nep-tra New Economics Papers
on Transition Economics
Issue of 2005‒06‒05
six papers chosen by
Tono Sanchez
Universitat de Valencia

  1. Rapid Rise of China’s Dairy Sector: Factors Behind the Growth in Demand and Supply, The By Fuller, Frank H.; Huang, Jikun; Ma, Hengyun; Rozelle, Scott
  2. The Opium Wars, Opium Legalization, and Opium Consumption in China By Jeffrey A. Miron; Chris Feige
  3. Is China's Growth Real and Sustainable By Justin Lifu Lin
  4. Lessons of China's Transition from a Planned Economy to a Market Economy By Justin Lifu Lin
  5. Causes of Privatization in China: Testing Several Hypotheses By Kai Guo
  6. Impacts of Privatization on Firm Performance in China By Lingang Song; Yang Yao

  1. By: Fuller, Frank H.; Huang, Jikun; Ma, Hengyun; Rozelle, Scott
    Abstract: With the rapid growth in China’s dairy industry, a number of recent papers have addressed either the supply or the demand trends for dairy products in China. None, however, presents a systematic explanation for the recent growth in both the supply and demand for dairy products. The goal of this paper is to sketch a more comprehensive picture of China’s dairy sector and to assess the nature of the sector’s development in the coming decades. Drawing upon several empirical studies, we examine the trends in dairy product consumption to create a composite picture of the factors underlying the recent growth. We also empirically investigate the sources of production gains in milk supply and assess the relative importance of expanding herd size, changes in the nature of production, technological change, and improvements in efficiency to the overall growth of milk production.
    Date: 2005–05–27
  2. By: Jeffrey A. Miron; Chris Feige
    Abstract: The effect of drug prohibition on drug consumption is a critical issue in debates over drug policy. One episode that provides information on the consumption-reducing effect of drug prohibition is the Chinese legalization of opium in 1858. In this paper we examine the impact of China's opium legalization on the quantity and price of British opium exports from India to China during the 19th century. We find little evidence that legalization increased exports or decreased price. Thus, the evidence suggests China's opium prohibition had a minimal impact on opium consumption.
    JEL: K4 N4
    Date: 2005–05
  3. By: Justin Lifu Lin (China Center for Economic Research)
    Abstract: Since the reform of 1978, China's overall economic performance has been remarkable. The average annual GDP growth rate reached 9.4% in 1978-2002. However, in the last few years, China's economic growth rate has been questioned. A deflation was evident at the end of 1997. In spite of the Chinese government's many efforts, the deflation has continued. A deflation in an economy in general accompanied by stagnation or slow GDP growth. However, China's GDP growth rate reached 7.8% annually during the deflation period in 1998-2002, which was the fastest growth rate in the world. Moreover, the energy consumption dropped in 1998 and 1999. The abnormality prompted some economists to question the reliability of China's statistics. In the paper, the author will analyze why it is possible for china to maintain high growth with reduction of energy consumption during the deflation period and suggest the way for China to absorb excess capacity and get out of the deflation. The author will also discuss the prospect for China's long-term growth.
    Keywords: China, growth, inflation, deflation, GDP, stagnation
    JEL: E31 E43 O4
    Date: 2004–02
  4. By: Justin Lifu Lin (China Center for Economic Research)
    Abstract: One of the most important events in the modern economic history is the socialist countries' transition from the Soviet-type planned economy to a market economy starting in the last two decades of the 20th Century. China's experience of transition has produced many interesting contrasts to the experience of transition in Eastern Europe and Former Soviet Union (EEFSU). When the transition started in EEFSU, most economists in the West favoured a big bang approach, which included stabilization, price liberalization, and privatization. They considered these three reforms to be necessary for a successful transition to a market economy and attempted to complete all these reforms simultaneously or in a short sequence. The big bang approach in essence is a version of the Washington Consensus, which is based on the basic principles of neoclassical economies for a well-functioning market economy and was recommended by the IMF/World Bank for market-orientated reforms in the developing countries. The proponents of big bang approach expected the transition in EEFSU to have a "J-Curve" effect on economic growth; that is, they expected the GDP in a country that implemented the big bang approach to decline initially and to be followed by a strong recovery in a short period of time. Most countries in EEFSU followed this approach. The big bang approach, nevertheless, has resulted in an unexpected sharp and prolonged decline in GDP with extraordinarily high inflation rates and serious deterioration of other social indicators.
    Keywords: China, transition, stabilization, price liberalization, privatization, GDP
    JEL: O11 O16 O18
    Date: 2004–02
  5. By: Kai Guo (China Center for Economic Research)
    Abstract: China has undergone massive yet quiet privatization since the mid-1990s. The number of SOEs has fallen by 40% in the period 1996-2001 and most of the remaining SOEs were scheduled for privatization in one or two years. As recent studies have shown, privatization has brought positive gains to firm efficiency. Contrasting to the top-down approach adopted in the former Soviet States and Eastern European counties, the Chinese privatization, like most other major reform initiatives, has taken a bottom-up approach by which the privatization templates were first experimented in several localities and then sanctioned and promoted by the central government. It is of great academic interests as to what are the economic and political forces that have led to China's spontaneous wave of privatization in transition as well as developed countries. In this paper, we identify five sets of such theories and test their validity for the Chinese case by using firm-level panel data collected on 683 firms in 11 cities for the period 1995-2001.
    Keywords: China, transition, privatization, central government, SOE
    JEL: L33 L22 P31
    Date: 2004–07
  6. By: Lingang Song (Australia–Japan Research Centre); Yang Yao (China Center for Economic Research)
    Abstract: This paper studies the impact of privatization on firm performance in China. Using a unique dataset, we are able to control the selection biases of privatization and handle the missing variable problem that are frequently encountered in the transition economies literature. Privatization is found to have a significantly positive impact in firm profitability, but a weak or no significant impact on unit cost and labor productivity. Clear time trends are found for the effect of privatization. Firms with medium length of privatization and firms in the period 1997-1999 are found to have more robust effects.
    Keywords: privatization, transition economies, Chinese economy
    JEL: L25 P27 P31
    Date: 2004–07

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