“How China Escaped the Poverty Trap” (New Books in Economics, 41 min listen)
Conventional economic development theory gets stuck in circular reasoning: good institutions generate economic development, but economic development is necessary to generate good institutions. In this podcast, Dr Yuen Yuen Ang from the University of Michigan takes an alternative systems approach, finding that countries that take advantage of their weaknesses and deploy ‘directed improvisation’ are the ones that develop. She uses China as a template in her new book revealing how Chinese leader Deng Xiaoping introduced democratising reforms in the 1980s. These included the delegation of powers to local provinces, accountability to economic targets, competition between provinces, and term limits. Whilst China still has no elections, it seems leaders grasped that autocracy isn’t sustainable long term. Today under President Xi Jinping, however, those reforms are being reversed, which could prove negative for China’s growth model.
Why does this matter? There’s a global trend towards strongman dictatorial politics that is partly inspired by China’s autocratic model. Yuen Ang’s work suggests that aspiring dictators are using the wrong Chinese leader as their template for economic success – it should be Deng not Xi.
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