How China Escaped the Poverty Trap by Yuen Yuen Ang

Bold in that when the state changes direction, it does so big time, and the whole country, or at least its 50 million civil servants, jump and do whatever it takes to achieve the new goals. Broad in that the state makes changes across the whole economy: Ang has little time for Dani Rodrik’s attempts to identify specific bottlenecks and tackle them one at a time – that is, thinking about the economy as a complicated, rather than a complex, system. It’s impossible to do justice to the book in a brief review, but here’s a taster: firstly, there are three distinct patterns to China’s take-off – the changes made by the state are broad, bold and uneven. There are echoes of Ha-Joon Chang’s work on the history of trade policy here (and he provides a fulsome plug for the dust jacket). The weak/strong description is imposed by experts from already developed countries who conclude that their institutions are obviously the 'strongest' since their countries are the richest. Perhaps her most explosive finding is that for countries just at the start of their development trajectory, so-called 'weak' institutions are often better than 'strong' ones. The institutions that help to achieve take-off are not the same as the ones that preserve and consolidate markets later on. Using China as an elephant-sized case study, Ang takes a systems sledgehammer to this kind of linear thinking and argues that development is a 'co-evolutionary process.' Institutions and markets interact with and change each other in context-specific ways that alter over time. The author, Yuen Yuen Ang, starts with a classic developmental chicken and egg problem – which comes first, good institutions or economic prosperity? Different camps within academia and the aid business urge developing countries either to 'first, get the institutions right' or 'first, get growth going,' and then the rest will follow. Its lessons apply far beyond China’s borders. This book is a triumph, opening a window onto the political economy of China’s astonishing rise that takes as its starting point systems and complexity.

How China Escaped the Poverty Trap by Yuen Yuen Ang