Doing well by doing good: a market for favors

Article Abstract:

A formal favor economy, where favor credit is earned by performing services for return favors, can be used as a transition between a transfer economy and a money economy. Government-aided transfer economy burdens taxpayers as recipients learn job skills that are marketable in the money economy. A transition to a favor economy can reduce the tax burden by mobilizing surplus resources to produce services for return favors. Giving favor credits to people hired and price discounts to low-income users of favor products can control fluctuations in a money economy.

Compensation and benefits, Welfare recipients, Occupational training

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The lessons of China's transition to a market economy

Article Abstract:

The transition of China's economic structure from a planned economy to a market economy provides valuable lessons for other transition economies. The theory of induced institutional innovation explains the reasons behind the success of Chinese reforms despite the absence of a master plan. Moreover, China's transition did not disturb the production of medium to large-scale companies as compared to the 'big bang' approach of Eastern European countries.

Central planning

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Ending inflation in China: from Mao to the 21st century

Article Abstract:

Chinese economic reforms dating from 1978 led to inflation that reached 24% in 1994 before falling back below zero in 1998. Government expenditures since then designed to encourage growth may cause future inflation and new fiscal strains.

China, Inflation (Finance)

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