Organizer: J. Ray Bowen II, University of Missouri, St. Louis
Chair: Margaret Maurer-Fazio, Bates College
Discussant: Thomas G. Rawski, University of Pittsburgh
This panel presents a sampling from a rapidly growing body of economic analysis of the structural change, economic integration, and development in the Chinese economy.
Close inspection of China's growth performance overall and in specific sectors during the 1980s and early 1990s reveals a startling picture of economic growth and change. Observers generally agree that by historical and cross-country comparison, China's growth performance is remarkable, if not unprecedented. International attention is now generally riveted on what China's growth portends for the future of all economies. Yet there remains much to be learned about the exact nature of China's economic performance.
This panel will present examples of how students of China's economy continue to examine and debate the character and depth of China's changes. Works include studies of: (1) the sources of the township-village enterprise sector's leadership in exports; (2) the extent of development of labor markets seen through wage differentials by gender; (3) the possibility that the co-growth of state and non-state sectors under reform policy signifies the arrival of a "big-push" industrialization; and, (4) whether certain features of China's economy attenuate its ability to achieve institutional changes that have historically accompanied development elsewhere.
The studies jointly suggest that China's process of economic change and market integration proceeds accompanied by unprecedented economic boom, but at the same time point to the substantial and serious challenges China continues to face in its long term development.
The Export Performance of Township-Village Enterprises: An Examination of
Regional and Industrial Variations
Mita Aggarwal, Columbia University
The tremendous growth of China's township-village enterprises (TVEs) during the 1980s transformed the rural sector and altered the course of urban reform. Policies aimed at promoting exports and opening up the countryside have resulted in TVEs contributing a disproportionately larger and more significant share of national export value as compared to their size by other measures. Indeed, one of the concerns with the reform process has been the existence of uneven development and its linkages to the internationalization of the economy.
This paper studies structural reasons for the TVEs' exceptional performance, and how the TVE activity affects other sectors of China's economy. Relationships between several measures of TVE export performance and regional and industry variations are analyzed using provincial level data. The effects of enterprise scale and export autonomy and their importance to trade are also examined. Policy implications for the role of small and medium enterprises in Chinese economic growth are considered in comparison to experiences of other developing countries.
Co-Growth of State and Non-State Sectors in China: A Case of Industrialization
Big Push
Wei Li, Duke University
China's reforms have been remarkably successful in generating economic growth. The main engine of this growth has been industrial expansion at a rate more than fifty percent higher than the overall rate of growth during 1978-94. This has not escaped the notice of students of transition economics, and has stimulated a spirited debate regarding the merits of China's incremental, pragmatic approach to reform as it contrasts to the merits of the conventionally-favored rapid privatization approach.
The fact that much of China's industrial growth has been attributed to the emergence of non-state firms conforms to the widely-held view that the re-allocation of resources from state to non-state enterprises should improve efficiency. Yet, close examination of the rate of growth of the state sector in China reveals that it too is very high, especially in consideration of the fact that it was already substantially developed at the inception of the reforms.
This paper examines the empirical evidence of the sources of the positive correlation between state and non-state enterprise growth. The evidence highlights the importance of external economies among the two sectors and the role of the reforms in promoting this inter-sectoral feedback. The Chinese growth experience is shown to manifest features similar to those of a "big push" industrialization familiar from the development experiences of other countries. Thereby, China's approach to reform can be credited with encouraging and coordinating China's remarkable growth and essential investments in new technology across sectors.
Structural Change in China's Labor Markets: Evidence from the Gender-Wage Gap
1988-1994
Margaret Maurer-Fazio, Bates College
China's reforms of the 1980s led to increased demands for reform of labor rules, the marketization of labor, and to significant changes in related attitudes and behaviors. An understanding of wage determination and its structural causes is critical to assessment of the efficiency of economic allocation in China.
This study explores the effect of reforms on a key aspect of labor, the size of the male-female wage differential. Previous survey studies have variously placed female wages in urban China between 59 and 84 percent of male earnings. Some have suggested that the overall gap between male and female incomes is narrowest for the youngest cohorts, while other studies show a rising gender gap among younger age cohorts and in the non-state sector most favored by reforms.
This study seeks to refine understanding of the sources of male-female wage differentials through use of comprehensive data for a range of economic sectors that employ more than 100 million workers, all in formal employment. Questions systematically addressed include (1) What is the size of gender wage differentials for staff and workers in the state sector, and by branch of activity? (2) Is there evidence of expansion or contraction of the gender gap during the period covered? (3) Do gender wage differentials vary by region? (4) Is the gender gap in state enterprises different from that observed in urban collective enterprises, joint ventures, and corporate enterprises? and (5) To what extent are observed wage differences within an industry linked with gender differentials in educational accomplishments?
The Impact of Mercantilism on the Evolution of Firms and Government Institutions:
A Lesson for China or an Opportunity Lost?
J. Ray Bowen II, University of Missouri, St. Louis
International attention is riveted on China's remarkable rate of growth. Yet by contrast, even now it remains to be demonstrated that China will become industrially developed in the broad sense, as defined either by gross measures or the details of institutions. The contrast is especially intriguing in an historical and comparative light: is there a structural reason for China's economy having remained essentially pre-modern more than two centuries after exposure to western industrial economies, while Taiwan, South Korea, Singapore and Japan have eventually undergone industrial revolutions?
This study provides a precise explanation for China's remarkable long-term non-development-past and recent growth notwithstanding-through examination of the co-evolution of government behavior and economic institutions. This study employs the insights from the literature of institutional economics that the pressure of mercantilist competition brought about specific institutional changes that in turn led to modernization in post-Renaissance Europe. Succinctly put, a sea change in government attitude toward private rights is compelled by an external bonding threat. While the process has begun in the NICs of East Asia, including states that share China's cultural legacy, this study argues that China's size has insulated it from these pressures.
The findings of this study highlight a precise institutional evolutionary explanation for the role of international trade in the process of modernization, and apply this to raise a serious question about China's ability to substantively reform its economy in the long run.