Differences of economic reform path-经济改革路径的差异
04-14, 2014
Differences of economic reform path
经济改革路径的差异
经济改革路径的差异
Introduction 引言
Last century has witnessed economic growth and transitional economies toward to more free market economy, especially, the years of 1990s. Most economists thought the reform or transitional road would continue in future economic development. More and more government interferences has clearly adopted into the national economy (Naqvi, 1995). Such as price regulation, foreign exchange rationing, trade policy, financial market, state or non-state enterprises are usual evidence for last decades.
过去的一个世纪见证了经济增长和转型经济向更自由的市场经济，特别是上世纪90年代。大多数经济学家认为改革或转型的道路将继续在未来的经济发展。越来越多的政府干预已明确纳入国民经济（纳克维，1995）。如价格管制，外汇配给，贸易政策，金融市场，国家和非国有企业在过去的几十年里。
However, different reform approaches represented different performance outcomes while considering different governments or countries (Sachs, 1996). China and Vietnam, adopted one gradualist approach to achieve national economic development since 1970s, has experienced extensive economic growth. On the contrary, the experience of most socialist economies in Eastern Europe and the former USSR, adopted one big bang approach, was proved to be failure for improving economic development since significant decline in output and slow growth the transitional period. Notably, the economies for example Russia just reached its economic recovery in recent years after 2000 (Sachs & Woo, 1994).
然而，不同的改革方式代表了不同性能的结果，同时考虑到不同的政府或国家（萨克斯，1996）。中国和越南，自20世纪70年代以来采用一个渐进的方式实现了国民经济的发展，经历了粗放型经济增长。相反，东欧和前苏联的社会主义经济的经验，采取一个大爆炸的方法被证明是失败的，经济发展的显着下降，产量增长缓慢。值得注意的是，例如俄罗斯经济恢复在2000年最近几年后，2000（Sachs &宇，1994）。
Then, why different performance outcomes happened? What are the differences exactly? In this essay, it focused on these questions and intended to illuminate potential differences involved in the transition path between China and Vietnam vs. Eastern Europe and the former USSR. Firstly, the essay introduced the background of economic reform during the 1990s happened in these countries. Secondly, it reviewed the theory of political economy of transition reforms and compared two major reform approaches including gradualism and big bang. Thirdly, the essay analyzed right differences about the reform issues of these two paths used by China and Vietnam vs. Eastern Europe and the former USSR. Ultimately, it hoped to provide a clear understanding about the political economic reform or transition views occurred over last decades.#p#分页标题#e#
那么，为什么会有不同的表现结果发生？到底有什么区别呢？在这篇文章中，重点研究这些问题，旨在说明潜在的差异，中国和越南与东欧和前苏联之间的过渡路径。首先，本文介绍了经济改革的背景下，在上世纪90年代这些国家的情况。其次，综述了过渡的改革和比较两大改革的方法包括渐进性和政治经济大爆炸理论。第三，本文分析了这两种路径的中国和越南与东欧和前苏联的改革问题，使用权的差异。最终，它希望提供关于政治经济改革或转型的意见，在过去的几十年里一个清晰的认识。
Background of economic reform or transition during 1980-90s 80至90年代的经济改革和转型的背景
During last two decades of the 20th century, economic reforms were extensively focused on the transition from one planned economy to a free market economy according to modern economic history. Plenty of literatures have deeply researched such economic transitions (World Bank, 2002). All of economic reforms are based on various leading factors and current economic conditions. Once the economy is proved to be slow growth, turbulent, inefficiency and ineffectiveness, it suggests strong political economic reform. Then, a series of reform measures or strategies would be released and taken part into practices. Significantly, there were two major economic reform practices have been identified according to their different performance outcomes.
China and Vietnam economic reform 中国和越南的经济改革
Chinaand Vietnam economic reform has adopted one relative unique approach later called gradualist reform approach by most economists. These two counties had to initiate economic reform based on the certain pressure of economic destitution. The government officers from both China and Vietnam believed that their countries must find out a new war to boost national economy and maintain political stability under the absolute power of the Communist party.
Chinaprimarily intended to build one Soviet-style of socialist economy after winning the liberate war in 1949, while Vietnam started to construct its socialist economy at the year of 1954 for the North. However, practices were proved to an absolute failures rather than successes during over 20 years pre-reform periods in both countries (Adam & Stefan, 1996; Larus, 2005).
Chinawrongly defined its development approach on the political power control and experienced tough period of “institutional revolution”. During this campaign, the national economy and culture were extensively destroyed and frustrated. Till December 1978, the Third plenary session of the 11th central committee, decided to launch the Chinese economic reform under the core leadership of Deng Xiaoping of Communist Party. The economic reform transferred the economic development way from Soviet-style of planned economy to free market economy (Naughton, 1994). According to the saying of Deng Xiaoping, “No matter it is a white cat or black cat, as long as it can catch mouse, it is a good cat”, it encouraged all of Chinese to focus working endeavors on economic development rather than political and class battle (Zhao, 1993). Over years of development, the Chinese economic reform has achieved unprecedented success to improve the overall economic growth.#p#分页标题#e#
Similarly, the economic reform was initiated since complete failure from Soviet-style of economic development pathway till 1986. During the pre-reform periods, Vietnam followed the leading of Soviet style economy and extensively focused on dealing with domestic political problems between North and South Vietnam, which prolonged to 1975. After reunification, Vietnam transferred its economic emphasized into reconstruction and socio-economic development. About eight years later from Chinese economic reform initiation, the sixth congress of Community Party of Vietnam officially adopted economic reform, known as “Doimoi”, which aimed to achieve transition from central planned economy to free market economy (World Bank, 2003). Though, most economists observed that the way of Vietnam economic reform is strike similar with Chinese economic reform, it helps to achieve rapid growth of domestic economy and successfully established its unique market economy in Vietnam.
Transition in Eastern Europe and the former USSR 东欧和前苏联转型
Transition involved in Eastern Europe and the former USSR resorted to the approach of big bang, according to economic reform theory. Though some communist governments has realized the significance of economic growth followed by the success of China and Vietnam reforms, many timid measures had been adopted to economic development in the late of 1970s and early years of 1980s, the performances ultimately did not really cause influences to boost economic development in former Soviet Union (Li & Wang, 2006). The fact proved that if any countries involved in former Soviet Union wanted to stubbornly continue the old socialist policy, the economy would be worsen than before (Johnson & Brooks, 1983). Thus, Along with the disorganization of Soviet Union in 1990, all of countries must find out their own development pathways.
Basically, they all choose to change the socialist community to capitalist society and develop democracies in both economic and political reforms. However, the practices of reforms for these countries are not always uneven. They experienced strong slowdown and declines toward to economic development at the beginning of transitions. Just regarding for the economic reform, these countries finally decided to achieve ordinary market economies from primary Soviet-style planned economy. There were just three countries which successfully transformed into market economy including Belarus, Turkmenistan and Uzbekistan (Woo, et al., 1996). In all of others, the economy did not really show success of market economy reform.
Notably, the experience of Russia strongly indicated the difficulties in the process of transition facing by these Eastern European countries. Maybe, it closely related with its chose reform approach. At the beginning of transition, Russia underwent dangerous economic decline with extremely high inflation rate, low productivity, turbulent economic condition, unexpected GDP sharp and continual decline in GDP. It is only in recent years after 2000, the economy in Russia started to recover and show increasing GDP growth (Li & Wang, 2006).#p#分页标题#e#
Theory of political economy of transition reforms 过渡的改革的政治经济理论
Since the increasing significance of political regulations or constraints involved in economic transition or reform, it directly urged the development of political economy of transition reform theory (Roland, 2000). The theory of political economy of transition is developed as a fundamental model recently in order to integrate political force or process into economic problem-solving process. There are two categories according to literature researches including normative and positive political economy of reforms (Roland, 2002). Generally speaking, the political economic theory widely used in all fields of economies such as trade, policies, financial economics, labor productivity, market regulations and others.
Particularly, the political economy theory can located the hottest topics of controversies about the economic transition from Soviet-style planned economy to capitalism free market economy. Accordingly, it can well explain the transition process and difference performance outcomes involved in the China and Vietnam economic reform, and Eastern Europe and former USSR. For example, in the reforms of Czech Republic and Russia, mass privatization for state assets was adopted by political force to its citizens and workers (Munich, et al., 1998). It is said that the political economy transition theory could be used to justify the process of reforms in order to overcome related political constraints.
Moreover, the political economic transition theory is able to analyze the different performance outcomes from economic reform (Hellman & Shankerman, 2000). Accordingly, it explained why Russia and most countries of former Soviet Union achieved little economic recovery from their economic transition that the force of state capture and rent-seeking was hence much more deeply in these former Soviet Union countries than other central European countries. Meanwhile, Roland and Verdier (1999) suggested that there was no any incentive of law enforments, complicance, and property rights from political regulation force in these countries of former Soviet Union. As a result, the reform performances in these countries would be less effective.
What is better: Gradualism vs. Big Bang? 更好的是：渐进主义与大爆炸？
There is still a long-lasting controversy between the merits of gradualism reform and big bang approach based on the success of China’s economic reform (Brezis & Schnytzer, 2003). The big bang transition approach is well appraised by most Western economists, and includes stabilization, price liberalization and privatization of economy. Specially, this approach proposes that all of reform measures or strategies should be adopted simultaneously or in a short sequence later (Blanchard, et al., 1991). For example, countries of Eastern Europe and former USSR largely resorted to big bang approach to finish economic reform and achieve growth.#p#分页标题#e#
Primarily, the big bang approach was an alternative version of the Washington Consensus articulated by John Williamson in 1990, which issued critical principles for well functioning market economy and encouraged extensive market-oriented reforms in developing countries such as Latin America and South Africa. As a result, it caused a smaller role of governments in market and improves the development of privatization and deregulation in market economy. Williamson suggested the Consensus is best suitable to developing countries since they strongly need economic growth and development in future. Subsequently, the ideas of Consensus continually addressed in the 1991 world development report (World Bank, 1992). This report extensively focused on necessity of achieving balance of governments and market in order to economic development rather than choose one of them. Meanwhile, it further suggested more specific reforms should be adopted in developing countries in order to reduce world poverty and reach economic growth. As a result, it generally is a concept of framework and approach for economic reforms during 1990s such as Eastern Europe and the former Soviet Union.
According to Perkins (2002), the outputs of big bang economic reforms are expected as a “J-curve” effect on economic growth. For example, the GDP growth would firstly experienced a short decline and then followed by strong economic recovery in relative short time (Brezis & Schnytzer, 2003). In Russia, the economy reform is the best case to explain this approach. At the beginning of reform, Russia encountered sharp economic decline with GDP. Just in recent year, the economy in Russia has gained its prolonged recovery. However, from the reform practices of Russia, the economy also trapped into extreme high inflation rate and serious deterioration of other social indicators such as unemployment rate, currency and labour productivity.
While in China and Vietnam reform they adopted one gradualism approach. It is an evolutional approach based on the radical needs of reforms. Litwack and Qian (1998) argued that the gradualism involved in political economic reform theory is aimed to identify the stage of reforms and provide demonstrated successes basis for next reform measures. It is a piecemeal, partial reform, incremental and often experimental trials for economic reform without large-scale privailation (Wu, 2005). For example, in China, the measures of decollectivization provided necessary support for later reforms. In Vietnam also followed same reform approach with China and achieved remarkable GDP growth, export expansion and poverty reduction since the 1989 reforms strategies.
However, the gradualism approach is not well grounded by certain economic theory or followed pre-determined blueprint. On the contrary, some economists believed the approach is fatally flawed and self-defeating to economy (Shirk, 1993; Larus, 2005). They are generally willing to regard the big bang approach as a perfect and feasible economic transition theory. Thus, based on the successful experience of gradualism approach, it has created various challenges to conventional economic theory (Chow, 1997). It is said the success of Chinese economic reform has confused many Western economists (Nolan, 1995).#p#分页标题#e#
Therefore, it is necessary to issue the question about what is better for economic reform. It is more or less difficult to identify the exact merits of these two approaches since current theories are unable to provide evidence to long prospects of each reform approach. The economic reform is a large scale of shifts involved in constitutional rules, market policies, enterprise relationship, trade policies and other aspects (Sachs, et al., 1999). According to Womack(2006), the advantages and disadvantages of big bang and gradualism approach are largely depended on which political regime charged with the implementation of reform. Thus, it suggested that reform approach should be decided according to national conditions and economic environments. It is successful in China for gradualism approach, but it is not certainly successful in Japan or Korea.
Others Differences of economic reform 其他经济改革差异
Based on the above argument, it is clear that two different types of reform approaches were adopted and become the most different involvements between China and Vietnam vs. Eastern Europe and former USSR. Otherwise, there were some other differences could be examined based on following perspectives:
(1) Factors leading reform
Basically, the factors leading the economic reform or transition maybe different from each unique circumstance. China and Vietnam are different from other countries involved in Soviet Union, which are relatively independent from the union. But they were not separate from the control or they were can not gain development without aids of Soviet Union during pre-reform periods. But efforts to build Soviet-style economy in China and Vietnam were proved to be failure rather than success. Meanwhile, China was impoverished since the Great Leap Forward campaign and ten years’ Cultural Revolution. As a result, the agriculture almost stopped and industrial productivity continued low and the standards of people’s life showed little updates within 20 years (Larus, 2005). In Vietnam, the causes of collectivization of land, nationalization of private ownership and trading sectors have almost ruined overall national economy. It directly caused the Vietnam became the poorest country in the world with per capita GDP at $ 203 until 1986 (World Bank, 2003). As the results of stagnant economic development in nearly 20 years, the frustrating economic development strongly required the people in both China and Vietnam make some profound changes under powerful governmental leadership.
However, for the countries of Eastern Europe and former USSR, they were because of the collapse of Soviet Union in 1990 and need to find out another way to development. Many members were urged to transform their economic style to market economy such as Russia, Poland and Czech Republic (Blanchard, et al., 1991). Their paramount leader would not exist forever. In other word, these countries must find out new leaders or independently develop their economy without other helps. Or otherwise, economic reform was urged by some extent of political force from capitalism.#p#分页标题#e#
(2) Development conditions at the beginning of reform
At the beginning of economic reform, it represented different development conditions toward to China and Vietnam vs. Eastern Europe and former USSR. Basically, China and Vietnam were agricultural based countries, which accounted for large portion of GDP and population. About 80% of population lived in rural areas in both China and Vietnam. They have similar production of cereal yield of per hectare about 2802 kilograms for China and 2715 kilograms for Vietnam. However, the GDP contribution for agriculture is very important. For Vietnam, the agricultural sector dominated largest portion of GDP with 38.1% (Kumssa, 1997). In China, the industrial sector contributed to about 48.2% in GDP, which indicated that China was still an agricultural based country (Wu, 2005). The economic reform should aim to achieve industrialization of economy from agricultural economy in both China and Vietnam.
While, countries from Eastern Europe and former USSR were well industrial developed and the industrial sector accounted for large portion of GDP. The economic reform was mainly aimed to finish the transformation from Soviet-style economy to market economy based on the world development report 1991 from World Bank. Meanwhile, the countries also conducted their political reform from socialist to capitalism governments (Li & Wang, 2006). For example, Russia is a classical example to illuminate the different development condition before reform. It established new capitalism society and followed one big bang approach to finish economic reform. Therefore, the development conditions for reform were hence different among China and Vietnam vs. Eastern Europe and former of USSR.
(3) Different central government
Through analysis of the success reform from China and Vietnam, the role of governments is more powerful to manage the gradual reform than other countries such as Eastern European countries and former USSR. Blanchard and Shleifer (2001) suggested that if gradual reform happened in Russia or other Eastern European countries, it would not be success since these countries lack one powerful political centralization. They are not same with Chinese and Vietnamese strong central governments. In these countries, the government is controlled by multi-parties. Instead, in China and Vietnam, the government is dominated by one Communist party with powerful leadership. A strong central government enables to alleviate political pressure and provides stable political environment for economic development.
Conclusion 结论
During the 1980s-1990s turbulent economic development, the world economy experienced significant reforms or transitions. Particularly, the transition from Soviet-style planned economy to market economy has extensively studied in both academic and practical researches. Two types of economic reforms have been identified including China and Vietnam vs. Eastern Europe and former USSR. China and Vietnam adopted one gradual reform and Eastern Europe and former USSR followed the big bang approach. Exactly, different performance outcomes were perceived and represented with different economic growth.#p#分页标题#e#
In this essay, it analyzed the background of China and Vietnam vs. Eastern Europe and former USSR. Meanwhile, the essay introduced the theory of political economic transition and discussed the approaches of gradualism and big bang involved in these economic transitions. It suggested that the reform approach is the largest difference and basic difference among the China and Vietnam vs. Eastern Europe and former USSR. In addition, the essay also examined other differences involved in the topics such as factors leading reform, development conditions for reform and different central governmental role in the process of implementation. All of these differences directly caused different performance outcomes for economic reforms toward to China and Vietnam vs. Eastern Europe and former USSR.
References 参考文献
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