Introduction In States vs. Markets, Herman Schwartz presents two economic development strategies that have been employed by late industrial developers in order to either take advantage of existing comparative advantages or facilitate rapid industrial growth through state intervention and provision in order to gain a competitive foothold in world markets. Schwartz demonstrates how China was able to employ elements of these development strategies to generate capital from an abundant rural labour supply in order to pursue industrial development and attract foreign investment through economic reform starting in the late 1970's. This paper will illustrate the theoretical framework of Ricardian and Kaldorian Development strategies and outline historical details of China's economic reforms since the late 1970's. Schwartz's framework will then be applied to examine how China employed Ricardian elements of comparative advantages to, initially, shift towards Kaldorian development strategies to overcome Gerschenkronian collective action problems and promote industrial growth and foreign investment. This essay will examine Schwartz's assessment that China faces Kaldorian collective action problems typical of late developers in order to illustrate the China's present and future economic development challenges. Section 1: Theoretical framework Ricardian Development Strategies According to Schwartz (2010), successful implementation of Ricardian development strategies involves using existing comparative advantages such as agricultural outputs or other primary product exports to drive economic development. This can also extend to low-value industrial activities such as textiles and garments (59-60). These strategies rely on the resolution... ... middle of paper ... ...nt. China's Great Economic Transformation (507-568). New York: Cambridge University Press. Coates, B., Horton, D., & McNamee, L. (2014, January 1). CHINA: PROSPECTS FOR EXPORT-DRIVEN GROWTH. Economic Roundup Issue 4. Department of the Treasury (Australia). http://www.treasury.gov.au/PublicationsAndMedia/Publications/2012/Economic-Roundup-Issue-4/HTML/article4 Heiduk, G., & McCaleb, A. (2012). China’s competitiveness in international trade: The impact of innovation and human capital – Review of empirical literature. WORLD ECONOMY RESEARCH INSTITUTE, 310. Krugman, P. (2013, July 18). Hitting China's Wall. The New York Times. Wignaraja, G. (2012) . Do Exporting Firms in the People’s Republic of China Innovate? ADBI Working Paper 365. Tokyo: Asian Development Bank Institute. Available: http://www.adbi.org/working-paper/2012/07/03/5135.exporting.firm.prc.innovate
Besides the modernization of agricultural, in the Deng era, there was a shift from central planning and reliance on heavy industry to consumer-oriented industries and reliance on foreign trade and investment. Some of the new factories were purchased from other countries; some of them were built with local resources. Capitalist enterprise was ac...
Zhang, Z.Y. (1995) China’s Foreign Trade Reform and Export Performance, Singapore: National University of Singapore.
International companies do not report their data globally on a macro level, which doesn’t allow competitors to benchmark sustainable progress. Therefore, TJD will analyze the strategic framework of the top three export countries and identify firms that have had success. Factors such as political, cultural, economic, and financial components will be assessed to determine competitive advantage.
Weiss, J. (2005). Export Growth and Industrial Policy:Lessons from the East Asian Miracle experience. ADB Institute Discussion Paper .
Finally, the 21st century defines a major devolution of the communist ideology as a mere symbol in the extreme forms of capitalist enterprise defined under the guise of “state power.” Mao had a negative impact on the Chinese economy by giving the state too much power to make decisions, which ultimately conform to neo-liberal economic ideologies that exploit the Chinese proletariat. Much like the great Leap Forward killed 45 million workers in the late 1950s, so does the current mode of economic development in an increasingly stratified class divisions centered in urban
The purpose of this proposal is to explore the potential challenges involved in expanding business activities in China. Of specific concerns are (1) the need to identify expatriates; (2) recruit local talent to staff the business units; (3) develop those employed in the expansion project; and (4) identify and address cross-culture issues that will inevitably emerge and determine the most efficient and effective strategies for addressing the deployment of expatriates and local talent. In attempting to respond to these challenges substantial research was done, providing guidance, which can be considered in the expansion efforts.
To support the counterargument that China is not an economic threat to Asian stability I will demonstrate how China is experiencing the same economic prosperity and drawbacks as any other Asian state. Case in point, due to surging energy prices, there are increased transportation costs for moving goods from one place to another and the difficulties of a scattered supply chain are encouraging some Chinese firms that had previously outsourced components to Southeast Asia to relocate their associated research-and-development and operational activities within China to other Asian states. Therefore, processing-related imports have declined from over 40 percent of China’s total impor...
Yuqing Xing(2009), The Global Economic Recession and Challenges to China’s Export-led Growth Strategy, Conference on Global Economic Crisis: Impact and Implications for Industrial Restructuring in Asia
China’s economy has been changed by continual influences of economic reform. Before 1949, China was a traditional society with a traditional household-based economy. To illustrate, 90 percent of the population living in China lived in rural areas and depended on agriculture. However, “China’s new leaders turned their backs on China’s traditional household-based economy, and set out to develop a massive socialist industrial complex though direct governments control” (Wei & Rowley, 2009).China shaped its economy from socialism for 30 years until it became associated with major shortcomings. As a result, China launched economic reform which transformed China’s economy from a “Soviet-style centrally planned economy to a more market-oriented economy, but still within a rigid political framework of Communist Party control “(Wei & Rowley, 2009).
Starting with coastal cities designated “Special Economic Zones”, Deng gradually introduced aspects of a capitalist economy to the rest of China. He lessened government’s role in planning and managing the national economy in three main ways: decollectivizing agriculture, promoting Forei...
The impact of globalisation on the Chinese economy can be seen through the increase in economic performance. Over the last two decades, the Chinese economy has experienced significant economic growth due to globalisation. Globalisation is responsible for reducing the barriers to trade and increasing the integration between different countries and economies. The reduction of trade barriers as well as the increased integration between different countries and economies resulted in an increase in foreign investment and international trading which leads to economic growth. China has experienced significant increases in international trading and investment flows. This is supported by the world bank which states that in 2010, China contributed 13.6% to global growth and was responsible for approximately 9.4% of W...
In the case of China, the cause of a robust economy might not match, or even be synonymous with, the causes of political and social change; especially since the effects have not yet reached their full potential. However, there is some contrasts
Palley, T. I. (2006). External contradictions of the Chinese Development Model: export-led growth and the dangers of global economic contraction. Journal of contemporary China, 15(46), 69-88.
The economic progress of the countries of East Asia has been simply amazing, and many look to keep growing. Part of that economic growth has been at the cost of political progress, this even applies to the democratic states. Unfortunately, worker rights have been ignored in order to increase productivity. Governments are heavily invested financial in the different sectors, such as the SOEs of China or the chaebols of South Korea. Power is largely consolidated, and that allows the governments to be invested into these corporations. Overall, economic progress is the product of a sacrificed political progress.
GE, W. (1999). Special Economic Zones and the Opening of the Chinese Economy: Some Lessons for Economic Liberalization. World Development Vol. 27, No. 7, , 1267-1285.