How China Escaped the Poverty Trap tackles a perennial chicken-and-egg problem in development through the crucial lens of China’s experiences: Is it good governance that leads to economic growth, or growth that enables good governance?
Academics and policymakers have long argued that poor countries should either “get growth first” or “fix governance first.” Applying the lens of complexity, Ang demolishes this traditional linear thinking. Retracing the steps of economic-and-institutional changes across different parts of China over 35 years, she unearths four key findings that upend the conventional wisdom in development:
- Development is not a linear process. Institutions and markets co-evolve across contexts, sharing a similar sequence despite different contexts.
- The first step out of the poverty trap is to harness normatively weak institutions to build markets.
- Institutions that help build new markets are not the same as the ones that preserve mature markets.
- Effective adaptation requires an enabling environment of “directed improvisation”—a paradoxical blend of top-down direction and bottom-up improvisation.
In China, the ruling party led the nation to prosperity not though command but through “directed improvisation”—the central leadership directs while local governments improvise—spawning an adaptive, locally tailored process of development.
Simultaneously bold and detailed, this groundbreaking book rethinks major questions in development and institutions, while providing the most complete synthesis to date of the complex forces that have shaped China’s dramatic makeover.
“Development economists have struggled to explain the extraordinary growth of the state-led Chinese economy—despite apparent violations of the usual ‘micro rules.’ Yuen Yuen Ang unpacks the process with convincing detail, explaining the underlying logic of a story so apparently different from the textbook models. Are there lessons here for today’s low-income economies? How China Escaped the Poverty Trap is worth reading with that in mind.”
—Nancy Birdsall, President, Center for Global Development
“Sometimes the best way to answer a difficult question is to ask a different question. In this book, instead of asking the usual question—How has China developed despite having low-quality institutions?—Yuen Yuen Ang asks how China has used those institutions to kick-start economic development, which then set off a mutually reinforcing cycle between institutional development and economic development. This innovative and sophisticated book is an outstanding contribution not only to the study of Chinese economic development but also to the long-running debate on the role of institutions in economic development.”
—Ha-Joon Chang, University of Cambridge, author of Kicking Away the Ladder and Economics
“In this major new contribution, Yuen Yuen Ang offers a fresh synthetic explanation for the stunning economic transformation of China in recent decades. She shows how China experienced sustained rapid economic development by transforming weak institutions in ways that strengthened states and markets simultaneously. This book points toward a potential model of growth for other countries and is a must-read for all scholars interested in explaining development trajectories in the Global South.”
—James Mahoney, Northwestern University, coauthor of Advances in Comparative-Historical Analysis
“How China Escaped the Poverty Trap addresses an enduring question in political economy: Why are some nations rich and others poor? This core question is explored through a secondary question about the sequential relationship between effective governance and economic growth: Did growth follow or result from state capacity? Yuen Yuen Ang states that the government and economy coevolved, meaning they adapted to each other. She identifies a three-step sequence to this coevolutionary process and shows, surprisingly, that the first step of development is actually to build markets with ‘weak’ institutions, that is, features inconsistent with norms of good governance. Ang crafts this original and compelling argument using a rich base of fieldwork, including more than three hundred interviews that introduce readers to real voices on the ground.”
—Kellee S. Tsai, Hong Kong University of Science & Technology and Johns Hopkins University, author of Capitalism without Democracy