WHAT ARE THE FACTORS CONTRIBUTING TO ECONOMIC GROWTH? LEARNING FROM CHINA.
It began in 1978, when Deng Hsio Peng took over as the leader of
Mao Tse Tung blamed the failure of the Great Leap Forward on people’s attitude, old customs and entrenched thinking. He blamed the failure of the great leap forward because the Chinese people practised counter revolutionary ideas. Chinese thinking failed to support the great leap because, it was dominated by old style thinking and bad culture. To demolish these devils as he called them, Mao Tse Tung, introduced the Cultural Revolution. The aim was to change people’s attitude and mindset. This caused great upheavals. The population was encouraged to rebel against anything. The message from china’s rulers provided the irresponsible elements in Chinese society with absolute discretionary reasons to dismantle anything and everything they thought were counter revolutionary. College students turned against their professors. Children against parents. Many people were forced to wear dunce caps and were paraded humiliatingly in the streets. All forms of authority and hierarchy were savagely attacked. Rebels rule was the battle cry.
It was obvious that the rulers of china at that time did not know how to approach economic development for china. Intuitively they knew that mindset change was necessary to carry out economic transformation. They also knew that the rate of growth was influenced by people’s attitude. Any economic transformation requires some sort of ever questioning attitude or to rebel against established rules. Joseph Schumpeter coined the term creative disruption. It refers to the necessity to destroy existing and older structures to make for the new. They failed to realise that these things can contribute to rapid economic transformation only if free market institutions were established and laws instituted. Hence fro 1978 onwards, the previous condemnation of capitalism was replaced by the new battle cry. It was- to be rich is glorious. Deng Hsio Peng said, he doesn’t care whether the cat is black or white, as long as it catches mice. He asked the people to seek truths from facts. Market institutions and practices were introduced.
During the next two decades from 1978 to 1998, the Chinese economy grew at a very rapid rate. The rate was around 9.6%. From 1998 to 2002, the growth rate was around over 6%, still a very good record. Given this rate of growth, china can equal the economy of