Abstract
There are many jokes about economists and most economics students will know at least a few. Economists often laugh at themselves as well and for a period of time the annual meeting of the American Economic Association set up a talk show to give economists the chance to let off steam and mock the profession. One of the jokes goes like this: a physicist, a chemist and an economist are adrift on an isolated island. While sitting at the shore, they find a can of food that floated in from the sea. On discussing how to open the can, the physicist suggests that they can use pressure exerted from rocks to break it open. The chemist chimes in and suggests that they can use heat from a wood fire to heat the can, so it expands and bursts. Finally, the economist gives a solution, “suppose we had a can opener…”.
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Notes
- 1.
The first model of competition is also known as the “U-shaped” (unitary) model, and the second is known as the “M-shaped” (multi-divisional) model, both of which are common in corporate governance. A “U-shaped” company divides departments by function, such as production, sales, purchasing and so on. An “M-shaped” company is divided into several sub-brands or business divisions, each of which forms a system and is highly independent from each other. Maskin, Qian and Xu (2000) use these structures of corporate governance to study the relationship between the central and local governments in China.
- 2.
- 3.
See the report submitted by Li Fuchun, Luo Ruiqing and Bo Yibo to Mao Zedong and the Party Central Committee on August 19, 1964.
- 4.
- 5.
Fan and Zou (2019) analyze the positive impact of the “Construction of Third Front” on the long-term development of local industrial firms across China, especially of local private firms.
- 6.
Gershenkron (1962) pointed out although many underdeveloped countries have a large population, they are extremely short of qualified industrial workers. “industrial labor, in the sense of a stable, reliable and disciplined group that has cut the umbilical cord connecting it with the land and has become suitable for utilization in factories, is not abundant but extremely scarce in a backward country. Creation of an industrial labor force that really deserves its name is a most difficult and protracted process”.
- 7.
Zhou (周黎安 2018) elaborates on the pros and cons of this competition system of “government plus market”. Much of the content in this paragraph is taken from this paper.
- 8.
Rodrik (1998) explains the positive correlation between globalization and “big government”.
- 9.
Besley and Persson (2011) constructs a theoretical framework that connects these three pillars. The contents in the following paragraphs on taxation capacity and legal capacity are inspired by their work.
- 10.
The measure of product complexity comes from the “The Atlas of Economic Complexity”, a project run by the Center for International Development at Harvard University.
- 11.
- 12.
Data on taxation of America’s wealthy and the example of Mark Zuckerberg come from Saez and Zucman (2019).
- 13.
The data come from a speech by Jin Renqing, then Director of the State Administration of Taxation, at the 2002 Conference of the Construction of National Taxation Information System.
- 14.
Fan et al. (2020) estimate the impact of the “Golden Tax Project-Phase II” on VAT revenue.
- 15.
Bardhan (2016) summarizes and discusses the successes and failures of trade protection and industrial policies in various countries. He particularly emphasizes the problem of “time inconsistency” in the protection commitments of infant industries. That is, the protection is designed to be removed after some time, but the removement often fails when the time comes.
- 16.
The data come from Zhang et al. (2018).
- 17.
The development of the service industry cannot be separated from population density. The main reason is that most services (such as restaurants or barber shops) cannot be traded at distance and instead transactions need to happen face to face. Zhong, Lu and Xi (钟粤俊, 陆铭, 奚锡灿 2020) analyze the positive correlation between population density and the development of the service industry across regions in China.
- 18.
For discussions of the “latecomer advantage” and the “latecomer disadvantage”, see Sachs, Woo and Yang (2000) and Lin (林毅夫 2003). Stiglitz and Greenwald (2015) systematically explain the relationship between learning and economic development and discuss how a series of policies that are considered “distortions” in mainstream economics could promote economic growth, including industrial policy and trade protection.
- 19.
Rodrik (2007) elaborates on this point.
- 20.
In fact, let alone provinces, even Chinese cities are large enough. There are about 95 Chinese cities with a population over 5 million, larger than Norway. Their development stories and models also have their own unique characteristics. There are not many in-depth studies in city-specific development stories, however. Interested readers can refer to Zhang and Liu (2019) on the Zhejiang Model. Zhang et al. (张军 2020) is a collection of papers on the Shenzhen Model. Zhang et al. (张燕生等 2001) is a research reports on the Foshan model, and Shi et.al. (史晋川等 2002) is a research report on the Wenzhou model.
- 21.
A collection of papers written by Qian (2017) elaborates on this point.
- 22.
Rodrik (2018) illustrates the conflict between trade theory and real interests.
- 23.
Lin (2012) introduces the basic framework of New Structural Economics, and it also includes many scholars’ discussions on this theory and Professor Lin’s response.
- 24.
See Cohen and Delong (2016).
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Translated References (in Chinese)
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Zhong, Yuejun, Ming Lu, and Xican Xi (2020). “Agglomeration and Service Industry Development: Based on the Perspective of Population Spatial Distribution.” Journal of Management World 11: 35–49. (in Chinese)
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Lan, X. (2024). Government and Economic Development. In: How China Works. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-97-0080-6_8
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