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From state resource allocation to a 'low-level equilibrium trap': re-evaluation of economic performance of Mao's China, 1949-78

Deng, Kent and Shen, Jim Huangnan (2019) From state resource allocation to a 'low-level equilibrium trap': re-evaluation of economic performance of Mao's China, 1949-78. Working Papers 2019 (298). Department of Economic History, London School of Economics and Political Science, London, UK.

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Abstract

This paper provides a full picture of how Maoist economy actually performed. We argue that Mao’s China neither undertook a structural change towards industrialisation nor generated a sustainable growth from 1949 to 1978.2 With fatal shortcomings of a planned economic system imported from the Soviet Union – the ‘principle-agent’ problem and information asymmetry for the bureaucracy, and disincentives for producers – China’s economy remained not only deliberately unbalanced but also predominantly rural until the 1980s. More importantly, the Maoist economy was not designed to enrich and empower the masses in society. Instead, all key consumer goods including food, clothing and housing were strictly rationed. The material life of ordinary citizens in China saw no improvement. This paper aims to reveal the harsh reality of the Maoist economy with solid evidence and theoretical explanation.

Item Type: Monograph (Working Paper)
Additional Information: © 2019 The Authors
Divisions: Economic History
Subjects: H Social Sciences > HC Economic History and Conditions
D History General and Old World > DS Asia
JEL classification: N - Economic History > N0 - General > N00 - General
N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries > N55 - Asia including Middle East
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East
Date Deposited: 05 Jul 2019 14:24
Last Modified: 12 Sep 2020 23:09
URI: http://eprints.lse.ac.uk/id/eprint/101127

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