Excluding Shangahi, Beijing and Tianjin, Zhejiang and Jiangsu are ranked first and third in China in terms of per capita GDP. The author makes it clear that Zhejiang is so rich because it has grown so quickly, from seventh in per capita GDP in 1980 to its preeminent position today. Facilitating this growth:
The Zhejiang model is characterized by a heavy reliance on private initiatives, a noninterventionist government style in the management of firms, and a supportive credit policy stance toward private companies.The author calls this an indigenous entreprenuerial economy, in contrast to a statist economy which allocates more of GDP to the government and encourages foreign investors to bring in technology and management expertise.
The author then interprets Zhejiang's GDP data in relation to Shanghai's in order to show that the price and cost of Shanghai's statist economy has had a detrimental effect on the relative real income of Shanghai residents compared to the rising relative real incomes of Zhejiang residents.
The author does not argue that Zhejiang residents are more wealthy than Shanghai residents, but he does point out that despite increases in both Zhejiang's and Shanghai's per capita GDP in relation to the national mean from 1999-2004, Shanghai's household income actually declined in this same period in relation to the national mean while Zhejiang's increased. In both cases the economy grows in real terms, but in the more entrpreneurial economy of Zhejiang the "material prosperity for aggregate bodies of human beings," measured in terms of lifespan, TVs, PCs, cameras, phones, house size, had a chance to grow at a faster pace in relation to the rest of China. For this reason, the author thinks that policies supporting indigenous entrepreneurship should spread in China.
Compelling, but I wonder if the author misses any benefit that a more well financed government might bring to its citizens? Or the benefit that foreign technology and management offer?
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