Growth and Development Evolutionary Perspectives

Author: Fei Jinhua (USA), Gustav Ranis
Publisher:
Publish Date: 2004-01-01
Features: This book will have more Chinese readers, including researchers, students, and policymakers, which I am very happy about. The main reason is that I believe the entire analytical framework of this book, as well as many of its specific analytical materials, are particularly suitable for China's development model and will be helpful to those interested in analyzing China's past, present, and future economy. From the overall analytical framework, it can be seen that this book differs from other specialized books or advanced textbooks on economic development research in that it adopts a dynamic evolutionary research method. For example, it focuses on analyzing how an agrarian society transitions to modern economic growth through a dual structure. Many economic growth and development theories are essentially ahistorical, assuming equilibrium and ignoring institutional dimensions, while institutional dimensions tend to produce symmetry in the behavior of different economic sectors. This book proposes an alternative theory, arguing that the market-clearing hypothesis may not be accurate in the short term, and even when there is a movement toward a neoclassical single-sector equilibrium, it may not be accurate in the long term, such as in the case of achieving modern economic growth. The book insists that the labor market in the agricultural sector of a dual economy operates very differently from that in the urban non-agricultural sector, and there are also significant differences in the behavior composition of the latter. My late friend, the co-author of this book, C. H. Fei Jinhua, has always been thinking about and researching the economic development of the transition economy. I dare not call myself an expert in Chinese economic issues, but I have visited China many times, taught at Peking University and Nankai University, participated in a project to revise economics curricula jointly launched by the U.S. National Academy of Sciences and the Chinese Ministry of Education, and have continuously tracked and studied literature on China's economic development over the past 25 years. If my understanding is correct, this fully supports my view that during the People's Commune period and after 1979 when the household responsibility system was implemented, the large agricultural sector ensured that every member had a "rice bowl" rather than adhering to the neoclassical rule of "wage equals marginal product." The productivity of agricultural production exceeding wages or income changes provided the impetus for China's development of rural enterprises, services, and urban non-agricultural activities. China is a prime example of a labor-surplus economy in transition and should not be treated as a homogeneous single-sector world. However, in this labor-surplus economy, agricultural, rural non-agricultural, urban commercial, and urban non-commercial activities interact with each other in very specific and dynamically changing ways over time. If we are able to fully analyze the operation of the entire system, it is necessary to clarify how the relationships between the agricultural sector that produces food, rural sideline activities, collective enterprises, private enterprises, rural enterprises (or mixed sectors), and state-owned enterprises change. It should also be emphasized that while this book focuses on economic growth, it also pays great attention to equality, poverty alleviation, and human development, which are also central to the entire analytical framework. Growth is a necessary condition for improving welfare distribution but not a sufficient one; it is determined by the nature of the growth path chosen—not its speed—and the book places high emphasis on the relationship between technological choices and technological change direction. Moreover, I believe it is one of the important issues that Chinese policymakers are concerned about today. Finally, including China among developing countries, this book particularly emphasizes that in an increasingly open world, economic development still relies primarily on its own strength. Although trade, foreign investment, technology imports, and human capital mobility are very helpful for economic development, they cannot replace sound domestic economic development policies and actions.