2014 Chapters (Layout Features)

Transition to a Market Economy: Explaining the Successes and Failures

Stiglitz, Joseph E.

This chapter examines China’s successful transition to a market economy, and compares its performance to that of Russia. Russia followed, though imperfectly, the Washington Consensus ‘shock therapy’ policies; China an alternative course. The chapter argues that unlike Russia, Chinese leaders understood that transition required institutional innovations. Unencumbered by the dictates of neoclassical economics, they were able to develop pragmatic solutions that provided the basis of China’s three decades of unprecedented growth.