China's Miracle

The last three decades has witnessed China's history-making economic growth, with an average annual growth rate of over 9 percent, despite a general lacking of sound legal system, financial system and other formal institutions. A general question thus arises: what is the relationship between institutions and economic development? The book attempts to explain China's phenomenal economic miracle and to predict its future through a theoretical framework which accounts for the dynamic relationship between economic development and institutions. It unravels China's economic miracle in light of the theory introduced.

The book presents the theory of interlinked relational contract, the workhorse model of the book. The theory highlights that effective governance is a function of market extent and market completeness. The process of economic development and modernization can be looked at fruitfully from two perspectives: the markets and the institutions and their interactions. The book stresses the critical fit between the development stage and governance for a country's economic transition and development and thus the idea of "appropriate institutions." The book draws up a few explicit models of economic growth and contract form and simulates the process of market extension and economic growth. The book also analyzes the East Asia model from the perspective of interlinked relational contract and discusses its general implications for economic development and institutional change.

The author is an expert in China's economy and the book draws on his expertise to facilitate the understanding of China's economic progress and its implications for the future. The book will prove to be most helpful for anyone who wants to understand more about the Chinese economy's past and future, and for anyone who is interested in institutions and development in general.

Yongqin Wang is currently Associate Professor at the China Center for Economic Studies (CCES), Fudan University, and has held visiting position at Yale University (2008-2010). He received his Phd in Economics from Fudan University in 2004 and has also visited Queen’s University (Kingston, Canada) and IDEI, University of Toulouse 1 (Toulouse, France) as a visiting scholar. His main research interests include microeconomic theory, financial economics, development economics, and Chinese economy.