Demystifying the Chinese Miracle
The Rise and Future of Relational Capitalism
By Wang Yongqin
Routledge – 2013 – 128 pages
The last three decades has witnessed miraculous economic growth of China. What has accounted for its miracle? What is the nature and future of the Chinese model? Is it unique?
This book presents an analytical framework to demystify China's economic growth miracle. The book suggests that interlinked and relational contracts between the agents (in particular, between the state and the business) can compensate for flawed markets to achieve high growth. This kind of relational capitalism is significant in the investment-based stage of development, when mobilization of resources to exploit the existing technologies is the key for growth.
The book presents a general theory of interlinked relational contract, the workhorse model of the book. The theory highlights that effective governance is a function of market extent and market completeness. The process of economic development and modernization can be looked at fruitfully from two perspectives: the markets and the institutions and their interactions. The book stresses the critical fit between the development stage and the governance for a country's economic transition and development and thus the idea of "appropriate institutions".
1 Introduction 1.1 Motivations and Questions 1.2 Contributions and Conclusions 1.3 Structure of the book 2 Interlinking Markets, Relational Contracts and Economic Transition 2.1 Introduction 2.2 Single-Market Relational Contract: Benchmark Case 2.3 Interlinking Markets and Relational Contract 2.4 Relational Contracts and Underlying Mechanism of Economic Transition: China versus Russia 2.5 Concluding Remarks 3 Markets, Contracts and Economic Growth 3.1 Introduction 3.2 Market Expansion Decision and Economic Growth 3.3 Capital Accumulation, Economic Growth and Market Expansion 3.4 Transaction Cost, Factor Complementarity and Growth: The Past and the Present 3.5 By way of Conclusion: Market Size, Division of Labor and Contractual Forms 4. Interlinked Contracts and Development: Where Do We Stand 4.1 Introduction 4.2 Contractual Structure in a Traditional Society 4.3 The Rationale and Advantages of Interlinked Contracts 4.4 Limitations of Interlinked Contracts 4.5 Concluding Remarks: Development and Dynamics of Interlinked Relational Contracts 5 Unraveling the Chinese Miracle:A Perspective of Interlinked Relational Contract 5.1 Introduction 5.2. Economic Development and Governance: An Analytical Framework 5.3 The Township and Village Enterprise as an Interlinked Contract 5.4 Reform in the Financial Sector Reconsidered 5.5 Reform of State-owned Enterprises Reconsidered 5.6 Concluding Remarks 6 The East Asian Development Model reconsideredwith Implications for China 6.1 Introduction 6.2 State and Economic Development: Industrial Policies as an Interlinked Relational Contract 6.3 How Industrial Policies Were Implemented 6.4 Law, Social Norm and Economic Development 6.5 Transition of East Asian Developmental Model 6.6 General Lessons from EADM 6.7 Lessons for Chinas Transition 7 Costs and Benefits of Relational Contracting in Chinas Transition 7.1 Introduction 7.2 Relational Society in China: A Historical Account 7.3 The Role of Relational Governance in Chinas Transition 7.4 The Role of Relational Governance in Transition: A Theoretical Summary 7.5 Economic Development and the Gradual Dismantling of Relational Governance 7.6 Concluding Remarks
Yongqin Wang is currently Associate Professor at the China Center for Economic Studies (CCES), Fudan University, and has held visiting position at Yale University (2008-2010). He received his Phd in Economics from Fudan University in 2004 and has also visited Queen’s University (Kingston, Canada) and IDEI, University of Toulouse 1 (Toulouse, France) as a visiting scholar. His main research interests include microeconomic theory, financial economics, development economics, and Chinese economy.