On the Fundamentals of a Successful Reform for National Prosperity—An Economic Analysis Based on the Practice of China’s Reform

Abstract

This paper discusses the fundamentals required for successful reform, i.e., the necessary institutional changes required to make a nation grow sustainably wealthier. It argues that enriching the people is a prerequisite for a prosperous nation and further reveals the inherent logic behind the statement “in order to enrich the people, they must be given private rights, and in order to protect the people’s private rights, public power must be limited.” Based on this argument, we examine and analyze the experience of China’s reform over the past 30 years and come to the conclusion that it is necessary to transform government functions and further deepen market-oriented reform. We hold that China’s economic performance bears no special or exceptional economic law, and there does not exist the so-called “China Model” characterized by government taking the leading role as a relatively mature, stable, and widely applicable development model, but that there does exist a Chinese development path or experience featuring the inherent logic of “prospering the nation through enriching its people” that can be employed by countries all over the world.

Keywords

prospering the nation through enriching its people / information asymmetry / incentive compatibility / limited government

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2016 Higher Education Press and Brill