Jack W. Hou

Economic reform of China: Cause and effects

Abstract Despite the early success in mobilizing the people after seizing power in 1949, the Chinese Communist Party (CCP) soon faced difficult bottlenecks. After the disastrous Great Leap Forward, compounded by the Three Bitter Years of natural calamities, reformists instituted a series of changes moving towards more market oriented rewards. This was short lived as Mao Zedong mobilized the Little Reds Guards to launch the Cultural Revolution and regain power. Chinas economy stagnated till the death of Mao. When Deng Dehuai reemerged as the leader, he reinstituted the reforms he had initiated a decade and a half ago. There is, however, a difference. The first time was a tacit move, but the Comprehensive Economic Reform (CER) started in 1978 represented a change in paradigm and a shift in ideology. True to the historical and cultural traits of China, the early stages of the reform were experimental, limited, and somewhat timid. It started in the rural agricultural production with the Household Responsibility System. With its success, the reform was extended to urban industrial sectors, but the Tianmen student demonstration in 1989 brought the momentum to a halt. It was not until Dengs Southern Tour in 1992 did the CER formally become the fundamental directive that “cannot be altered for a hundred years”. The CER is true to its name, comprehensive. The reform encompassed many aspects, with few exceptions (e.g., the insistence of the CCP one-party rule). We discuss the reform actions in four facets: property rights, factor income, macro controls, and global integration. Chinas economic success is evident, as it has sustained an average of more than 8% growth for more than three decades, but what is the prognosis for the future? Bumpy, but promising.

The Regulation of Migration in a Transition Economy: China's Hukou System

Unlike most countries, China regulates internal migration. Public benefits, access to good quality housing, schools, health care, and attractive employment opportunities are available only to those who have local registration (Hukou). Coincident with the deepening of economic reforms, Hukou has gradually been relaxed since the 1980s, helping to explain an extraordinary surge of migration within China. In this study of interprovincial Chinese migration, we address two questions. First, what is a sensible way of incorporating Hukou into theoretical and empirical models of internal migration? Second, to what extent has Hukou influenced the scale and structure of migration? We incorporate two alternative measures of Hukou into a modified gravity model – the unregistered migrants: (i) perceived probability of securing Hukou; and (ii) perceived probability of securing employment opportunities available only to those with Hukou. In contrast to previous studies, our model includes a much wider variety of control especially important for the Chinese case. Analyzing the relationship between Hukou and migration using census data for 1985-90, 1995-2000 and 2000-05, we find that migration is very sensitive to Hukou, with the greatest sensitivity occurring during the middle period.

Public-private wage comparison: A case study of Taiwan

Abstract This paper rigorously examines the public-private wage differential. Two novelties: it deals with a newly industrialized economy-Taiwan, and an attempt is made to isolate out any alleged “favorable” industry/occupation job distribution that may exist for the public sector. Significant wage advantages were found to exists for both genders in the public sector. Both the absolute magnitude of this advantage premium and the relative size between genders were comparable to the estimates for the U.S and for Canada. The often alleged superior industry/occupation distribution of public sector jobs were verified and found to account for a significant portion of the observed sectoral wage differential.

The dynamics of Human Development Index

Abstract In criticizing the nature of the Human Development Index, this paper proposes a different way of constructing the HDI in terms of capturing the pure flow of human development in the areas of material well-being, health, and education. Our comparison of the HDIF and the HDI shows that measuring human development with flow variables provides a better human development performance in terms of health and education than the traditional measure which is a mixture of stock and flow variables.

Evolution of economic institutions and China’s economic reform

Abstract In the feudalistic society of medieval Europe, factors of production (such as land, etc.) were not commodities, it was not possible to change one’s status through economic activities. With the collapse of the manor system, Europe evolved into Mercantilism, followed by a brief period of Physiocrats, which inspired the laissez faire of Smith, promoting the Industrial Revolution and the formulation of the market economy system. The economic development of China from the West Chou to early Han dynasty followed a very similar path. Regardless of the West or China, the directional pattern of the evolution from Feudalism to a laissez faire economy is common. Based on this, the prospect of the current economic reform in China is an optimistic one. It has exhibited the same evolution phases as in the historical past, and is currently on the verge of Physiocratism. If history is to repeat itself, China will eventually move into a free market economy.

Migration in China from 1985 to 2000: The Effects of Past Migration, Investments, and Deregulation

During the 1980s and 1990s, interprovincial migration in China surged concurrently with three major developments in the economy: deregulation of migration, rapid growth, and substantial increases in foreign and domestic investments. To what extent did these developments influence the changes in interprovincial migration? In this study, data from the National Census and National Bureau of Statistics are used to estimate a more extensive modified gravity model compared to previous research. It is found that past migration substantially influences current migration, confirming that migrants strongly prefer moving to provinces with relatively large migrant enclaves. Greater levels of foreign direct investment (FDI) in the target destination were found to stimulate inmigration, particularly during the 1990s. The deep economic reforms made in the 1990s changed the structure of migration significantly.

An extension of currency substitution into the near monies framework: a case for Canada

This paper attempts to estimate the nearness of near monies in Canada including foreign monetary assets, i.e. US dollars. The results enable us to make a statement about how substitutable US dollars are in the Canadian private asset portfolio. This brought the event of currency substitution into the near money framework and we found US dollars are far from good substitutes for Canadian narrowly defined money. Our analysis further provides a reconciliation of results obtained by Miles (1978), Bordo and Choudhri (1982), Husted (1984) and Ghosh (1989).

Wage comparison by gender and the effect of job segregation: The case of Taiwan

Abstract This paper examines the wage differential between the genders in a newly industrialized economy-Taiwan. The objective is to verify the existence and magnitude of the Taiwanese wage differential (or discrimination as some would term it) and contrast it with findings in the United States. The gender gap was estimated for the private sector and the public sector respectively. It was found that wage discrimination against females does exist. The magnitude of the “discrimination” falls within the same range as the empirical estimates for the U.S. In Taiwan, however, the wage discrimination appeared to be slightly more severe in the public sector. A measure for the discriminatory effects of the “occupational segregation” was proposed and implemented. Contrary to common belief, the “occupational segregation” was not an important factor in wage discrimination. Nor did the disparity of jobs distribution in terms of “industry” generate any significant level of wage discrimination. The main source of gender discrimination (in terms of wage rates) came from the lower returns to the “productivity” characteristics (experience, education, tenure, etc.) and not from seemingly popular hypotheses of occupational segregation (or, in more general terms, job segregation). This is in sharp contrast to previous studies.

A Strike Like No Other Strike: Richard A. Brisbin, Jr., The John Hopkins University Press, 2002, 350 pages

This book presents a significant contribution to the field of environmental policy analysis. Dr. William Lowry is to be applauded for his successful attempt of building a comprehensive theoretical framework explaining variations in environmental policy outcomes. Supported by a wealth of empirical data, this framework can be effective in addressing policy changes in a variety of areas. In the concluding chapter of his book, the author provides a brief introduction to restoration efforts addressing other natural resource issues or implemented in other nations proving that the approach developed in this book is applicable to a variety of ecosystems, socioeconomic contexts, and restoration policies. Dam politics is targeted at a wide audience of social scientists interested in environmental policy. It will be of special interest to anyone concerned about the condition of America’s rivers. Written with a distinctive personal touch and a strong passion for restoring river ecosystems, this book provides a comprehensive and lively account of restoration activities on the nation’s rivers. Despite its theoretical and factual richness, it is a captivating reading.

The Impact of Tax Rebates on Export Performance: China's Textile Exports to the USA

The paper evaluates the effectiveness of China increasing its tax rebate on textile exports to the USA. Using the difference-in-differences technique and employing The Harmonized System six-digit data, it is found that the tax rebate policy boosted the growth of textile exports to the USA. Approximately 6 to 25 per cent of the growth can be attributed to this policy. The difference-in-differences technique appears useful in evaluating such policies and opens the door to studies measuring the impact of polices. The effectiveness of the export tax rebate policy should be a lesson for policymakers facing slumps in their exports in economic downturns and perhaps become part of the standard trade policy arsenal.