- What does Zilibotti say about poverty reduction in China?
China used to have the poorest economy in the world with people living below the standards of extreme poverty lines being 88%. Currently however, it is a middle income country with only 10% of its population reported to live below the poverty line.
2. What are the three factors that he mentions were important for China’s economic development?
a) Investment- it lead to the increase in production capacity of the industrial sector
b) Reallocation- this is the moving of poor people from villages to cities. This enabled farms to be led more by private cooperation and less by the government. The private cooperation are more efficient compared to the government.
c) Copying technology from western farms- this led to improved farming since more advanced technological methods had to be invented after copying.
3. What is a key challenge concerning the origin of growth?
China has to reform its institutions to form a different type of economy
4. What are the three policy challenges?
a) Establishment of an independent judiciary system– these are meant to protect both the investors and the owners of the farms equally.
b) Financial development- this is to enhance financial access for startup farms. This should not be necessarily through large banks but through set up financial institutions that area able to absorb risks.
c) Curbing corruption- this involves curbing corruption as well as developing the incentives that boost innovation and investment.
5. What is a risk at China’s current level of development?
It risks going through an economic slowdown if it doesn’t make the necessary reforms in its political, social and economic platforms.
6. What is the positive scenario?
China is projected to
have a sustainable economic growth that is environmental friendly due to
reforms that boosts its growth as well as develops the domestic markets.