China's economic performance of the past two decades presents a puzzle for the economics of transition and development: Enormous private business incentives were unleashed that have fueled rapid economic growth despite the fact that China has had very weak "conventional institutions" (such as...

In the absence of constraints on the state based on rule of law, there is a dilemma facing the state: when the state has the incentives to enforce contracts, it also has the incentives for predation. We demonstrate that information available to the state can determine the outcome in such a...

Why has the rapid privatization of firms in Eastern Europe and the former Soviet Union not brought dramatically higher performance as expected? If private ownership were so clearly dominant, why has state control of enterprises been such a common phenomenon historically, even in many Western...

Financial repression entails an implicit taxation on savings. When effective income-tax rates are very uneven, as common in developing countries, raising some government revenue through mild financial repression can be more efficient than collecting income tax only

Countries making the transition to a market economy often experience an increase in corruption along with an increase in growth. This observation is puzzling in the context of current models, which emphasize the destructive nature of corruption. We present a model of corruption and reform which...

During transition, maintaining employment and providing a social safety net to the unemployed are important to social stability, which in turn is crucial for the productivity of the whole economy. Because independent institutions for social safety are lacking and firms with strong profit...

Does accession to the WTO stimulate faster growth? The issue is not only of interest to the business and policy communities, but also a test case of several active lines of economics research on openness and growth. We conduct an event study of accessions to the WTO (GATT) of 74 economies. The...

A substantial body of literature has documented impressive total factor productivity (TFP) growth in China's state owned enterprises (SOEs) during the period of China's enterprise reform. Such growth rates have been used to support the view that China's reforms of SOEs have been highly...