The existence of economic slack or inefficiency is a common phenomenon of economies that operate under mandatory central planning. It implies that the economy operates in the interior of its set of production possibilities and not on its frontier. It also implies that output can be increased without any increase in the inputs if the constraints which prevent the economy from operating on the frontier in the first place are removed. Thus, there is “surplus potential output” that is not directly observable and cannot be identified by conventional analysis of the relationship between inputs and output alone. The objective of this study is to attempt to identify and estimate the surplus potential output in the Chinese economy prior to its economic reform in 1978. This will help answer the question of how much of the Chinese economic growth since 1978 can be attributed to the reduction and elimination of the pre-existing economic slack. This question is important because the increase in output due to the reduction or elimination of the economic slack can only take effect once and cannot be continuing. It will also affect the attribution of the sources of Chinese economic growth. Our investigation suggests that a reasonable estimate of the magnitude of the surplus potential output of the Chinese economy on the eve of its reform is approximately 50% of the actual realized output in 1978.     

The paradox of developing agricultural mechanization services in China: Supporting or kicking out smallholder farmers?

Developing agricultural mechanization services (AMS) is commonly regarded as an important step in the modernization of smallholder farmers in China. However, given the increase in the opportunity costs of agriculture and the high cost of AMS, further study is needed to determine the relationship between AMS and smallholder farmers' exit from agricultural production. In this paper, data from the China Family Panel Survey collected in 2017 and 2019 are used to investigate this issue. Our findings show that the development of AMS reduces the probability that smallholder farmers exit from agricultural production though land abandonment, but increases the probability through land renting-out. Further analysis shows that with the emergence of large farm operators and the increase in land size rented by large farm operators, the development of AMS induces smallholder farmers' exit from agricultural production through both land abandonment and land renting-out. We also find that AMS can increase the market demand for land transfers and the marketization of land rentals, and as land markets develop, AMS induce smallholder farmers' exit through the abandonment of fragmented and distant land plots.     

Why did Swedish regional net migration rates fall in the 1970s? The role of policy changes versus structural change, 1945–1985

The relationship between local labour market conditions and regional migration has been widely discussed within research. In Sweden, where interregional migration reached a peak in the 1960s but decreased substantially in the 1970s, the role of economic policy has been especially contended in light of the Swedish model and its official stress on regional mobility. By collecting and creating a new and unique dataset on net-migration, vacancy rates, employment and labour income by county, the pattern of interregional migration in Sweden is analysed over a period of time that also covers the early postwar period (1945–1985), allowing for a detailed evaluation of the drivers of migration at different times. My results suggest that there was no significant change over time in the responsiveness of migration to local labour market conditions. The changing patterns of regional migration were therefore more likely the result of changes in the pace and direction of structural change. I discuss the implications of these results for previous accounts of the Swedish model and of the decline in migration after 1970.     

Early globalizations: The integration of Asia in the world economy, 1800–1938

This paper contributes to the debate on globalization and the great divergence with a comprehensive analysis of the integration of Asia in the world market from 1800 to the eve of World War II. We examine the patterns of convergence in prices for a wide range of commodities between Europe and the main Asian countries (India, Indonesia, Japan and China) and we compare them with convergence between Europe and the East Coast of the United States, hitherto the yardstick for the 19th century. Most price convergence occurred before 1870, mainly as a consequence of the abolition of the European trading monopolies with Asia, and, to a lesser extent, the repeal of duties on Atlantic trade. After 1870, price differentials continued to decline thanks to falling freights and to better communication after the lay-out of telegraph cables. There was only little disintegration in the inter-war years.     

For a fistful of pesetas? The political economy of the army in a nonconsolidated democracy: the Second Spanish Republic and Civil War (1931–9)

This article focuses on the importance of military factionalism in a nonconsolidated democracy: the Spanish Republic (1931–9). It builds a new micro-dataset for over 11,000 officers during the Spanish Civil War (1936–9) to study how professional and economic interests created divisions within the military and influenced officers’ allegiances during the war. Results confirm that distributional conflicts influenced officers’ decisions in Republican-controlled territories: officers who gained from military reforms in the years before the civil war and those with more rapid promotions in the months predating the war were more likely to remain loyal to the government. This article also explores the behavioural determinants of officers’ propensity to rebel and finds that hierarchy mattered, as senior officers influenced subordinates’ choices of side.     

Community health service centers in China, not always trusted by the populations they serve?

Based on the idea that healthcare needs to be managed by individuals and that basic health services should be provided by the community, this paper examines the factors that impact urban outpatients' preferences for particular community health service centers (CHSCs) and hospitals. Rational consumption of healthcare is influenced by a patient's beliefs, beyond simple demographics and social structure. Ignorance of basic health issues leads to non-rational patient behavior, which also explains the confusion in Chinese health reform regarding people's mistrust of CHSCs. Health education in the form of self-managed care may increase personal health knowledge and encourage individuals to make use of the basic health services that are supplied by CHSCs.     

The impact of tariff reductions on firm dynamics and productivity in China: Does market-oriented transition matter?

This paper investigates the impact of trade liberalization on firm dynamics and productivity in the context of dramatic tariff reductions after China's accession to the WTO, and how this impact varies across regions with different marketization levels. Our results show that (a) on average, output tariff reductions tend to reduce firm entry rate and increase firm exit rate, while input tariff reductions help to increase both firm entry rate and exit rate, furthermore, regional marketization strengthens the impact of trade liberalization on firm dynamics; (b) trade liberalization exerts greater impact on the likelihood of exit for the least productive firms while it tends to reduce the probability of exit for the more productive firms, with regional marketization strengthening such a reallocation process of trade liberalization; (c) firm dynamics effect contributes approximately 43% of the growth of productivity, and it (especially the firm exit effect) is an important channel through which trade liberalization fosters productivity growth, and domestic market reform is found to strengthen such an impact.     

Why more restricted stocks,less stock options?--An explanation based on the preference of regulators of China?

This paper provides an empirical explanation of the more frequent use of restricted stock plans for executives than stock option plans, to reveal the determinants of a restricted stock plan and understand its subsequent effects. We find that firms with higher growth opportunity, smaller size, higher executive ownership, smaller rent-seeking probably, and dividend payment prefer to grant restricted stock plans. Moreover, the preference of regulators drives the tendency of using restricted stock plans, designed to have higher pay-performance sensitivity (delta) and lower pay-risk sensitivity (vega). Under the intensive regulation, the restricted stock plans designed by firms with executive ownerships and large agency debt costs are more sensitive to risk. As a result, granting restricted stock plans rather than stock options helps improve firm performance and the preference of regulators on restricted stock plans can also enhance firm performance and decrease firm risks.     

Not an ordinary bank but a great engine of state: The Bank of England and the British economy, 1694–1844

From its foundation as a private corporation in 1694, the Bank of England extended large amounts of credit to support the British private economy and to support an increasingly centralised British state. The Bank helped the British state reach a position of geopolitical and economic hegemony in the international economic order. In this paper, we deploy recalibrated financial data to analyse an evolving trajectory of connections between the British economy, the state, and the Bank of England. We show how these connections contributed to form an effective and efficient fiscal–naval state and promote the development of a system of financial intermediation for the economy. This symbiotic relationship became stronger after 1793. The evidence that we consider here shows that although the Bank was nominally a private institution and profits were paid to its shareholders, it was playing a public role well before Bagehot's doctrine.     

How do consumers determine the safety of milk in Beijing,China?

In asymmetric information markets, consumers often rely on certain extrinsic indictors to assess the safety of food products. This study analyzes how consumers in Beijing determined milk safety when they purchased liquid milk using survey data conducted just before the melamine-contaminated infant formula event was disclosed. The key finding indicates that milk brand and purchase venue, on average, were ranked as the first two important safety indicators in fluid milk purchases, suggesting that China's milk safety regulators should put more monitoring resources toward supervising the safety of milk produced from branded firms and milk sold in ostensibly trustable stores and not allow exemptions to inspections. Meanwhile, the findings of this study indicate that the existing milk safety certification system in China might be significantly inefficient, suggesting potential waste of regulatory resources.     

Job satisfaction and relative income in economic transition: Status or signal?: The case of urban China

We use two datasets for urban China to examine whether an increase in reference group income lowers or increases job satisfaction. The former is consistent with a status effect — an increase in the income of others lowers my satisfaction because I feel jealous. The latter is consistent with a signal effect — an increase in the income of others might make me jealous, but it also provides an information signal about my future prospects. When we use a single item indicator of job satisfaction we find no support for a status or signal effect; however, when we use a psychometrically valid instrument to measure job satisfaction, we find some support for the existence of a status effect. We consider the components of job satisfaction through which the status effect operates. We find that the status effect operates through satisfaction with co-workers, operating procedures, pay and supervision.     

Trading away what kind of jobs? Globalization,trade and tasks in the US economy

Economists and other social scientists are calling for a reassessment of the impact of international trade on labor markets in developed and developing countries. Classical models of globalization and trade, based upon the international exchange of finished goods, fail to capture the fragmentation of much commodity production and the geographical separation of individual production tasks. This fragmentation, captured in the growing volume of intra-industry trade, prompts investigation of the effects of trade within, rather than between, sectors of the economy. In this paper we examine the relationship between international trade and the task structure of US employment. We link disaggregate US trade data from 1972 to 2006, the NBER manufacturing database, the Decennial Census, and occupational and task data from the Dictionary of Occupational Titles. Within-industry shifts in task characteristics are linked to import competition and technological change. Our results suggest that trade has played a major role in the growth in relative demand for nonroutine tasks, particularly those requiring high levels of interpersonal interaction.     

Old,not yet rich? The impact of population aging on export upgrading in developing countries

Does population aging in developing countries, which undermines their traditional export advantages, prevent them upgrading export? Using the method of instrument variables, this paper empirically shows that population aging significantly and adversely affects export upgrading in developing countries. Moreover, the negative impact of population aging is mainly channeled through innovation and human capital. Furthermore, the negative impact of population aging on export upgrading is not present in developed countries and is decreasing in recent years of developing countries. This is possibly due to the inferior institutions and slow adoption of automation in developing countries. Lastly, this paper extends the analysis to a disaggregated level, where the results suggest that an aging country indeed exports less of the products with higher quality.     

The role of small enterprises in the household and national economy in Kenya: A significant contribution or a last resort?

Based on a nationwide survey, this article addresses the contribution of micro and small enterprises (MSEs) to employment, national income, and household income in Kenya. One-third of all working persons are employed in MSEs and the sector contributes 13% to national income. Despite their large contribution as a whole, returns to individual MSEs vary tremendously. Among those MSEs that represent the sole source of income for the household, 72% make less than the absolute poverty line in urban areas and none of the MSEs in rural areas make above the absolute poverty line. Comparing hourly MSE returns to average earnings in the private sector, the majority make below the average earnings while a minority make significantly higher earnings.     

Efficiency or equity? The effect of an exogenous agricultural commercial shock: Evidence from Manchuria in the 1930s

The adoption of high-value cash crops (HVCs) is considered an efficient way to improve farmers' productivity and welfare, although the systematic empirical evidence is limited. By exploiting an exogenous commercial shock for soybeans and microlevel rural survey data from Manchuria of China in the 1930s, where factor markets were relatively well functioning, this study investigates the influence of HVC cultivation on farmers' agricultural performance, welfare, and inequality both theoretically and empirically. We find that (i) larger farms devote a larger proportion of land to HVCs and that (ii) farmers who cultivate a larger proportion of HVCs have higher agricultural productivity, profit, net income, and expenditure. Furthermore, the adoption of HVCs lowers profit, income, and expenditure inequality by enhancing income from wages relative to land rents, which benefits households with less land.