ABSTRACT
In the 1980s China experienced an explosion of pent-up entrepreneurship facilitated by wide-ranging, although often unorthodox, economic reforms. Walker’s (1993) apt metaphor rightly focuses the spotlight on China’s entrepreneurs who include not just factory managers but also local government officials, especially mayors of cities and counties. Growth in gross domestic product (GDP) jumped from 6.4 percent a year between 1965 and 1980 to 10.1 percent between 1980 and 1989. From 1985 to 1989, the years on which we focus, the pace of economic reforms was stepped up and performance was especially outstanding: GDP grew at 11.5 percent a year, and industrial output, the principal engine of growth, grew at a yearly rate of 14.4 percent. Moreover, factor productivity-which made virtually no contribution to growth in the three decades before 1980-grew at an annual rate of 2.4 percent for state-owned enterprises and 4.6 percent for collectively owned enterprises and accounted for 27 percent of growth between 1980 and 1988 (Chow 1993; Jefferson, Rawski, and Zheng 1990). At the same time China’s share of world markets jumped dramatically between 1985 and 1989, particularly (but not exclusively) in light manufactured goods, such as shoes, clothing, toys, and small electrical appliances.
