China and India-A Note on the Influence of Hierarchy vs. Polyarchy on Economic Growth

By Keren, Michael | The European Journal of Comparative Economics, December 2009 | Go to article overview

China and India-A Note on the Influence of Hierarchy vs. Polyarchy on Economic Growth


Keren, Michael, The European Journal of Comparative Economics


1. Introduction

Communist countries seem to have an advantage in the early stages of development: they seem to be able to shake up their atrophied social structures and mobilize all resources and start upon a fast lane of growth. However, this strategy puts up inflexible structures and soon meets obstacles it cannot overcome. As a result the frontrunners are overtaken by the former laggards, the open market economies that were slower to take off. This, at least, was how post World War II European experience appeared, where Communist states have managed to sprint into development and growth faster than similarly placed democratic market economies: see Table 1. Yet all European communist economies arrived at a ceiling that stopped their growth and let the market economies overtake them and leave them far behind. (3) Most of them tried to change course and introduce more decentralization and flexibility into their economy without weakening their centralized political structures--but failed. They found it impossible to change their economic regime without ditching the communist party's centralized control. The question arises: can a communist economy leave its economic trajectory, open up and join the new fast lane, without giving up its political institutions? On the face of it the comparison of the paths taken by China and India would seem an ideal response to the riddle, with a resounding positive answer: Yes, the communist development model can be left at will at a convenient junction and transition to market-led growth may be costless. It seems that such a switch by a communist state is much easier than a policy change and an opening up in a democratic country, the largest one that exists, India. My aim in this note is to examine the role of system and policy in this story, where arguably the most important policy decision is the decision about system change. Clearly, the factors discussed below may add to existing explanations of the paths taken by these two countries, and cannot claim to comprehend the myriad of factors that have shaped their development.

China, as a communist state, the first to liberalize its economy without letting go of the tight political control, has become a role model for the few remaining socialist countries. Ever since the accession of Deng Xiaoping to China's leadership slow, hesitant yet consistent steps were taken to permit the entry of non-state entrepreneurship, and later even allowing the privatization of large chunks of its state-owned sector (Economist, 1996d, 1997a, 1997c, 2000; Boltho, 2009). The response of the economy has been remarkable, with an accelerated and enviable rate of growth. A comparison with India may lead to the idea that its success can be credited to the centralized control of the Communist Party of China that may have given it advantages that India lacks because of its democratic and federal structure.

India among the non-communist states is also an exception. It did not follow the development paths of the group of Asian states to its east. India's original growth model relied on import substitution in a closed economy and on an effort to preserve traditional sectors and technologies, while some of its neighbors, the Asian tigers, opened their economies and darted forward. (4) These countries, much smaller than the Indian elephant, managed to sprint ahead to arrive at relatively high levels of affluence during recent decades, while India was lagging behind. Its growth started late and has been accelerating only in the last few years. Was this due to policy choices or to system changes, namely the modification of economic institutions?

My aim in this paper is to examine this question from the point of view of an economic comparativist, and to look at the systemic and policy differences and similarities between these two giant countries and how they affected their development. To point out, in particular, those elements of the systemic institutions of India and China that shape the incentive of entrepreneurs, both inside and outside of the countries, and lead them to take very different choices in each country. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

China and India-A Note on the Influence of Hierarchy vs. Polyarchy on Economic Growth
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.