Transition to a Market-Oriented Economy: China versus Eastern Europe and Russia

  • Justin Yifu Lin
  • Valery Makarov
Part of the International Economic Association Series book series (IEA)


For the transition from a centrally planned economy to a decentralized market economy, there are two different approaches. The first is a ‘big bang’ or ‘shock therapy’ approach; the reforms undertaken in Eastern Europe and the former USSR in recent years are typical examples. This approach considers stabilization, marketization, and privatization to be the necessary components of a successful transition and attempts to complete all these components simultaneously or in a short sequence. The contrasting alternative is the ‘gradual’, ‘organic’, or ‘evolutional’ approach, and this latter has characterized China’s recent reforms. It is piecemeal, partial, incremental, sequential, often experimental, and without large-scale privatization.


Interest Rate Total Factor Productivity Foreign Exchange Heavy Industry Allocation Mechanism 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© International Economic Association 1998

Authors and Affiliations

  • Justin Yifu Lin
    • 2
    • 3
  • Valery Makarov
    • 1
  1. 1.Central Economic-Mathematical InstituteMoscowRussia
  2. 2.Peking UniversityChina
  3. 3.Hong Kong University of Science and TechnologyAustralian National UniversityUSA

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