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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.

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Also Published In

The Oxford Companion to the Economics of China
Oxford University Press

More About This Work

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Published Here
April 15, 2019


Keywords: economic development, Chinese economy, economic change, economic transition, Russia, neoclassical economics, economic policies, Washington Consensus

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