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Rent seeking and economic liberalization: why are China and Vietnam different from Eastern Europe?

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  • Qiangbing Chen

Abstract

Why did a gradualist transition approach achieve different performances among socialist economies in the 1980s? Why did some socialist economies never try a gradualist approach to economic liberalization? This paper develops a model to show that the liberalization of a socialist economy has two opposite effects on the rent captured by government. The initial economic condition determines the relative strength of the two effects, and consequently the transition path and performance. In addition, a gradualist reform strategy adopted by a rent-seeking government cannot finish the transition toward a complete market economy. To achieve that goal, a new constitutional order and the rule of law are necessary.

Suggested Citation

  • Qiangbing Chen, 2008. "Rent seeking and economic liberalization: why are China and Vietnam different from Eastern Europe?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 13(2), pages 168-179.
    • Handle: RePEc:taf:rjapxx:v:13:y:2008:i:2:p:168-179
    DOI: 10.1080/13547860801923566
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    References listed on IDEAS

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    1. Gérard Roland, 2004. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 026268148x, April.
    2. Olivier Blanchard & Andrei Shleifer, 2001. "Federalism With and Without Political Centralization: China Versus Russia," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-8.
    3. Jeffrey D. Sachs & Wing Thye Woo, "undated". "Understanding China'S Economic Performance," Department of Economics 97-04, California Davis - Department of Economics.
    4. Yingyi Qian, 1999. "The Institutional Foundations of China's Market Transition," Working Papers 99011, Stanford University, Department of Economics.
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    Cited by:

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    2. Frye, Timothy M. & Iwasaki, Ichiro, 2011. "Government directors and business–state relations in Russia," European Journal of Political Economy, Elsevier, vol. 27(4), pages 642-658.

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