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With the end of the Cultural Revolution and the downfall of the Gang of Four in 1976, China entered the “Golden Age” of reform, which ended tragically within a decade in 1989. Deng’s Southern Tour launched economic reforms without its political counterpart, and created huge interest groups that have benefited from the authoritarian system, further hindering political reform. The Initiative for Building Consensus on Reform advocated comprehensive constitutional reforms to be taken for China to return to healthy economic development. Without political reform that makes the ruler accountable to the ruled, no matter how much freedom, wealth or half-baked rule of law enjoyed by the ruled, it can be taken away from them overnight, as the zero-Covid policy showed in 2020– 22.
The Chinese Communist Party (CCP) celebrated its one-hundredth birthday in 2021. Its durability poses a twofold question: How has the party survived thus far? And is its survival formula sustainable in the future? This Element argues that the CCP has displayed a continuous capacity for adaptation, most recently in response to the 1989 Tiananmen protests and the collapse of communism in Europe. As the CCP evaluated the lessons of 1989, it identified four threats to single-party rule: economic stagnation; socioeconomic discontent; ideological subversion; and political pluralism. These threats have led to adaptive responses: allowing more private activity; expansion of the social safety net; promotion of indigenous cultural production; and rival incorporation into the party. Although these responses have enabled the CCP to survive thus far, each is reaching its limit. As adaptation stagnates, the strategy has been to increase repression, which creates doubt about the ongoing viability of single-party rule.
Research suggests that institutional complexity is of strategic importance and recent calls have been made to investigate organizational strategizing in such a situation of multiple institutional logics. We therefore investigate middle managers’ strategizing for institutional complexity. In doing so, we follow theoretical suggestions of a renewed practice-based view on strategizing as a broad social accomplishment beyond top management activities. Based on a qualitative field study in a company under influence of substantive financial reform, findings show that middle managers re-strategize institutional complexity at the vertical interstices of top management strategies and the distributed agency of their followers. Furthermore, the study highlights the character and effects of lateral dynamics of middle managers’ competing strategizing. We explain how these vertical and lateral dynamics provide insight into strategizing for institutional complexity as a distributed, situated, and emergent social accomplishment. Such strategizing practices have unintended organizational consequences beyond both top and middle management control.
Chapter 3 starts the chronological review by looking at the role of law during the Early Reform Era (1978–1989). In this era, the Party-state vested economic decision-making authorities with its local governments, giving them a relatively free rein to experiment with and administer economic activity by limiting central law-making. The chapter tracks how such political–economic relations were bolstered by the Party-state’s choices with respect to the use of law. It also shows how, as the era progressed, the law was used to carve out and legitimize politically palatable forms of market activity.
Japan has long strived to acquire a more influential voice in trade negotiations but failed because of the lack of decisiveness rooted in the resistance from those who have vested interests. However, a series of domestic reforms undertaken since the 1990s have made it possible for Japan to play a leadership role in the new rulemaking of international trade. After the Trump administration withdrew the United States from the Trans-Pacific Partnership, Japan took the initiative to conclude a new agreement called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. How have domestic factors pushed Japan to step up as a new leader in the rulemaking of international trade? How have the economic rise of China and the relative decline of US hegemonic power impacted Japanese domestic politics and economics? What implications do Japan's new roles have for the security and prosperity of the Asia-Pacific region? By exploring empirical evidence drawn from five new books, we argue that the commitment to domestic economic reforms has enabled Japan to play a leadership role in the rulemaking of the international economic order.
Chapter 1 introduces the main theme of the book, that is, challenging the conventional wisdom that the existing WTO rules are inadequate to address China’s state capitalism and demonstrating that China’s WTO-plus obligations, coupled with the general rules on subsidies, do provide ways to address the problem. It also provides summaries of the chapters to explain the structure of the arguments in the book.
One major issue facing the world trading system today is how to deal with the challenge of China's state capitalism. Many commentators believe that the existing WTO rules are insufficient and, thus new rules are needed. This book challenges this conventional wisdom. Through meticulous studies and fresh analysis of the commitments in China's WTO accession package, existing rules on state capitalism in WTO agreements and recent attempts to make new rules on these issues at the bilateral, regional and multilateral levels, this book argues that existing WTO rules, especially those on subsidies, coupled with China-specific rules in its accession protocol, do provide feasible tools to counter China's state capitalism. This book also discusses the reasons for the lack of usage of these rules and provides concrete policy suggestions on how the rules may be better utilized, as well as how to conduct constructive negotiations on new rules in the WTO and beyond.
In this chapter, I examine the evolution of US democracy aid in Egypt through the eyes of the diplomats, practitioners, and bureaucrats engaged with such efforts in Egypt. I focus on the practical construction of democracy aid on the ground and the struggles undertaken by different actors to implement aid programs in an authoritarian state. I examine how ideas, interests, and institutions engaged in such aid evolved since 1990s to shape a kind of reform more attuned to the commercial and economic interests of the US and Egyptian governments rather than those of citizens in the country. In the first section, I focus on the nature of authoritarianism in Egypt, tracing its origins since the Nasser era to describe how power has since been exercised and maintained. In the second section, I examine how US democracy aid evolved in Egypt, focusing on the debates and discussions at the inception of USAID’s programs.
December 1978 was a political, economic and social turning point for China. As the balance of power within the top leadership shifted, a search for new policies began that deepened into what came to be called “reform and opening” and culminated decades later in a multistranded transition to a market-based economy. This new policy orientation was accompanied by a shift in development strategy that permitted China to take advantage of its factor endowments and structural conditions and dramatically accelerate economic growth. Thus 1978 marks not only the beginning of “reform,” but also the start of the Chinese “economic miracle,” a remarkable thirty-two-year period, through 2010, during which GDP grew at an annual rate of 10 percent. Chinese economic structure and Chinese society were utterly transformed. An extraordinary distance separates the vibrant upper-middle-income, predominantly market-based, economy that is China today from the troubled, isolated low-income country that was China at the end of the Cultural Revolution. This chapter builds its narrative around the systemic and structural changes that transformed China, especially in the thirty years between 1978 and 2008.
In chapter five, we argue that the economic collapse and famine of the 1990s profoundly transformed North Korea’s political economy. North Korea’s population increasingly turned towards market activities for their survival. North Koreans have continued to rely on markets for food and everyday goods, though marketisation has since expanded to the services, transport and housing sectors. While much of the existing literature has presented state and market as situated in a zero-sum relationship, we challenge the ontological separation between state and market to argue that the rise of the market in North Korea has been closely intertwined with the state. State officials have increasingly become involved in market activities, and the growing entrepreneurial class have entered into partnerships with officials as a means of negotiating the lack of clear property rights. The state has also taken a leading role in furthering the process of marketisation through the creation of new economic sectors, such as the mobile communications sector, for example.
Political opening, romantic freedoms, economic reforms, and such moderate political leaders as Hu Yaobang and Zhao Ziyang sparked happiness for many people in China during the 1980s, but their high hopes created heightened expectations that would be dashed by the end of the decade.
Across myriad literatures, it is widely held that expanding economic grievances induce violence, protest, or other forms of backlash. In Latin America, where economic liberalization deepened the downturn of the ‘lost decade’ of the 1980s (and 1990s), reform has been tightly associated with protest and mobilization. At the same time, liberal economic reforms have proven to be remarkably durable, even where long-promised benefits are hard to discern. This article makes the case that economically liberal reforms, despite inducing or deepening severe and sustained economic downturns, have actually undermined political protest. Previous work confirming the conventional wisdom foundered on two main methodological problems. First, selection into economic reform was a consequence of the very economic pain and macroeconomic imbalances it also served to induce. Secondly, because of this, these key (macro)economic characteristics are both pre- and post-treatment. Utilizing a marginal structural model approach to assess the impact of economic liberalization on protest outcomes net of this selection process, and the prior history of treatment, the study finds that painful reform reduces political protest even as it heightens grievances. This depoliticizing dynamic helps to explain the surprising durability of liberal reforms in Latin America.
Between 1985 and 2018, Brazilian economic well-being stagnated, with lackluster growth and regressive public policies destroying citizens’ life opportunities. There is considerable consensus about the sources of this low-level economic equilibrium, including low savings, low investment, and modest human capital improvements. Despite this consensus, and despite decades of reform, however, the overall institutional equilibrium changed only marginally. Drawing on the study of varieties of capitalism, this chapter describes how institutional complementarities drove actors’ incentives toward a collectively suboptimal equilibrium. Complementarities within and across five domains sustained the equilibrium: 1) the macroeconomy of a middle-income developmental state, 2) the microeconomy of firm organization; 3) the coalitional presidential political system; 4) the weak control mechanisms this political system set in place; and 5) an autonomous bureaucracy that permitted incremental reform but in consequence, may have moderated demands for more dramatic reforms while deepening fiscal constraints and impelling policymakers to preserve the tool kit of the developmental state.
Chapter 11 examines the stock market bubbles which occurred in China in 2007 and 2015. Between the end of 2005 and October 2007, the stock market soared by over 400 per cent. One year later, the market had fallen by 70 per cent. Similarly, in the year before June 2015, the stock market had increased by more than 150 per cent. It then collapsed by more than 50 per cent in under three months. The chapter discusses how, in the space of 20 years, China went from having almost no marketability to having heavily controlled marketability, and then near-free marketability. China also went from having virtually no middle class to having the world’s largest middle class, which then became the new speculating class. Thanks to margin lending, they were able to borrow heavily to finance their investments. Both bubbles are very clear examples of how and why governments engineer bubbles in the first instance. In 2007 the Chinese authorities needed to stimulate privatisation and in 2015 they needed to unwind the largest economic stimulus in history.
Chapter 4 analyzes the political dimension of the HECS framework in the context of Syria, contending that ideology played a key role in creating Syria’s vulnerabilities in the lead-up to the uprising. The chapter focuses on two key ideologies – Ba’athism in the 1970s and neoliberalism in the early 2000s – and their economic and agricultural policies. The Ba’athist regime under Hafez al-Assad effectively securitized food production to justify agricultural reforms designed to maintain the support of rural agrarian constitutiencies. The author shows that these Ba’athist policies, which included intensive irrigation, food and fuel subsidies, and large-scale hydroprojects, led to unsustainable water and agricultural practices and poor governance. Finally, the chapter examines the liberalizing reforms under Bashar al-Assad, which culminated in a 2005 shift to a social market economy, and concludes that they increased the vulnerability.
Decades of research show that economic freedom is highly correlated with desirable economic outcomes both internationally and locally. Yet we still know little about the transition from low to high levels of economic freedom, particularly for institutions under local control. This research shows that while economic freedom in the United States is decreasing with regard to institutions under national control, it is increasing with regard to institutions under state and local control. Economic freedom increases gradually among the states, driven primarily by increasing labor market freedom. Decreases in economic freedom, on the other hand, occur sharply, often following stark changes to state fiscal policies.
The occupation of Iraq in 2003 involved a wide-ranging set of interventions in the domestic legal, political and economic structures of the state, interventions that provoked a debate about whether the law of occupation should recognize a category of ‘transformative’ occupation.
While the occupation itself has often been decried as an imperial venture, its administration involved a diffusion of power among international institutions as well as ratification by the Security Council through Resolution 1483. This article pursues the intuition that the transformation of norms and practices elsewhere in the international order underwrote the idea that it was the law of occupation that was problematic, at the same time facilitating the transmutation and preservation of practices that might be identified as imperial. Two developments are key: The first is the pervasive normalization of intervention in the domestic policy and legal orders of states; the second is the dissemination of norms about domestic regulation within the international order, those that touch on economic governance in particular. The orders of the occupying were infused in both form and substance with ideas of ‘normal governance’ traceable to myriad projects, policies and practices of other international institutions: development agencies, financial institutions, trade organizations. Iraq then might be a revealing case with which to consider the character and locations of contemporary imperialism, as well as the role of international law and international institutions in its unfolding.
This paper examines the political economy of the Orange Revolution in an effort to understand routes by which less democratic postcommunist countries might break with an illiberal status quo. The fusion of Ukraine's rent-seeking economic interests and illiberal political regime produced an unstable equilibrium that is poorly explained by two leading theoretical frameworks: ‘market reform’ and ‘political competition’ theory. Only by combining key insights from each do we get a full explanation of the pressures that generated Ukraine's challenge to illiberalism in 2004. We examine this story with a particular focus on the crisis-prone nature of ‘competitive authoritarian regimes’ and the related strategic calculations of business elites.
I truly enjoyed reading the perspective article entitled ‘Advancing indigenous management theory: Executive rationale as an institutional logic’ by Gordon Redding and Michael Witt (2015), especially its implications for a ‘promising avenue for indigenous management research’ (179). I agree with the authors in general terms that the research on the impact of culture as an informal institution, and also the effect of formal institutions, on business practices must come down from a highly abstract level to a more pragmatic ground, especially their interaction and integration as embodied by various specific mechanisms to guide practices. For that purpose, Redding and Witt introduce an interesting notion of ‘executive rationale’ to guide action. Applying the abstract notion of institutional logic to specific business practices, executive rationale refers to the ‘socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social reality’ (Thornton & Ocasio, 2008: 101) in the specific context of business practices. In other words, executive rationale provides a mental blueprint for practical actions in a business context. In addition, the authors have empirically generated a tentative model with multiple dimensions to compare the dominant executive rationales as institutionally-embedded across five key economies.
In this article I build an analytic narrative to provide an integrated and analytical view of the economic reforms that took place in Colombia during the years 1974-1978. Through the use of basic game theory and historical evidence, I present the core of the strategic interactions between several players: Government is depicted as a committed but poorly endowed agenda setter, Coffee as the dominant player and Industry as the contending but relatively weak player. The analysis shows that the 1976 coffee boom changed the interaction between sectors from an assurance to a prisoner’s dilemma game, and identifies as the post-boom solution the Government–Coffee coalition, which carried out a soft version of the initial reforms.