intensive and extensive margins of exports what can india learn from china we decompose india s export performance in manufactured products during 2000 15 into changes at the intensive and extensive margins india s performance along different margins is compared and contrasted with that of china the results show that while china outperforms india at both the margins the gap is particularly wide at the intensive margin decomposition of intensive margin along quantity and price margins shows that chinese products are generally sold cheaper than indian products higher price margin however has not translated into high intensive margin for india due to its abysmally low quantity margin we examine different explanations for china s superior performance relative to india along different margins using a gravity model our results suggest that china s exchange rate policy was not the prime reason for its export success neither do we find that fdi inflows were significant in explaining the export performance gap between them the results show that china s export relationship bias towards high income partner countries holds the key in understanding its superior performance this bias is a natural consequence of china s high degree of specialization in labor intensive activities india by contrast due to an idiosyncratic pattern of specialisation has failed to exploit its export potential in high income countries

china s collectivisation puzzle a new resolution according to total factor productivity trends in chinese agriculture china achieved productivity gains both when collectivising 1954 58 and when decollectivising 1979 84 its agriculture if the productivity gains from decollectivisation were due mainly to eliminating the incentive problems of collective farms how the initial collectivisation could also have been associated with gains in productivity presents a major historical puzzle we suggest as an answer the possibility that agricultural production in china was widely organised on a household basis until 1958 despite the collectivisation of property rights and that the formation of the agricultural producers co operatives reduced the inefficiencies in factor allocation that existed following china s land reform

political risk and the expectations hypothesis abstract this paper develops and empirically supports using 3 and 6 month interest rates a theory that political risk can explain the shifting term premia found in u s data we find that incorporating these political regime shifts yield results that support the expectations hypothesis

policy reform and productivity change in chinese agriculture a distance function approach abstract agricultural policy reform has been an important source of change in the chinese agricultural sector the reforms led to productivity growth and helped china to pursue its self sufficiency goal especially in the grain sector in order to analyze whether observable productivity growth stems from technologically induced components or from the market induced parts a multi input multi output model is derived by using an econometric distance function framework a decomposition allows to distinguish allocative effects scale effects technological change and technical efficiency change data on farms in zhejiang from 1986 to 2000 are used to analyze the impact of policy reform

informality property rights and poverty in china s favelas in this study of households living in informal settlements in three principal chinese cities we analyze the associations between informality property rights and poverty we propose that informality can be understood in terms of property rights presence absence strength completeness and ambiguity drawing on the property rights entitlements theories of sen de soto ostrom alchian and coase we refine a list of property rights effects that can be tested empirically using a household questionnaire survey of 1 208 respondents from a representative sample of 60 urban villages in beijing shanghai and guangzhou we use robust regression models to detect statistical relationships between household performance on six poverty domains as a function of four property rights domains controlling for income human capital and other influences we find evidence for what we call sen effects and de soto effects our models show that some property rights are associated with lower poverty indicators but we also find evidence to show that the absence weakness or ambiguity of property rights also reduce poverty indicators on particular domains through what we assume to be a substitution effect informal settlements permit poorer household to live at lower costs than is usually or officially acceptable and thus spend more on other welfare enhancing expenditures the distribution of property rights determines the size distribution and impacts of these trade offs and shapes the economic and social performance of informal settlements

on the trail of china s phantom farmers abstract many studies of china s economy use standard yearbook data for china s farm labor force these data massively overestimate the number of chinese farm workers our calculations show that the number of phantom farmers actually working outside agriculture may easily surpass 100 million this paper reveals the implausible implications of the standard data uses information from cost surveys to derive new estimates of china s farm work force and investigates the implications of the new lower series for agricultural employment on the measurement and interpretation of recent chinese growth

the effect of scale on the response to reform by chinese state owned construction units abstract using firm level data on large and medium state owned construction units a production function approach evaluates the effect of scale on the response of chinese state enterprises to reform large state units have greater economies of scale but are less productive and less input price efficient as investment increases in nonproductive fixed assets large unit profits are declining fastest and a comparison of coastal interior and ministry level units contradicts the hypothesis that competition is the primary source of this decline instead falling profits are explained by the increased autonomy which allows these units to be more inefficient

the institutional causes of china s great famine 1959 1961 this paper studies the causes of china s great famine during which 16 5 to 45 million individuals perished in rural areas we document that average rural food retention during the famine was too high to generate a severe famine without rural inequality in food availability that there was significant variance in famine mortality rates across rural regions and that rural mortality rates were positively correlated with per capita food production a surprising pattern that is unique to the famine years we provide evidence that an inflexible and progressive government procurement policy where procurement could not adjust to contemporaneous production and larger shares of expected production were procured from more productive regions was necessary for generating this pattern and that this policy was a quantitatively important contributor to overall famine mortality

non stationarities in financial time series the long range dependence and the igarch effects we give the theoretical basis of a possible explanation for two stylized facts observed in long log return series the long range dependence lrd in volatility and the integrated garch igarch both these effects can be explained theoretically if one assumes that the data are nonstationary

chinese villages and townships as industrial corporations ownership governance and market discipline1 public firms in a reforming socialist economy face two problems the old soft budget constraint syndrome and new principal agent problems china s township village government owned enterprises tves outperform state owned enterprises soes in growth rate and productivity three explanations are proposed in the literature 1 tves represent informal or ambiguous private property rights which are most efficient in partial reform 2 the small size and scale of township village governments as industrial corporations allows officials to monitor tves directly and to limit their wherewithal for cross subsidizing 3 strict market disciplines facing tves render indirect market monitoring to mitigate agency problems effectively analyses of jiangyin data show that a while both superior to local soes village and township enterprises share similar productivity and b the scale of township village corporations slightly increases productivity i conclude that local state corporatism should be revised to inc

assessing the validity and reliability of contingent values a comparison of on site users off site users and non users abstract imperfect information in contingent markets can affect the validity and reliability of contingent values willingness to pay wtp for changes in natural resource allocations survey respondents can acquire information about the natural resource to be valued from behavior such as on site use of the resource off site use of the resource and or from the survey itself in this paper we compare the validity and reliability of wtp from respondents who obtained information in these different ways using theoretical validity tests based on relative prices as well as income we find that wtp is valid for respondents with information from on site and or off site use willingness to pay is less valid for respondents who had no information about the natural resource before they participated in the survey using an alternative form reliability test we find that wtp is in the technical sense reliable for all respondents and somewhat more reliable for on site users

are chinese cities too small this paper models and estimates net urban agglomeration economies for cities economic models of cities postulate an inverted u shape of real income per worker against city employment where the inverted u shifts with industrial composition across the urban hierarchy of cities this relationship has never been estimated in part because of data requirements china has the necessary data and context we find that urban agglomeration benefits are high real incomes per worker rise sharply with increases in city size from a low level they level out nearer the peak and then decline very slowly past the peak we find that a large fraction of cities in china are undersized due to nationally imposed strong migration restrictions resulting in large income losses

productivity growth and structural change in chinese manufacturing 1980 2002 this article focuses on the contribution of structural change to aggregate manufacturing and industrial productivity in china using shift share techniques this article examines three types of structural change changes in the sectoral structure of production changes in the ownership structure and changes in the regional structure of production overall productivity growth was slow in the 1980s but accelerated dramatically from 1990 onwards in 1980s we found evidence of a structural change bonus with sectoral shifts contributing 24 to overall productivity growth however when productivity growth accelerated in the 1990s the contribution of the shift effect dropped to a mere 3 3 in contrast to sectoral changes changes in the ownership structure in the early 1980s contributed negatively to overall productivity growth the contributions of ownership change turned positive after 1985 reaching 23 of productivity growth in the period 1992 1997 shifts in ownership explain a substantial part of productivity growth during the productivity boom like shifts in ownership regional shifts initially contributed negatively to productivity growth till 1992 and positively thereafter however the general contribution of regional shifts is lower than the contributions of sectoral and ownership shifts contrary to initial expectations the regional analysis of productivity trends does not indicate regional divergence

the creation and spread of technology and total factor productivity in china s agriculture the overall goal of this study is to create a framework for assessing the trends of china s national and international investment in agricultural research and to measure its impact on total factor productivity the main methodological contribution is to provide more convincing measures of crop specific technologies from china s national research program and of those imported from the international agricultural research system our results find that from 1980 to 1995 china s total factor productivity for rice wheat and maize grew rapidly and new technology accounts for most of the productivity growth

economics of transaction costs saving forestry following the arguments concerning the problems of traditional forest economics in putz 2000 this article shows that transaction cost economics can overcome some of the shortcomings of the main stream forest economics the public forestry subsistence forestry non industrial private forestry china s share holding forestry and their revolutions are analyzed by the relative transaction costs of labor capital land and forest products potential implications of transaction cost economics in forest policy including regulated access to commons sustainable forestry criteria ecological certificates and land tenure decentralization have also been discussed 2001 elsevier science b v all rights reserved

the diverging patterns of profitability investment and growth of china and india during 1980 2003 summary this paper documents the diverging patterns of capital accumulation profit rates investment rates capital productivity and technological progress of china and india between 1980 and 2003 the two asian economies have followed very different growth patterns and today they face different challenges india s is how to accelerate growth while china s policy makers debate between the need to maintain a high growth rate to generate employment and the imperative to reduce it to cool the economy india must address impediments to investment china must deal with the question of whether investment can continue being the main source of growth

consumption savings and investment by social class in bangladesh does the rural sector support the urban sector this article employs input output analysis and information from a social accounting matrix and the concept of net savings to examine savings consumption and investment behaviour by various social classes in bangladesh in urban and rural areas considerable differences between social classes can be identified in all three respects a majority of the social classes in the rural sector does not appear to generate enough savings to sustain its consumption whereas the urban social classes do there seems to be little difference in consumption pattern of the rural rich and the urban rich there is considerable urban rural difference in the import intensities of consumption the findings of this study based on the hazari model do not establish the existence of urban bias but the problem seems to be one of rich bias rather than urban bias per se however the hazari model cannot capture all possible sources of urban bias and circumstantial evidence indicates concentration of advantages in the urban areas

the urban rural income gap in china implications for global food markets with the exceptions of the agricultural and financial sectors china has essentially become a market economy and indications are that it will enjoy a sustained period of high economic growth well into the twenty first century naughton however growth in china s agriculture has slowed since 1984 crook 1996 wen and this seems to be related to a policy bias against agriculture from 1978 to 1984 agriculture grew at 7 6 but this slowed to 4 from 1985 to 1994 crook 1996 agriculture remains underdeveloped in china largely because the government still purchases at fixed prices more than 50 of the grain sold off the farm the government forces some farmers to produce grain and supports this policy by discouraging integration between the rural and urban economies as a result rural product and factor markets are distorted nowhere is this more evident than in the labor market banister carter zhong and cai cook knight and song riskin taylor yang and zhou despite large increases in rural nonagricultural employment since 1978 the absorption has not kept up with population growth and the job of shifting labor out of agriculture is far from complete as of 1995 there were approximately 50 million more farmers in china than at the be

rural urban disparity and sectoral labour allocation in china this study examines china s rural urban segmentation and its causes in the context of economic reforms household survey and aggregate data indicate a v shaped process in which rural urban consumption and income differentials decreased between 1978 and 1985 but then have continually increased to historically high levels this sectoral division is consistent with production function estimates based on provincial data that reveal higher labour productivity in urban state owned industries than in rural industries and agriculture to explain the v shaped change we argue that the precedent of successful rural reforms raised farmers relative earnings but the remaining obstacles to an efficient sectoral allocation of labour have prevented china from eliminating dualism recent financial policies consisting of urban price subsidies and increased investment credits have also had influential distribution effects that are biased against the rural sector

how industrial reform worked in china the role of innovation competition and property rights in china early attempts at partial reform unleashed forces that fifteen years later have brought china s economy to the brink of a market system the participation of tens of thousands of enterprises and millions of administrators managers and workers over the duration of the reform eventually built a constituency for market directed change that was far stronger than any official announcement could have produced gradual and partial reform shifted the economy toward a market system under a regime of growth improved productivity accelerated technical change and rising exports reactions of firms and governments focused incresingly on innovation cost reduction and further deregulation deepening the cumulative impact of reform rather than on rent seeking and subsidies this process of reform is very different from the top down centrally planned approach to reform that is widely advocated by international organizations and economic researchers but it has produced a durable reform constituency that easily rebuffed high level efforts to roll back reform in the wake of the inflation scare and political repression of 1989

dimensions and diversity of property rights in rural china dilemmas on the road to further reform abstract this paper contributes to the debate over land tenure in rural china by conceptualizing and measuring multiple dimensions of property rights in a way that elucidates the competing interests that are affected by the property rights regime utilizing a unique village level data set this paper argues that the regional and temporal variation in rural property rights signals a pattern in which decentralized institutional innovation occurs in response to the competing interests of the national state of local authorities and of present and possible future individual land users unlike the earlier debate concerning the household responsibility system the current property rights dilemma is intrinsically more complex because the potential conflicts of interest between individuals local collectives and the state are greater resolution of that debate will ultimately require careful exploration of the reality and substance of the tradeoffs and competing interests that make further reform of rural property rights so difficult

new institutional economics in the post socialist transformation debate the paper suggests that there is a tension between the basic tenant of new institutional economics nie and the manner in which it has been applied in the debate on post socialist transformation this tension is explored in the context of four main perspectives on nie i property rights ii transaction costs economics iii new economic history and iv evolutionary economics there are two main arguments the first is that the transformation phase should be seen as open ended rather than a closed process where the pure market is the inevitable end result the second is that although the nie literature touches on most of the issues which are relevant to post socialist transformation the insights that it offers are still too general for policy guidance

effect of distance on the preservation value of water quality in the past dozen years an extensive body of literature has developed on the willingness to pay for water quality in particular its recreation use and nonuse preservation values this paper illustrates a procedure for estimating the effect of distance on the preservation value of environmental quality using the contingent valuation approach the case considered is the potential degradation of water quality due to coal mining activity in the flathead river drainage system montana the analysis supports a negative association for this particular study area the effect of distance on preservation value was considered both directly and indirectly through its effect on visits 36 references 2 tables

do contingent valuation estimates pass a scope test a meta analysis abstract this paper considers the scope test proposed to judge the internal consistency of contingent valuation estimates the test is shown to be quite sensitive to the maintained hypotheses required to derive fairly precise expectations for the properties of wtp functions and therefore a different approach may be needed in gauging the reliability of cv this paper describes an approach that relies on a weight of the evidence criterion and uses meta analysis to develop a systematic appraisal of what the economic values of changes in amenity resources are the approach is illustrated for the case of estimating people s willingness to pay for improving or maintaining visibility at the national parks

characterizing the effects of valuation methodology in function based benefits transfer abstract meta analyses have demonstrated that willingness to pay wtp estimates vary systematically according to methodological factors the benefits transfer literature provides little guidance with regard to the treatment of such effects transfers are typically conducted by ignoring such effects using ad hoc adjustments or otherwise suppressing information regarding the sensitivity of wtp to methodological attributes this paper illustrates a means to characterize methodological effects within benefits transfer based on an application of the common bootstrap drawing from meta analysis the approach characterizes the sampling distribution of wtp with respect to patterns of methodological variation present in underlying studies results provide a means to characterize the extent of variation associated with predefined groups of methodological attributes providing transparent information on the sensitivity of wtp not typically available in benefits transfer

how reliable are meta analyses for international benefit transfers meta analysis has increasingly been used to synthesise the environmental valuation literature but only a few test the use of these analyses for benefit transfer these are typically based on national studies only however meta analyses of valuation studies across countries are a potentially powerful tool for benefit transfer especially for environmental goods where the domestic literature is scarce we test the reliability of such international meta analytic transfers and find that even under conditions of homogeneity in valuation methods cultural and institutional conditions across countries and a meta analysis with large explanatory power the transfer errors could still be large further international meta analytic transfers do not on average perform better than simple value transfers averaging over domestic studies thus we question whether the use of meta analysis for practical benefit transfer achieves reliability gains justifying the increased effort however more meta analytic benefit transfer tests should be performed for other environmental goods and other countries before discarding international meta analysis as a tool for benefit transfer

third world cities the changing national settlement system this is a review of recent literature on trends in urbanization in developing countries the author examines the decline in the pace of urbanization in the middle east and latin america changes in migration related to changes in spatial structure a trend toward a more polycentric form of metropolitan development around some major urban centers a decline in the pace of metropolitan expansion associated with economic recession and the failure of regional policy to affect urbanization trends annotation

subsidising inequality economic reforms fiscal transfers and convergence across chinese provinces the article investigates per capita income convergence across chinese provinces over the 1978 92 period it confirms previous studies which find a reduction in inter regional income inequality over the course of economic reforms however the rate of convergence has declined since 1985 as a result of two factors first the shift from rural to industrial reforms has disproportionately benefited the relatively wealthier coastal provinces second the system of inter provincial fiscal transfers has prevented convergence among interior provinces as transfers have gone to the richer among them further fiscal decentralisation and an acceleration of reforms in the interior provinces is thus unlikely to increase regional income inequality

china s macroeconomic performance and management during transition since reforms started in 1978 china has combined rapid growth with moderate price stability this paper analyzes china s macroeconomic performance over the past fifteen years with special attention to factors responsible both for the pace of economic expansion and the periodic fluctuations regarding the former the author identifies four sources of stimuli administrative decentralization high levels of fixed capital investment the elastic supply and quality of the labor force and the increasing volume of savings supplemented in recent years by a large inflow of foreign direct investment future growth with stability calls for controlling and implementing banking and fiscal reform

stagflationary effect of government bond financing in the transforming chinese economy a general equilibrium analysis abstract this paper studies how the method of government debt financing affects the macroeconomic performance of the transforming chinese economy the investigation is conducted within the context of an endogenous growth model that incorporates the major institutional features of the chinese economy using this framework we evaluate the effects on the growth rate of output and inflation if the chinese government relies more on bonds and less on money creation for budget deficit and debt repayment financing it is shown that although this policy change can reduce the growth rate of the money supply it can generate a stagflationary effect reducing the rate of output growth while raising the rate of inflation if the initial fraction of government deficit and debt repayment financed by bonds is sufficiently small and the tax rate on labor income is sufficiently low

valuing watershed quality improvements using conjoint analysis abstract this paper reports on a study of valuation of multiple stream quality improvements in an acid mine degraded watershed in western pennsylvania a technique extensively used in marketing research conjoint cj analysis is used in conjunction with a random utility model rum to establish shadow valuations for various combinations of stream quality improvements in two streams the technique shows promise in the valuation of ecosystems which provide a complex variety of services several variations on respondent choice binary choice bc and intensity of preference ip were used where the latter allowed for an expression of degree of preference between status quo and alternative conditions the sample constituted a panel data set from which user and non user valuations were distinguished in addition sample respondents were identified by the distances of their residences to the stream sites permitting the analysis of effects of distance on quality improvement valuations these valuations suggested that persons living within roughly 50 miles of the evaluated stream segments place some positive value on stream improvements

partner selection and venturing success the case of joint ventures with firms in the people s republic of china it has been hypothesized in the international joint venture ijv literature that partner selection affects interpartner fit which in turn influences a synergistic effect on ijv performance this study investigates the relationship between ijv success and the strategic and organizational traits of local partners we address this issue in the context of an emerging economy p r china newly emerging economies have in recent years become major hosts of direct investment by multinational corporations mncs because these rapidly expanding economies characterized by an exploding demand previously stifled by ideologically based government intervention provide tremendous opportunities which mncs can preempt mncs in such economies however face the challenges of structural reform weak market structure poorly specified property rights and institutional uncertainty right local partners can help mncs boost market expansion obtain insightful information mitigate operational risks and provide country specific knowledge the analysis of the data obtained from china suggests that both strategic and organizational traits of local partners are significantly associated with some individual dimensions of ijv performance among strategic traits absorptive capacity product relatedness and market power are favorable to ijvs market and financial outcomes market power and experience significantly reduce ijvs operational uncertainties of organizational traits international experience and organizational collaboration are important for ijvs not only profitability and stability but also local market expansion and export growth organizational form and size influence ijvs local market performance the findings provided by this study can help mncs determine what criteria they should use in opting for local partners and what criteria are vital to their goal accomplishment those investors seeking local market expansion should select those local partners that have rich market experience superior market position high absorptive capacity and related product diversification with the ijvs those seeking profitability and stability should select local firms that have superior international experience longer organizational collaboration and greater market power while mncs should use appropriate strategic and organizational criteria to select local partners the host government or local firms can try to make these traits available to attract more stable and profitable foreign direct investment

financial liberalisation and growth in china s economic reform this paper summarises china s financial liberalisation experience and examines the contributions of financial resources on economic growth during the post reform period financial liberalisation has resulted in the reallocation of the four sources of total investment in fixed assets state budget appropriation national bank loans self raised funds and foreign investment we find that the growth of gdp and industrial production are positively related to the growth of self raised funds and foreign investment we conclude that the use of foreign investment and funds raised by the enterprises themselves are more efficient than the government s appropriation and provision of bank loans

rural urban disparities in india and china abstract this paper compares rural urban disparities in china and india in light of differences in the following indicators income and consumption deposit to credit ratios and agricultural and industrial productivity access to such public services as health are also considered reasons for disparities are sought in government policies affecting agricultural terms of trade credit and rural to urban migration the paper concludes that the chinese economy during the mao zedong period was much more egalitarian than the indian but the case is less clearcut for the deng xiaoping period

india and china contrasts in economic liberalization abstract it is argued that in both india and china despite some important differences 1 a similar cultural and political imperatives led to similar systems of dirigisme and economic outcomes with the chinese growth higher than the indian because of higher investment 2 b crises engendered by their dirigiste regimes impelled reform 3 c their attempts to replace the plan by the market have striking similarities but 4 d ultimately because of continuing atavistic attitudes to toward trade and commerce the reforms remain insecure

are there cultural effects on saving some cross sectional evidence why are there such large differences in saving rates across countries conventional economic analyses have not been successful in explaining international saving differences so economists have sometimes suggested that national saving differences may be explained by cultural differences this paper tests the hypothesis that cultural factors influence saving by comparing saving patterns of immigrants to canada from different cultures using data from the canadian survey of family expenditures we find no evidence of cultural effects on saving

production and productivity growth in chinese agriculture new measurement and evidence abstract this study uses a more appropriate approach to measure growth in output input and total factor productivity for chinese agriculture using newly estimated production and productivity growth indexes the impact of rural reforms have been reassessed the conventional approach would overestimate the impact of the rural reforms on both production and productivity growth nevertheless both production and productivity still grew at respectable rates during the reform period the study also found that in order to promote the long term production and productivity growth which is much needed to feed the chinese population in the future it is imperative for the government to increase its investment in agriculture as the effects of recent institutional changes have been largely exhausted

differentiating use and nonuse values for coastal pond water quality improvements this paper measures the benefits of water quality improvements in three coastal ponds on the island of martha s vineyard massachusetts u s a use option and existence values were elicited from martha s vineyard property owners by the contingent valuation method on average more than half of the total benefits are attributed to existence value results from the heckman selection model show that the exclusion of protest as well as missing bids does not cause significant bias in estimating respondents willingness to pay socioeconomic characteristics are found to have distinctively different influences on use option and existence values different model parameters are likely to be estimated depending on which value categories are measured by a selected valuation technique these findings emphasize the importance of nonuse values from water quality improvements and of socioeconomic characteristics for measuring different categories of values

the impact of china s economic reforms on agricultural productivity growth this paper presents a method for assessing the relative importance of price increases and strengthened individual incentives due to the introduction of the responsibility system for the post 1978 increase in china s agricultural productivity data on post 1978 chinese agricultural performance suggest that a little over three quarters of the measured productivity increase is due to payment system changes and the remainder to price increases we also use our method to calculate incentive indices giving an estimate of the fraction of their marginal product that peasants received under the pre 1978 regime

meta analysis benefit transfer and methodological covariates implications for transfer error meta regression models in the valuation literature demonstrate that willingness to pay estimates vary according to methodological factors neither theory nor characteristics of policy sites dictate the treatment of associated covariates within benefit transfer however and the literature provides few insights into potential impacts of common empirical treatments this paper introduces a method to systematically characterize the impact of methodological variables on transfer error using a repeated leave one out convergent validity framework the analysis contrasts errors for a hypothetical ideal case in which correct methodological covariate treatments are known to the realistic case in which the correct treatment is unknown results indicate that the common assumption of mean values for methodological covariates leads to only a modest increase in mean transfer error relative to that found in the hypothetical ideal case

how large is the extent of the market for public goods evidence from a nationwide contingent valuation survey to assess the extent of the geographic area over which to sum vertically the public good benefits of removing two dams and restoring salmon populations households were surveyed throughout the us households were asked a dichotomouschoice contingent valuation question regarding their willingness to pay higher federal taxes for ten years to remove the dams and restore salmon populations while the distance from the site of the dam removal is statistically significant and negative in the logit willingness to pay equation benefits per household fall off slowly and the extent of the market is nationwide with a majority of households living outside the immediate area of the dam the rest of the us households reflect 97 of the national benefits for dam removal and salmon restoration this example suggests that failure to account for the national public good market can result in a serious underestimate of the value of public goods

reforms the weather and productivity growth in china s grain sector we use disaggregate county level production data to study the effects of economic reform on china s grain production between 1980 and 1990 china s grain production area is divided into five regions based on geographic agronomic and meteorological criteria regional grain production functions are estimated and weather is explicitly modeled the institutional impact of economic reform was found to explain about 38 of the production growth from 1980 to 1985 this is lower than the estimates reported in many previous studies regional differences in efficiency gains from economic reform and in the effects of weather on grain production are found to be significant

the impact of migration on rural poverty and inequality a case study in china large numbers of agricultural labor moved from the countryside to cities after the economic reforms in china migration and remittances play an important role in transforming the structure of rural household income this article examines the impact of rural to urban migration on rural poverty and inequality in a mountainous area of hubei province using the data of a 2002 household survey since migration income is a potential substitute for farm income we present counterfactual scenarios of what rural income poverty and inequality would have been in the absence of migration our results show that by providing alternatives to households with lower marginal labor productivity in agriculture migration leads to an increase in rural income in contrast to many studies that suggest that the increasing share of nonfarm income in total income widens inequality this article offers support for the hypothesis that migration tends to have egalitarian effects on rural income for three reasons 1 migration is rational self selection farmers with higher expected return in agricultural activities and or in local nonfarm activities choose to remain in the countryside while those with higher expected return in urban nonfarm sectors migrate 2 households facing binding constraints of land supply are more likely to migrate 3 poorer households benefit disproportionately from migration

comparisons of real output and productivity of chinese and indian manufacturing 1980 2002 the principal objective of this paper is to compare the real output and labour productivity of chinese and indian manufacturing from 1980 to 2002 using an industry of origin approach purchasing power parities ppps for the benchmark year 1985 are derived from the chinese and indian industrial censuses in turn the ppps are used to convert indian manufacturing gdp into chinese yuan for direct comparisons secondary objectives are twofold first to set this direct comparison within the general context of the economic policy reform process followed in each country and second to compare and contrast the organisation and structure of both countries manufacturing sectors the analysis shows that since 1980 real value added and labour productivity growth for chinese manufacturing has been well above indian levels

research productivity and output growth in chinese agriculture recent attempts to quantify the sources of growth in chinese agriculture have attributed an exceptionally large share of this growth to the contemporary institutional and market reforms within china to analyze this important issue we use a newly constructed panel data set that includes an agricultural research or stock of knowledge variable our results suggest that while still a significant source of growth the direct growth promoting consequence of institutional change and market reforms have been overstated by these earlier studies research induced technical change accounts for a significant share 20 of the growth in agricultural output since 1965

enhanced geospatial validity for meta analysis and environmental benefit transfer an application to water quality improvements meta regression models are commonly used within benefit transfer to estimate willingness to pay wtp for environmental quality improvements theory suggests that these estimates should be sensitive to geospatial factors including resource scale market extent and the availability of substitutes and complements valuation meta regression models addressing the quantity of non market commodities sometimes incorporate spatial variables that proxy for a subset of these effects however meta analyses of wtp for environmental quality generally omit geospatial factors such as these leading to benefit transfers that are invariant to these factors this paper reports on a meta regression model for water quality benefit transfer that incorporates spatially explicit factors predicted by theory to influence wtp the metadata are drawn from stated preference studies that estimate per household wtp for water quality changes in united states water bodies and combine primary study information with extensive geospatial data from external sources results find that geospatial variables are associated with significant wtp variations as predicted by theory and that inclusion of these variables reduces transfer errors

growth efficiency and convergence in china s state and collective industry in china as in the soviet union and eastern europe economic reform initiatives seek to increase productivity by introducing elements of market oriented policies and institutions into an economy formerly dominated by state planning efforts to evaluate the impact of reform of chinese industry have focused on the measurement of productivity change in state enterprises this study expands the prior framework of analysis in several directions our investigation of productivity trends is not limited to state enterprises but includes quantitative comparisons with china s fast growing collective industries which contributed 36 of overall industrial output in 1988 1 unlike previous studies our analysis works with gross rather than net output this permits us to investigate changes in the productivity of intermediate inputs which occupy a large portion of total costs in chinese industry as well as labor and capital to do this we develop a quasi frontier estimation procedure which seems appropriate for comparisons of total factor productivity based on chinese industrial data finally we offer a quantitative perspective on the extent to which reform efforts have moved industrial resource allocation toward patterns expected of a market system the analysis confirms our previous finding based on a restricted framework employing only labor fixed capital and net output that multifactor productivity in state industry has risen substantially during

the great leap forward anatomy of a central planning disaster the great leap forward disaster characterized by a collapse in grain production and a widespread famine in china between 1959 and 1961 is found attributable to a systemic failure in central planning wishfully expecting a great leap in agricultural productivity from collectivization the chinese government accelerated its aggressive industrialization timetable grain output fell sharply as the government diverted agricultural resources to industry and imposed an excessive grain procurement burden on peasants leaving them with insufficient calories to sustain labor productivity our analysis shows that 61 percent of the decline in output is attributable to the policies of resource diversion and excessive procurement

the effect of money shocks on interest rates in the presence of conditional heteroskedasticity most current empirical work finds no evidence that money shocks lower interest rates we show that these nonresults are mainly due to a failure to model the conditional heteroskedasticity of interest rates autoregressive conditional heteroskedasticity arch models find a significant liquidity effect where ordinary least squares ols models do not the existence of a liquidity effect is found using different models and sample periods when arch models are used in estimation but never when ols is employed

kinship networks and entrepreneurs in china s transitional economy1 this research draws insights from two theoretical traditions one is new institutionalism which emphasizes the role of institutions both formal and informal in economic growth the other is social network analysis which highlights the role of interpersonal relations in producing and enforcing informal norms integrating these two approaches yields the thesis that social networks affect economic growth via enforcing informal institutions the article focuses on the economic payoff of kinship networks in the context of china s rural industrialization to argue that kin solidarity and kin trust played an important role in protecting the property rights of private entrepreneurs and reducing transaction costs during the early stages of market reform when formal property rights laws were ineffective and market institutions underdeveloped data from 366 villages show that the strength of kinship networks has large positive effects on the count and workforce size of private rural enterprises and insignificant

soft budget constraint and inflation cycles a positive model of the macro dynamics in china during transition abstract in this paper we develop a positive general equilibrium model consistent with china s institutional and political environment to explain the growth and inflation cycles during transition central to our explanation is the government s use of the monetary and financial system to support the state sector and the growing tension between a long running commitment to the sector and economic decentralization given this commitment we show how the cycles emerge as a product of the government s imperfect control over credit allocation under decentralization and the high costs of implementing administrative credit control

starting point bias in dichotomous choice valuation with follow up questioning abstract follow up questions are frequently used to improve the efficiency of dichotomous choice contingent valuation questionnaires however a number of authors e g 12 16 have noted a significant difference between the wtp distributions implied by initial and follow up question responses this paper investigates starting point bias as one explanation for the phenomenon we develop a model of starting point bias in the context of dichotomous choice questioning with follow up using a monte carlo simulation to illustrate the potential bias imparted to wtp estimates an application is provided based on data from a cv study in northcentral iowa

environmental value transfer state of the art and future prospects abstract the main objectives of the paper are to 1 give an overview of the state of the art of environmental value transfer 2 discuss its prospects and potential role in cba as a decision support tool and 3 provide further guidelines for proper use and application environmental value or benefit transfer is a technique in which the results of studies on monetary environmental valuation are applied to new policy contexts the technique is controversial not least because of academic and political reservations over the usefulness and technical feasibility of economic valuation tools to demonstrate the importance of environmental values in project or programme appraisals testing of environmental value transfer so far has been unable to validate the practice taking into account the conditions set out in the literature for valid and reliable value transfer most transfers appear to result in substantial transfer errors this paper discusses why and addresses the question of which factors may have been overlooked it is argued that the problem is much more fundamental than previously acknowledged strict guidelines in terms of quantitative adjustment mechanisms to valid value transfer are meaningless if the more fundamental issue of differences in the very nature of the values elicited is not addressed at the same time

governing china s transition to the market institutional incentives politicians choices and unintended outcomes this essay reviews two books that seek to account for china s success in making economic reforms and sustaining rapid growth one perspective explains china s reformist approach in terms of politicians making choices under certain institutional rules the other sees an economic logic of market transition and emphasizes policymakers limited abilities in governing the economy the essay assesses the merits of these competing claims it calls for better specification of the causal linkages between institutional rules and politicians choices and concludes that both the dynamics and dilemmas of china s political economy are explained in terms of increasing market competition finally the essay evaluates the argument that decentralization leads to market segmentation and points to the chinese government s evolving role in dealing with the economy

collectivization and china s agricultural crisis in 1959 1961 the agricultural crisis in china in 1959 61 after the initial success of the collectivization movement resulted in 30 million extra deaths in this paper a game theory hypothesis proposes the main cause of this catastrophe i argue that because of the difficulty in supervising agricultural work the success of an agricultural collective depends on a self enforcing contract in which each one promises to discipline oneself a self enforcing contract however can be sustained only in a repeated game in the fall of 1958 the right to withdraw from a collective was deprived the nature of the collectivization was thus changed from a repeated game to a one time game as a result the self enforcing contract could not be sustained and agricultural productivity collapsed the empirical evidence is consistent with this hypothesis

enterprise reform and technical efficiency of china s state owned enterprises this study investigates whether the enterprise reforms were helpful for the technical efficiency of china s state owned enterprises a stochastic varying coefficients frontier approach is applied on enterprise survey data in 1992 the results suggest that exposure to market competition or less state intervention is positively correlated with firms level of technical efficiency there is no evidence however of positive contribution by adoption of the new enterprise institutions to technical efficiency

did the technical efficiency of state enterprises improve with the same speed in all provinces in china the objectives of this study are to examine whether technical efficiency of china s state enterprises improved over time due to the impact of economic reforms and to examine whether the response rates varied significantly across provinces the results carry strong policy implications for future reforms the empirical results show that technical efficiency improved significantly due to economic reforms from 1986 to 1989 shanghai appears to have responded more quickly and consistently to economic reforms than other provinces over the period

success and failure of reform insights from the transition of agriculture this paper analyzes the linkages between the reform strategies in transition countries and economic performance the authors focus on agriculture because of the sharpness of the policy changes fundamental differences among countries and relative simplicity of agricultural relationships the authors document post reform performance in the transition countries of asia and europe the authors show how a pricing reform and subsidy reductions b land rights reform and policies that affect farm restructuring and c the presence institutions that facilitate exchange either markets or market substitutes affect output and productivity the paper ends with general lessons on reforms and transition

rural industrialization in china and india role of policies and institutions summary the dynamic rural nonfarm sector in china has been a major contributor to the country s remarkable growth while in india the growth in output and employment in this sector has been rather stagnant this paper argues that the observed patterns in the rural nonfarm development are the results of institutional differences between the two countries especially in their political systems ownership structure and credit institutions a review of the strengths and weaknesses of the rural nonfarm economy in china and india highlights the potentials and challenges of growth in the sector

willingness to pay for quality improvements should revealed and stated preference data be combined abstract in this article we propose theoretically consistent welfare measurement of use and nonuse values for an improvement in environmental quality with revealed and stated preference data an analytical model based on the comparative static analysis of the variation function that describes the relationship between recreation demand and dichotomous choice contingent valuation models is estimated our results show that revealed and stated data should not be combined under the same assumed preference structure unless the two decisions imply the same change in behavior induced by the quality change in addition our results indicate scope effects in willingness to pay measures estimated with stated preference data

the effect of common sources of regression error on benefit estimates discussions of the sources of error in recreation demand analysis are common in the existing literature the most traditional line of thought e g gum and martin considers the error component in predicting the individual s recreation behavior to arise from unmeasured socioeconomic factors others e g hanemann attribute at least some of this error to fundamental randomness in human behavior applied statisticians e g hiett and worrall on the other hand suggest that recall of annual number of recreational trips i e the quantity demanded is subject to substantial error still others e g brown et al have argued that recall of explanatory variables such as travel expenses contains error despite the discussion of potential error sources there is no work which relates the sources of error in the demand relationship with benefit measurement 1 of practical importance in recreational demand estimation is whether error assumptions have an influence on welfare measures since it is for public policy decision purposes that recreational demand estimation is usually undertaken will the estimated consumer surplus derived from demand analysis be independent of the assumed source of the error in the regression the purpose of this paper is to explore how the assumptions about sources of error influence estimates of recreation benefits a discussion of the various sources of error in de

the term structure of very short term rates new evidence for the expectations hypothesis abstract empirical researchers have frequently rejected the expectations hypothesis the expectations hypothesis however has seldom if ever been tested at the extreme short end of the term structure where maturities are measured in days or weeks using overnight weekly and monthly repo rates i find that term rates are almost unbiased estimates of the average overnight rate this evidence provides new support for the expectations hypothesis

presidential influence on the federal reserve in the 1970 s this research examined presidential influence on federal reserve monetary policy in the 1970s a reaction function for the change in the federal funds rate was estimated and then checked to determine whether that reaction function shifted at politically important points the two political influences studied were elections and administration the federal reserve did not appear to manipulate the money supply in 1972 to aid president nixon s reelection the reaction function shifted between the nixon and ford administrations it did not shift with the ascension of carter and it did not shift with the replacement of chairman arthur burns by chairman william miller

inferring attribute non attendance from discrete choice experiments implications for benefit transfer typical convergent validity tests of benefit transfer based on stated preference data assume that willingness to pay wtp estimates have been accurately measured and that differences in wtp arise from differences in observable and unobservable characteristics between the study and the policy sites in this paper we conduct a convergent validity test assuming equality of underlying preferences but allow for the possibility that transfer errors arise from differences in the way that respondents process information in the preference elicitation tasks using data from an identical survey instrument applied to the population of two river basins in spain we obtain marginal and total wtp estimates for ecological improvements of water bodies and the corresponding transfer errors across sites results of equality constrained latent class eclc models that infer attribute non attendance an a are compared to results from mixed logit mxl models in wtp space we find large absolute and relative differences in marginal and total wtp between sites for the mxl models and significantly reduced transfer errors for the eclc models this paper therefore provides further evidence that an a can significantly affect environmental values derived from attribute based stated preference methods and is the first to investigate the implications for benefit transfer

total factor productivity change in china s farming sector 1952 1989 a crucial problem in economic development is choosing institutions that are relatively efficient in resource allocation and conducive to growth however institutional innovations usually take time and it is often difficult to isolate these effects from the effects of noninstitutional factors modern china is one of the few exceptions it offers a rich experience in dramatic institutional changes after 1949 a smallholder system was experimented with immediately after the land reform this was quickly followed by various forms of collectivization since 1979 the household responsibility system hrs has gradually replaced the commune system thus china provides a unique opportunity for a comparative study of these different rural institutions in terms of the total factor productivity index tfpi this index measures the change in output relative to the change in inputs the examination of the tfpi also has policy implications the apparent plateau in grain production and the slow growth in other crop production from 1985 to 1989 constitute a sharp contrast to the period 1979 84 which witnessed rapid growth in both grain and economic crop production in china public ownership is favored by orthodox ideology and noneconomic factors often play an important role in economic life 2 in facing slower growth in crop production whether the hrs should or should not be the long term rural institution has become a sensitive question again and has kindled a heated debate within china in this study i will examine the performance of the successive rural institutions in china in terms of changes in the tfpi over the period 1952 89 using 1989 as the final year of my study the most important finding of this study is that the hrs showed a clear advan

market reforms technological capabilities and the performance of small enterprises in china this paper shows that the domestic and foreign trade liberalization of the chinese economy since the late 1970s has led to much dynamism among small and medium firms such firms have grown at a rapid pace and have increased their share of value added in the chinese economy at the same time they have recorded gains in total factor productivity however after two decades of decontrol the potential for further growth among small and medium industries is limited unless further liberalization is undertaken and government policies pertaining to the allocation of credit levy of taxes and grants of research and other subsidies are applied in a more even handed fashion

politics and business cycles in industrial democracies politics alberto alesina influences from political competition on macroeconomic policy are often thought to be a source of economic fluctuations politicians are described as being driven by two not mutually exclusive main motivations they want to be reelected and they harbour political or ideological biases when such theories are confronted with actual cycles in a number of industrial countries the pattern of inflation unemployment output and budget deficits indicates that partisan policy making is a fairly widespread phenomenon with more limited evidence that electoral preoccupations result in major fluctuations the combination of partisanship and electoral cycles may easily result in socially undesirable outcomes in particular the degree of politico institutional stability and the independence of the central bank have a bearing on macroeconomic outcomes these observations raise a number of important questions about the design of political institutions

the political economy of economic liberalization two of the major policy problems facing governments of developing countries in the 1 980s have been unsustainable external and internal disequilibria and implementation of politically feasible stabilization cum liberalization programs which become necessary to correct these imbalances this article discusses these crises and subsequent policy reform the analysis suggests that balance of payments and fiscal deficits are frequently the result of use of an incorrect accounting system in a fixed exchange rate economy and of public sector expansion beyond its economically feasible size that governments usually seek to liberalize their economies during a crisis to regain control when the growth of the transfer state has led to generalized tax resistance avoidance or evasion that reduction of the government role will be required to alleviate these crises that sharp departures from past policies rather than gradual reform may be politically necessary and that contrary to the current technocratic opinion on this matter the sequencing of a consistent and credible package of reforms which will most effectively reduce the costs of adjustment is initial liberalization of domestic capital markets simultaneous with cuts in the fiscal deficit followed by floating the exchange rate and then commodity market liberalization with the growing importance of internal monetary fund imf stabilization and world bank structural adjustment programs there has been concern about the proper sequencing of the standard stabilization cum liberalization measures contained in these packages in particular there is grave concern at the very mixed and in some cases disastrous effects of liberalization attempts on incomes and employment in the southern cone of latin america in the late 1970s and early 1 980s much of the existing discussion of the order of liberalization is conducted within the traditional technocratic framework which seeks to determine the welfare cost minimizing deployment of policies in the standard stabilization and 1 this assumes a benevolent and well informed government maximizing a social welfare function

responsiveness flexibility and market liberalization in china s agriculture been at most only limited gains from market liberalization if one were to take the findings of this admittedly scant literature seriously it would appear as if there is at most only a relatively small impact from market reforms in china we believe there are three possible but only one plausible explanations for the findings first if market liberalization actually contributes little to no growth or increases in output or incomes this would of course in part explain why economies that lead reform with market liberalization do not experience significant gains theory and the experiences of other economies in other settings however would argue against such an interpretation second it could be that china s agricultural market liberalization has just proceeded so slowly that it is still too early for output to have been positively affected by market liberalization however as seen above the record on the market expansion and the observations of many researchers would not support this view

a welfare measurement of china s rural forestry reform during the 1980s abstract rural institutional innovation in china encompassed changes in land tenure arrangements and commodity pricing practices and their effects hinged on how they were carried out properly implemented the incentive structure could improve forest production would increase and thus producers and consumers would benefit otherwise if the reform programs were inappropriately implemented as reflected in market control and price distortions as well as policy uncertainty then the incentive structure might improve only slightly chances for production increase could be diminished making it hard for producers and consumers to benefit in addition to quantifying these impacts using contrasting cases this article also suggests some policy implications in a broader context

completing china s move to the market beginning in late 1978 by luck as much as design china arrived at a strategy for market oriented economic reform that combined substantial reform with rapid growth in gdp and exports the sequencing of reform began with the easy to reform sectors agriculture and foreign trade and then took up the more difficult task of reforming the large state owned enterprises with respect to agriculture small scale industry and foreign investment china found ways of introducing meaningful property rights into the increasingly marketized system a partially unreformed financial system and inadequate autonomy of large state enterprises accounts however for the current stop go nature of chinese development

reply to a comment on industry s response to market liberalization in china evidence from jiangsu province jiangsu has experienced impressive industrial development since 1949 often achieving higher growth rates than china s national average nonetheless rates of growth have fluctuated with distinct policy periods in industry s response to market liberalization in china evidence from jiangsu province i analyzed the structure of industrial production and productivity in jiangsu province to explore changes in specialization and efficiency this research covered the years 1952 88 and focused on comparing the period before 1978 when maoist regional self reliance was being promoted with the post 1978 reform when many of the selfreliant policies were reversed to analyze jiangsu s production structure i used location quotients for 29 products the results showed that jiangsu s production patterns became less specialized from 1957 to 1978 consistent with self reliance in fact none of the products in the sample showed an increase in specialization during this period after 1978 however 14 of the products analyzed moved toward specialization showing a clear change in the production structure to analyze productivity i applied a simple growth accounting framework using estimates of the output elasticities with respect to capital and labor based on jiangsu data with these assumptions productivity declined an average of 2 1 per year from 1953 to 1978 while it increased an average of 4 4 per year from 1978 to 1988 these results did not change substantially with alternative parameter assumptions both the specialization and productivity results suggest that reforms had a substantial positive impact on jiangsu s economy the comment by menghao zhao and paul m sommers addresses the last section of my article which compared state and collective industrial productivity in the reform period series for both gross and net out

firm dynamics and industrialization in the chinese economy in transition implications for small business policy abstract this article first presents a review of the development of different types of domestic enterprises state owned enterprise soes collectiveowned enterprises coes and other enterprises oes which include mainly private enterprises compared with other transition economies coes are actually an important source of china s rapid economic growth they are vaguely defined cooperative without a well defined ownership structure there is no equivalent organizational structure similar to coes in western economies the purpose of this article is to study the empirical relationship between the size of domestic enterprises including state owned enterprises collective owned enterprises and other enterprises and their firm dynamics growth by investigating whether they grow according to gibrat s law the majority of coes and oes were formed after the economic reform the rapid growth of these non state enterprises especially coes is actually the driving force behind the rapid development of the industrial sector our empirical results suggest that gibrat s law does not hold for all types of enterprises the rejection is especially strong for coes moreover small enterprises are growing faster than their larger counterparts in terms of employment and output this conclusion leads to at least three implications 1 there has been little research into the dynamics of soes and coes in an economy in transition our results not only help stimulate further research in this area but also provide information for designing policies to speed up the economic reforms 2 until now the chinese government has not had a comprehensive small business policy given our empirical results there is an implication for government policy prescription to achieve china s development targets of rapid industrialization and lower unemployment or underemployment the chinese economy can reap more dynamic benefits by breaking up a giant and inefficient enterprise especially inefficient soe into a number of smaller enterprises in addition more small enterprises also improve competition in the marketplace and force other inefficient soes to improve their performance further research should be undertaken to examine the viability of this policy 3 because coes are the majority of small manufacturing enterprises the rapid growth of coes after their formation that are simply the opposite of the type of private organizations the center of the central and east european reforms is rather surprising to academics although some hypotheses like cooperative culture and moral framework for rights are put forward to explain their superior performance the validity of such hypotheses has not been empirically tested yet this is a fruitful area for further research

infrastructure externalities and regional industrial productivity in china a spatial econometric approach this paper evaluates infrastructure s impact on regional industrial productivity in china and distinguishes between within and cross region effects three infrastructure assets are examined elect

how to reform a planned economy lessons from china the countries of eastern europe and the former soviet union have been flooded with advice from the west on how to liberalize their planned econo mies this advice is unfortunately offered in an empirical vacuum no one knows how these econo mies will react to the proposed liberalization meas ures there exists however a neglected source of information china offers a long time series of data over a decade s worth on the effects of reforms on a planned economy china s reforms were gradual but their cumulative effect has been large and they have been remarkably successful china s experiments provide some practical les sons on what kinds of reforms can work elsewhere the dominant school of thought among economists favours the big bang policy of reforming quickly and according to a comprehensive plan partial reforms in this view are useless they will be negated by the remnants of the planning system the proponents of big bang reform have been influential with poland czechoslovakia and rus sia announcing plans for a rapid transition to capi talism