Topic 17 - Central and Local in Chinese Economic System Flashcards
How was the RDA system centralised and decentralised at the same time?
It was highly centralized in terms of personnel appointment but highly decentralized in terms of delegation of economic policies and resource allocation
Why were local officials so obsessed with the performance of the region in comparison to other regions?
The readiness of the Chinese central government to reward and punish local officials on the basis of their economic performance motivates them to promote the local economy (Li & Zhou, 2005)
Who said that government officials were obsessed with their ranking?
Li & Zhou, 2005
What about China’s economic structure allowed for the promotion and demotion of officials?
The M-Form structure
How did the criteria for promotion of provincial leaders change in the 1980s?
3 new criteria were added:
1) Officials had to be young
2) Officials had to have good education
3) Officials had to demonstrate expertise in administrative management
Why might local officials have been so attached to and obsessed with their regional performance?
It was for promotions but also because there was virtually no labour market for these officials outside of the political structure
What conditions are necessary for the RDA paradigm to work?
1) Personnel control is centralised in the hands of the central government
2) The M-form structure of the Chinese economy makes each provincial leader’s performance individually distinguishable
3) Officials move upwards in the internal political labour market and there is virtually no outside opportunity
What happened to Soviet RDA?
It failed partly because political reform went too quickly. The centre no longer had the ability to reward or punish regional leaders and this led to decentralised corruption.
What was Cai and Treisman’s (2006) argument about RDA in China?
Cai and Treisman (2006) argued that it was political centralisation rather than economic decentralisation that was essential to China’s growth
Why did Cai and Treisman argue what they did about RDA?
1) China’s administration was partially recentralised in the 1990s and the economy performed well
2) Fiscal decentralisation worsened the bad debts of the state banking sector
3) Decentralisation did allow for regional experimentation but provincial leaders did not have complete discretion over how to experiment. Experiments only gained significance when sponsored by central leaders.
What was the race to the bottom and how is it linked to the Great Leap Famine?
The race to the bottom describes the competition between regional leaders in the RDA structure. It is linked to the Great Leap Famine in relation to the overcommitment of grain from some regions.
What are the advantages of RDA?
- Competition
- Easy comparison with M-form
- Economy-wide coordination failures less likely when there are external shocks
What are the disadvantages of RDA?
- Competition (race to the bottom - grain & pollution)
- Lack of an independent judiciary
- Corruption