Institutional Change and Economic Development in East-Central Europe and China: Contrasts in the Light of the ‘East Asian Model’

  • Dic Lo
  • Hugo Radice
Part of the International Political Economy Series book series (IPES)


The contrast in institutional transformation between Central and Eastern Europe (CEE) and the former Soviet Union (FSU) on the one hand, and China on the other, is often characterized as one of shock therapy versus gradualism, although recently Sachs and Woo (1994) have argued that ‘structural’ differences make comparisons between the two cases problematic. This is part of a more general debate among economists concerning the pace and irreversibility of change towards a ‘market economy’. But at the same time, the predominant neoclassical approach of most economic analysts allows the divergent experience of the CEE/FSU and China to support a common standpoint on the desirability in particular of ownership change. In this view, the continuing poor macro-economic performance of the CEE/FSU is at least in part due to the failure to carry through the shock therapy logic fully, for example in allowing the continuation of soft budget constraints for large state-owned enterprises (SOEs) and ex-SOEs; while the good performance of the Chinese economy is partly because despite the continued existence of a soft-budgeted state sector, the private and local-state firms (township and village enterprises — TVEs) have been ‘free’ to respond to market forces.


Corporate Governance Institutional Change Foreign Capital Former Soviet Union Allocative Efficiency 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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© Palgrave Macmillan, a division of Macmillan Publishers Limited 1998

Authors and Affiliations

  • Dic Lo
  • Hugo Radice

There are no affiliations available

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