Economic Systems

• What does "over commitment of resources" mean?

• What was the effect (were the effects) of China's and the Soviet Union's overallocatin of resources?

• What is the coordination problem and why do planned economies encounter this problem?

• What is the incentive problem?

• Why did workers and management resist innovation in pre-reform China and Russia?

An article specifically relating to the Chinese economy compares the Chinese transition from a planned to a more market economy to the similar transitions of Eastern European economies. While reading this article, answer the following questions:

• How long has China’s transition from a centrally planned to a market economy been underway?

 
• How has the Chinese approach to transition differed from the methods used in Eastern Europe?

 
• What was the Chinese economy like when the reform movement began?

 
• How quickly has China moved toward privatization?

 
• What role do supply and demand play in China?

 
• What factor(s) does the author feel has (have) been critical in permitting growth and progress in China during this transition period?

Between the mid1960s and 1990 the rate of economic growth in the East Asian economies of Japan, Singapore, Hong Kong, the Republic of Korea, Taiwan/China, Malaysia, Thailand, and Indonesia was phenomenal.

The article The Making of the East Asia Miracle discusses many factors that resulted in the high levels of economic growth of these Asian economies.

• Factors which lead to this rapid growth include …
  
  
• What role did government play in Asia's economic growth? 
  
  
• How and why do the above factors affect the economy's production possibilities frontier?

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Last updated January 30, 2005

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