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A Theory of Ambiguous Property Rights in Transitional Economies
Working paper
David Li
July 1995 |
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A widely held belief in economics is that institutions of clearly defined property rights are the pre-conditions for economic prosperity. Based on this conventional wisdom, rapid privatization has been accepted as the main strategy of the post-socialist transition. The rest of the question is who should be the owner or who should enjoy property rights.
However, the Chinese experience constitutes a major contradiction to the conventional wisdom of property rights. The surprise comes from the Chinese non-state sector,where property rights arrangements on the whole are far from being clear. The owners of firms in the Chinese non-state sector are often loosely defined. Moreover, the rights of the owners are also ambiguously specified and poorly protected. Surprisingly, the performance of the Chinese non-state sector is miraculous, judged by common standards.During the past decade, it has been enjoying over 20 percent of average annual growth.As a result, the non-state sector has taken over 50 percent of the nation’s output. |
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| Last updated on: 12/19/2006 |
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