China. Impressive growth since 1978 Contrasting experience relative to Russia Inequality and poverty has fallen Absolute poverty fell from 250 million to 50 million in two decades
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Absolute poverty fell from 250 million to 50 million in two decades
Life expectancy has increased from 64.37 in the 1970s to 70.80 in 1996, (68.71 for men and 73.04 for women), today it is 71.13 for men and 74.82 for women
Infant mortality fell from over 50 per thousand in the 1970s to less than 30 per thousand in the 1990s (today it is 22.12)
At PPP, China's share of global output has risen from close to 11 percent in 2000 to a shade over 13 percent in 2004.
On that basis it dwarfs Canada---and France, Italy and the UK; and is almost twice as big as Japan. Indeed, on the ppp basis it is the third largest economy if we count the euro area as a single economy.
China looks different from other transition countries
Suppose and that supply and rationing is efficient
Efficient supply means that planned supplies are delivered by producers with the lowest marginal cost, and efficient rationing means that the planned quota is delivered to buyers with the highest willingness to pay.
Further suppose that
Dual Track means that above-quota output is sold in markets
Since the real wage rises, and aggregate profits necessarily increase
One could think of this as a tax reform
Before, lump-sum tax on quota output and 100% marginal tax rate on above quota output
Dual track reduces marginal tax rate on above quota output
As a result, enterprises increase production and labor demand; the consumer is offered a higher real wage rate (or more consumption) and hence supplies more labor. The reform, therefore, leads to an increase in aggregate economic activity.
Notice that efficiency gain is split between government and public