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Home arrow Political science arrow Dancing with the devil : the political economy of privatization in China


In short, the entrepreneurship thesis can be strengthened with an explicit analysis of the risks (and costs) of unauthorized local government actions to facilitate or promote private enterprise. The role of entrepreneurship can also be more clearly understood from a broader view that incorporates the causes, dynamics, and effects of central policymaking regarding the private sector. The budget constraint thesis can benefit from closer attention to the moral hazard associated with the pursuit of political benefits through softening the budget constraint on public enterprises. It can also be complemented with an account of self-seeking behavior of party-state officials as a concurrent cause for the deteriorating financial health of public enterprises, as well as by an analysis of the changing opportunity costs of maintaining and relying on these enterprises. The FDI thesis can be reinforced with an account that considers not only the benefits but the costs of local deviations from centrally defined rules and examines how such costs were dealt with by extending the analytic focus from the dependence on foreign capital to the interdependence between different levels of political authority. Demographics and public finance, as pointed out above, provide useful coordinates for these further explorations of the decision-making and behavior of political actors, whose roles loom large but remain somewhat blurry in each of the three theses.

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