Working Paper: NBER ID: w28370
Authors: Martin Ravallion
Abstract: The other side of the coin to post-reform success is often pre-reform failure, and the policy lessons are found on both sides. The paper estimates how much of China’s poverty rate around 1980—near the outset of Deng Xiaoping’s pro-market reforms—is attributable to the prior Maoist regime. Based on the history, it is argued that South Korea and Taiwan provide a relevant counterfactual. Then a difference-in-difference estimate using historical data indicates that about two thirds of China’s poverty in 1980 is attributed to the impact of the Maoist path since 1950. Further checks and tests suggest that (if anything) this is likely to be an underestimate. It took 10-20 years for China’s post-reform economy to make up the lost ground. The impact of the Maoist path had begun to fade in the 1970s, and half or more of the catch-up was in period up to 1990, under Deng’s rule.
Keywords: No keywords provided
JEL Codes: I32; N35; O53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Maoist economic policies (1950-1980) (P26) | Poverty rate in China around 1980 (I32) |
| Maoist economic policies (1950-1980) (P26) | Failure of the Maoist model to reduce poverty effectively (P39) |
| Failure of the Maoist model to reduce poverty effectively (P39) | High initial poverty rate at the start of the reform period (I32) |