How China Escaped the Poverty Trap by Yuen Yuen Ang
My rating: 4 of 5 stars

Singaporean political economist, Yuen Yuen Ang, provides an introduction to the complexity theory of development using the evolution of China’s market economy post-1978 as an example. Professor Ang argues that instead of simply assuming a linear relationship between variables in an economic system – for example independent institutions and market development – we should consider that variables within the system adapt and evolve as the other variables change. Therefore no variable is ever independent of the other. To put it simply, we cannot assume that Western-style “strong” institutions lead to the development of markets. Instead markets and institutions develop, adapt and evolve to react to each other. A strong market could lead to the requirement for, and therefore the development of, strong institutions.

If you are looking for a narrative history of how China went from one era to the other on the way to lifting millions of its people out of poverty then this is not the book for you. This book is largely an academic work making the case for complexity theory with insights derived from extensive research of Chinese provinces and interviews of Chinese officials about the development of private enterprise after 1978 and especially after 1993.

To stress her point, she traces the development of Nollywood in the 1990s from the production of quickly slapped together movies funded by VCD vendors to the high-end productions released on Youtube and the venture-funded iRokoTV. She argues that it was not strong institutions that led to the development of this industry but innovative entrepreneurs who developed Nollywood. The creation of Nollywood’s market is what then developed institutions around it to provide funding and anti-piracy protection.

Although I consider this a development economics book, I consider the focus to be quite narrow i.e. focused on the development of markets. Perhaps it would be unfair to demand of the book something it does not claim to provide, but I would have wanted a broader scope given the title of “escaping the poverty trap”. The challenges to escaping poverty are multifaceted and involve much more than developing a capitalist market system. Overall, it’s an educative read and a good introduction to another way to look at how nations develop.

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