The role of the state in economic transformation : comparing the transition experiences of Russia and China

This paper compares two radically different approaches to transforming an economic system based on central planning and state property into a capitalist system, the neoliberal transition strategy and the state directed transition strategy. Russia s transition since 1992 is examined as an example of the neoliberal approach, while China s transition since 1978 is analyzed as an example of the state directed approach. The primary explanation for China s economically superior transition performance is located in the advantages of the state directed transition strategy. However, contradictions in a state directed transition strategy are identified which tend to promote an eventual shift toward a neoliberal strategy.