Economic liberalization in China and India: Issues and an analytical framework

Abstract

A simple analytical framework is proposed for assessing the credibility and prospects for success of economic liberalization policies of China and India. It is argued that liberalization of external transactions is likely to yield only limited benefits unless it is accompanied by elimination of controls on domestic transactions. Further, in China economic liberalization is likely to generate demands for political liberalization which in turn may result in a retreat from economic reforms. In India, on the other hand, interest groups enjoying "rents" from economic controls may try to prevent their elimination. © 1987.