Why do they take different paths? - because they have to : structural explanation for path dependency theory in cases of reforms in China and Russia
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Economic transition in China and the former Soviet Union took two distinctive paths: gradualism and radical reform. What made the two big former centralized economies choose different approaches of transition? The paper argues that structural factors, namely, domestic economic structure before reform and international environment are the major causes that led to the difference. The highly centralized, defense-oriented industrial structure in the former Soviet Union and Cold War contention caused severe institutional decay that left little chance for a gradual change. On the contrary, production structure in China and the relative isolated international status enabled the Chinese government to adopt a gradual, experimental way of institutional transition. Once the reform began, the two major structural factors interact and reinforce the paths chosen. The paper also hypothesizes that cultural traits may account for the different outcomes, but concludes that the effect of culture is hard to define and comparatively less salient than the structural causes.