Web sites.
Because of the party’s control over economic institutions,
the extent of creative destruction is heavily curtailed, and it
will remain so until there is radical reform in political
institutions. Just as in the Soviet Union, the Chinese
experience of growth under extractive political institutions is
greatly facilitated because there is a lot of catching up to
do. Income per capita in China is still a fraction of that in the
United States and Western Europe. Of course, Chinese
growth is considerably more diversified than Soviet growth;
it doesn’t rely on only armaments or heavy industry, and
Chinese entrepreneurs are showing a lot of ingenuity. All
the same, this growth will run out of steam unless extractive
political institutions make way for inclusive institutions. As
long as political institutions remain extractive, growth will be
inherently limited, as it has been in all other similar cases.
The Chinese experience does raise several interesting
questions about the future of Chinese growth and, more
important, the desirability and viability of authoritarian
growth. Such growth has become a popular alternative to
the “Washington consensus,” which emphasizes the
importance of market and trade liberalization and certain
forms of institutional reform for kick-starting economic
growth in many less developed parts of the world. While
part of the appeal of authoritarian growth comes as a
reaction to the Washington consensus, perhaps its greater
charm—certainly to the rulers presiding over extractive
institutions—is that it gives them free rein in maintaining
and even strengthening their hold on power and legitimizes
their extraction.
As our theory highlights, particularly in societies that have
undergone some degree of state centralization, this type of
growth under extractive institutions is possible and may
even be the most likely scenario for many nations, ranging
from Cambodia and Vietnam to Burundi, Ethiopia, and
Rwanda. But it also implies that like all examples of growth
under extractive political institutions, it will not be sustained.
In the case of China, the growth process based on catch-
up, import of foreign technology, and export of low-end
manufacturing products is likely to continue for a while.
Nevertheless, Chinese growth is also likely to come to an
end, particularly once China reaches the standards of living