China's rapid economic growth during the past two decades has occurred without the systematic privatization programs once urged upon the former Communist regimes of Europe and the USSR. Some observers have argued that this shows that changes in property rights are not important in reforming a command economy; others insist that in China a façade of public ownership hides a variety of ownership forms that are essentially private in nature. This volume seeks to adjudicate these opposing views by clarifying conceptually and factually the pattern of property rights changes in the contemporary Chinese economy.

The contributors to this volume, from the fields of anthropology, economics, political science, and sociology, have all conducted fieldwork in China on specific economic sectors or enterprise types. Working with a common definitional framework derived from the work of the institutional economist Harold Demsetz, they seek to establish which actors exercise what kinds of rights in practice over what kinds of economic assets, documenting changes through time. Most of the essays examine the rural industrial economy - the fastest-growing sector - or the "spin-off" economic enterprises and activities of public enterprises and institutions.

The research presented in this volume supports several specific conclusions. First, industrializing rural regions have emerged with diametrically opposed property rights regimes: in one kind of region public ownership only marginally different in form from that of the Mao years has predominated; in other regions wholly new forms of private household and foreign-funded enterprise have arisen. Second, the regimes of all the examined regions and sectors have evolved continually since the outset of reform, and in recent years change has accelerated because of the increased pressures of competitive markets. Third, in the evolution of property rights the distinction between public and private is not crucial in differentiating the key arrangements; instead, a more finely differentiated set of gradations from "public" to "private" prove central to the story of the Chinese economy.

Since 1992, the Japanese economy has been utterly stagnant, with signs of weak performance at every turn. Since 1997, Japan’s economy has experienced negative growth, a situation unprecedented in the postwar era. Most large Japanese corporations have engaged in extensive restructuring during this period, which has in turn contributed to 4.8 percent unemployment—higher than rates in the United States. Further, in 1998, the closure rate of small companies (3.8 percent) exceeded the start-up rate of new business ventures (3.7 percent).

This grim scenario has not always existed. Japan once fostered phenomenal growth, from the smallest of ventures to the largest of multinational companies. As is evident in organizations such as Sony and Honda, Japanese entrepreneurship once led the world in innovation. In the 1990s, however, this torch has passed to the U.S. economy, which has enjoyed an extraordinary boom, due in large part to Silicon Valley venture businesses. Why have Japanese entrepreneurial activities, formerly so robust, lagged behind?

In asking this question, other questions arise. Despite the present business climate, how can Japan revive its economy? How can it absorb its unemployed workers? Most important, how can Japanese entrepreneurship again take the lead, and restore the country’s economic health? This paper seeks to address these issues.

Published as part of the "Silicon Valley Networks" Research Project.

A one-day conference organized by Shorenstein APARC brought together 110 distinguished participants from India, the United States, Israel, Taiwan, Europe, and Latin America. The program's objective was to inform and educate India's information technology policymakers and practitioners on India's enabling environment with respect to regulation, governance, access to capital, and technological capabilities. These are the proceedings of this conference, prepared by Dr. Rafiq Dossani.

In recent years, India has made good progress in the export of information technology software and services. Many other countries now look to it as a model. At the same time, India's concentration of low value-added services, the near-absence of technology development, and the total absence of hardware development suggest that IT exports are not fulfilling their potential, either in terms of innovative content or of possible sustainability. The Indian government has set aggressive targets for the high technology industry, including an annual export growth rate of 33 percent for the next decade, compared with 50 percent over the past five years. These goals will translate to substantial dollar increases in software and IT services exports: from $3 billion in 1998 to $50 billion in 2008. Can this ambitious figure be achieved? Or, perhaps, is it too low, given India's current growth trajectory?

At the height of the Cold War, the dominant Western theories of alliance building in interstate relations argued that alliances tend to be motivated more by an external need to confront a clearly defined common adversary than by the domestic attributes of alliance partners. The newly reinvigorated U.S.-Japan alliance, however, together with the newly expanded NATO, seems to depart from the conventional pattern by emphasizing shared democratic values and by maintaining a high degree of ambiguity regarding the goals and targets of the alliance. Although these new features of American-led military alliances provide an anchor in an other- wise highly fluid situation in the post–Cold War world, many Chinese foreign- and defense- policy analysts believe that U.S. alliances with Asian countries, particularly with Japan, pose a serious, long-term challenge, if not a threat, to China’s national security, national unification, and modernization. The ambiguity of the revised U.S.-Japan security alliance means that it is at best searching for targets and at worst aiming at China.

China’s concerns about the intention, scope, and capability of the alliances are set against a backdrop of several major changes in the region: the end of the Cold War, the simultaneous rise of China and Japan, the post-revolution reforms of Asian communist regimes, and the United States as the sole superpower. China’s uneasiness about the U.S.-led alliances goes far beyond the systemic change in the post–Cold War world, however. Its roots lie in China’s inherent weakness in the games of major powers in East Asia and in relations with other major powers in the first half of the twentieth century.

This paper begins with an overview of the interactions between China and the U.S.-led alliances in East Asia during the Cold War. This is followed by an examination of the post– Cold War period and China’s policies toward the alliances. Finally, policy options are discussed.

The study will review select policy-relevant scholarly publications of the 1990s, when the U.S.-led alliances were perceived to have made significant adaptations to the post–Cold War environment and when China’s perceptions of and policies toward these alliances also changed significantly. The survey also includes some interviews with Chinese analysts.

Published as part of the "America's Alliances with Japan and Korea in a Changing Northeast Asia" Research Project.

Why Poor Countries Are Becoming Richer, Democratic, Increasingly Peaceable, and Sometimes More Dangerous

It is easy to be confused about the world’s prospect. On the one hand, since the collapse of the Soviet Union and its empire, many millions of people have been freed from economic and political shackles that had long kept them under authoritarian rule and in poverty—or at least far poorer than they should be. On the other hand, several parts of the world are beset by political turmoil and conflicts, rapid population increases, and falling incomes.

North Korea has recently exhibited some noteworthy changes. In September 1998 it amended its constitution to change the power structure and introduced a number of progressive clauses. It also began to use the slogan “A Strong and Prosperous Nation,” which emphasizes eco- nomic prosperity as well as political, ideological, and military strength.

There are two conflicting views among North Korea watchers regarding these changes, together with some other recent changes in relations between the party, military, and govern- ment. One view is that the new constitution can be characterized by the distribution of au- thority and power. According to this view, North Korea is now trying to institutionalize the ruling system, ending Kim Jong Il’s personal rule. Technocrats will take more responsibility for running the economy. Constitutional clauses regarding the economy also aim to provide legal and institutional bases for reform and opening to the international community. This view regards the slogan “A Strong and Prosperous Nation” as North Korea’s declaration of its intent to focus foremost on economic development rather than the military and ideology. According to the other view, on the other hand, the new constitution only institutionalizes and strengthens the military rule that has persisted in North Korea for the last several years. This view suspects that the distribution of power reflected in the new constitution is nominal and that constitutional change regarding the economy is nothing but acceptance of change that has already taken place in North Korea. Therefore, the closed system will be maintained. During the last several years, particularly since the death of Kim Il Sung, there has been debate regarding the relationship between the party, military, and government in North Ko- rea. Does the enhanced status of the military increase its role in North Korea’s general deci- sion-making? Is the role of the party decreasing in the face of the rising role of the military? Is the role of the government also changing? Finally, do the changing relations between the party, the military, and the government affect North Korea’s policy direction?

The purpose of this paper is to analyze the changing relations between the party, military, and government, and their impact on policy direction in North Korea.

Published as part of the "America's Alliances with Japan and Korea in a Changing Northeast Asia" Research Project.

This collection of papers stems from a recent World Bank project focused upon the contentious issue of whether government has played any positive role in the success of the so-called "high-performing" Asian economies. It goes beyond the influential World Bank volume The East Asian Miracle to chart a middle ground that recognizes diversity among the different East Asian economies, as well as the evolutionary nature of government intervention.

Published as part of the "America's Alliances with Japan and Korea in a Changing Northeast Asia" Research Project.

Published as part of the "America's Alliances with Japan and Korea in a Changing Northeast Asia" Research Project.