Saturday, 24 March 2007

China and "New Development Economics"

Abhijit Banerjee posts on the future of development economics. This is an excellent article for anyone interested in Development Economics, more specifically the issue of "property rights".

The China quotes have been extracted (from the Boston Review):

Inside the Machine: Toward a new development economics

On the topic of WHY foreign direct investment in China is so high:

Is it all a matter of luck? Perhaps people are investing in China because everyone else is. Or is it something deeper? After all, despite being run by a party that calls itself communist, China offers a pro-business environment, security of property, and a docile labor force. Is this what investors are looking for? Or is it China’s ability to produce a seemingly endless supply of competent entrepreneurs who run China’s industry (including most of what foreigners nominally run)? Or should we entertain an altogether more daring possibility: that China’s is a healthy and relatively well-educated labor force, tolerant of the inequalities that markets produce because it has known equality—the accidental gift of 30 years of communism?

The truth is that the Chinese machine has so many potential drivers that it is anybody’s guess why it runs. Moreover, no one really knows why all the forces that should have pushed China the other way—a corrupt and opaque system of governance, a decrepit banking system, dwindling natural resources—have not done more damage. But, then, explaining what happens in a country by examining it in isolation is always an unfair challenge. It is easier and also more useful to look for patterns that hold across a large number of countries.

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