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39 Cards in this Set
- Front
- Back
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Pros and cons of decentralization
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Pros: local incentives, exploit local information, meet local needs, and experimentation
cons: inequity (lack of fairness) , nonuniform standards, breeds localism, makes coordination difficult |
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Pre reform fiscal system
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1. revenues from enterprises owned by different governments levels.
2. playing to provinces in elite political competition 3. no division of authority and responsibility b/w center and regions. |
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Pre 1994 fiscal reforms
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> significant decentralization ( revenues and expenditure in local hands.
>Negotiated arrangements with different provinces >Benefits >>highly incentivized local leader >>Market preserving federalism |
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Problems with decentralization
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>over investment due to revenue max
>Local protectionism > Inability to redistribute |
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1994 tax reforms
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> central tax collection
>more revenue for central gov. Focus on vlaue added tax |
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Challenges with new tax reforms
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Some provinces receive more tax rebates. Local gov. debt
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History of FDI
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Normal relations with US in 1979, More special economic zones, Lower tariffs
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Key elements of Joint Venture law
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> income tax rate 15%
>No income tax first two years >50 % tax years 3 to 5 > Import inputs no tax > no export duties |
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Key Feature of China's special economic zones
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> strong infrastructure
> preferential policies Fous on exports |
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Limited early success of FDI
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>Not export orientated
>Difficult attracting high tech > legal environment |
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Reason for success after 1992 in FDI
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>Dengs souther tour spring of 1992
>Expand access of foreign capital >Openness greater then other Asian countries |
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Distinctive feature of FDI in China
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> High FDI in manufacturing much less services
>FDI inflows predominately form East asia, HK |
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Why FDI in china benefits?
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> low wages
>immense domestic market > Disciplined labor force >stable Cones >corruption > bad legal system > political and other risk |
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Huang's argument
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Main reason for FDI reflects bad in china. no good financing system.
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Benefits and cost of FDI in China
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Benefits
>Capital >tech >management skills >employment COnes >profit remitted abroad >Discomfort about foreign ownership |
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Huang's evidence
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>fragmentation: Guangdong receives 1/3 of FDI
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The role of FDI in China's economic development
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> FDI as eky part of globalization of China
>FDI key in China's growth >FDI widening regional gaps, and educational gaps . |
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Accusations that Chinese is manipulating the exchange rate
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> deficit with US
> Geihner senate testimony >RMB highly undervalued and inconsistent with China's global responsibilities |
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China's view on currency
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> not manipulating currency
> Support stability in currency for trade >China not protectionist , seen in its overall trade balance. > Trade shifting from other asian nations to China to US >China has employment problems as well |
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Past History of US-China trade relations
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> Jacson Vnik Amendment to trade act. 1974- trade with non-market economies
>China gains MFN status in 1980 |
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Theoretical problems with manipulation argument
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> trade imbalance reflects differences in savings and investment in the two countries
>Manipulation of real exchange rate is hard if prices are flexible |
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Methods to measure currency balance
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> Divination from trend, over values it not under
>Balassa- Samuelson, per capita due to non tradables |
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Why uan revaluation will not save US jobs
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> trade with china is small part of US economy
>Chinas will replace its imports |
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Why revaluation of yuan could hurt US
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> purchase less from US
>China import demand could pust prices up, inflation world wide |
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Hukou
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registration system. urban/rural
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migration and urbanization background
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> Hukou system
>Rapid non agricultural growth > Unbalanced growth- costal and non costal. |
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Key transitions 1978 to 2010 labor market
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> Agriculture share 71% to 37%
>Urban area, 24% to 46% > State to private, 78% to 21% |
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Importance of labor
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Labor key factor of production
Labor is individuals welfare |
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Challenges in reforms in labor market
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> emplyment creation and adjustment
> Rising inequality > Information of the labor market and establishing effective social insurance programs. |
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Chinas labor contract law 2008
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>Labor contracts, after 2 fixed term, 10year contract must be open
>30 day notice to employee |
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Results of labor law
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> education correlates with contracts
> State owned well enforced, follow by foreign and then general private. > Women less likely to have contract > local residents dissatisfied with law while migrant are satisfied. |
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Population, one child policy History and consequences
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<Policy in 1980
<Relaxed for 1.5 child policy in 1984 >son preference, > large number of singel men > |
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Challenge of rapid aging
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>great challenges for health care system to meet growing demand for the elderly
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Bardhan's view on Democracy in china
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Positive
>Avoids disastrous mistakes ( famine ) >Better at managing conflict >more pressure to share benefits fo growth Negative >competitive populism >social order if week civic culture |
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Bardhams viw on authoritarianism
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not necessary ( india, costa rica) nor sufficient (africa) >
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China reasons in succes in tis government policy
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> Recruiting talent
>Review by party, pressure to do well compre to other towns > strong decentralization |
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Lipset hypothesis
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Prosperity stimulates democracy
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Chinas distinctive feature of economic growth
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Highe investment and larger manufacturing share
> structural changes |
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China and R &D
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Hight investemnt
> foreign investment might hinder the ability to make technology themselves.s |
