Comparative Essay Example A

Jeffry Freidan How far will international economic integration go?"

Bruegel essay and lecture series, 2008
Dani Rodrik How far will international economic integration go? Journal
of economic Perspectives volume14, Number 1, winter 2000, pp 77-186
Globalization or International economic integration as Dani Rodrik
defines it, is a hot discussion topic in all the fields of social sciences,
however the focus of this paper will be on the political and economic sideeffects of globalization and its future, by comparing and contrasting the
two opposite approaches of scholars: Dani Rodriks How far will
international economic integration go? and Jeffry Friedans Will global
Capitalism fall again? Having discussed the current trends of
globalization, Rodrik concludes that the future of the worlds political
structure will be global federalism, with different parts of the world under
the common umbrella of supranational political institutions; Friedan, on
the other hand, looks back to the world history of past 100 years and tries
to make his analysis by comparing two different waves of globalization.
Based on historical evidence he then tries to identify how the demise of
the current wave of international economic integration could have been
avoided by correctly addressing the difficulties that it faces. However in
his reasoning, Friedan does not consider the creation of any supranational
governance, but rather he calls for legitimate political governance and
appropriate domestic policies. Discussing, these two different approaches
below, I will argue in favor of Friedans approach and try to convince the
reader that he develops more persuasive arguments, relevant to current
trends in world politics.
During the gold standard era the economies of most countries would
adjust quickly to changing international economic conditions, rather than
other way round. The overall consensus was that states were committed
to derive the benefits of integration into the world economy at any price

and their economies had to pay for it. The adjustment mechanism was
working perfectly as long as wages and prices were flexible. This flexibility
in turn was sustainable for both economic and political reasons. Most
countries before 1914 were either not completely democratic or were
completely undemocratic, with limited franchise, no labor unions, small
businesses and farmers whose interests were ignored by political leaders.1
However, by the 1920s neither the economics nor the politics were the
same as of the classical adjustment mechanism. The expansion of
franchise and other forms of representative democracy, with large firms
and organized labor unions, made it difficult for policy-makers to sit back
and wait for economies to adjust when they faced strict demands from
their electorates. So, as Friedan advocates, the first age of globalization
worked well as the political and economic structure of the time allowed
governments to be perfectly devoted to their international economic
commitments; however, it was no longer the case after World War I. This
process is also very clearly pinpointed in Rodriks analysis and fits in the
framework of his political trillema argumentation. This is the case when
countries try to maintain the nation-state system as is, but to ensure that
national jurisdictions do not get into the way of economic transactions. 2In
Friedmans words, a country puts on the Golden Straitjacket and its
political choices get reduced to Pepsi or Coke. So as Rodriks
argumentation goes, when countries set their rules of the game by the
requirements of global economy the ability of interest groups to influence
national economic policy- making is very much restricted. The experience
with the gold standard and its eventual demise proved a perfect
illustration of this hypothesis. As capitalism today is at least as global as it
was in the decades before 1914 it is essential to ask what should be done
for the current system not to fail as the former did. Both scholars have
their stance on this question. But before we come to that point we should
see the sequence of events in the history of economic developments that
was followed by the golden age.
1 Jeffry Freidan How far will international economic integration go?" pg 12-15
2 Dani Rodrik How far will international economic integration go? pg 6-7

The new regimes that arose from the wreckage of the classical order were
flown in different direction, as they ignored the potential benefits of
globalization. Fascist autarky and central planning in the USSR both
played themselves out over time. Attempts to close national economies
off to the rest of the world led to terrible policies that failed just as
miserably as those they replaced. The overall protectionism of the
interwar period was altered by the overall misery of states after WWII.3
Compromise between globalism and nationalism and between social
reform and markets named- Bretton Woods permitted western economies
to grow rapidly and stably. So in Rodriks political trillema terms, in the
case of the Bretton Woodss system, countries sacrificed the objective of
complete international economic integration (restrictions of capital flows,
gradual trade liberalization, and exchange rates fixed to dollar) by
maintaining nation-state and mass politics objectives. The system
revealed to be prosperous until the 1970s. Both Rodrik and Friedan list
similar reasons why the system could not last long. Contradictions
between increasingly integrated international financial markets, on one
hand and the continued desire of national governments to run
independent monetary policies, on the other, brought the system down.
So sacrificing the international economic integration from Rodriks stance
was not a durable and feasible approach.
By the mid 1980s most industrial states were on the path which implied
both a greater reliance on market forces domestically and redoubled
commitment to international openness. By the late 1990ies the striking
event of the collapse of the Soviet Union, Friedan argues, was the turning
point in launching the second age of globalization- a resurgence of global
capitalism.4 The global economy of the last 20 years has continued along
this line, with all of the indicators of integration trending upwards. On the
the other side of the process, the concerns about globalization have
grown. What might the previous experiences of global capitalism teach us
about contemporary issues?
3 Jeffry Freidan How far will international economic integration go?" pg 29-30
4 Jeffry Freidan How far will international economic integration go?" pg18-19

Rodrik argues that as of today, the markets for goods, services and
factors of production are not completely integrated and this is due to
several economic obstacles. Among them he emphasizes the role of
national borders and specifically political and legal jurisdictions that are
major barriers for deeper integration. Exchanges that cross a national
jurisdictions are subject to transaction costs that bring the main problem
of a contract enforcement, which in turn is the main source of the cost.5
When one of the parties reneges on a written contract, local and
international courts might be unable to solve the problem. So Rodrik sees
a national sovereignty as hindrance to contract enforcement and, making
international transactions hostage to the increased risk. Therefore
jurisdictional boundaries limit the depth of markets and national
sovereignty poses a constraint to international economic development.
Can markets become international while politics become local? This is the
driving question in Rodriks future prognosis.
Friedan approaches the current trends of globalization from the
perspective of the previous historic experience of the first wave of
globalization and tries to link them. He argues that as in the case of the
golden rule, there are parties on the losing side of the process today. The
unequal distribution of income in US and deteriorating wage of unskilled
and semi-skilled workers creates hostility in American society. So the
middle class is not convinced that globalization brings any benefit to
them. This type of discrepancy led the demise of the golden rule in the
first stage and it is a great challenge again today. Another aspect of the
US economy is global macroeconomic imbalances. Americas current
integration into the world economy is largely due to capital inflows that
keep the US dollar stronger and contributes to the general feeling of
prosperity. But Friedan argues that this boom will not continue for long
and when US goes from living beyond its means to living within its
means then the latent tension over globalization will become a hot
debate. National security is another challenge to globalization as observed
in the US foreign policy formation for the past decades. While after WWII it
5 Dani Rodrik How far will international economic integration go? pg 4-8

was a struggle against communism that helped the US to unite a mass of

countries under the Bretton Woodss umbrella now the US faces the threat
from China. United States needs to prepare to deal with the potentially
destabilizing role of China. So based on the data in hand, Freidan argues
that to avoid the demise of international economic integration countries
need to work together to build an effective and stable governance
structure for international economic interactions together with balancing
domestic political and economic conditions that allow enduring support for
international commitments. This could be done by consultation with
affected social groups, compensation for those asked to sacrifice and a
bulk of other policies to maintain social and political stability necessary for
national economies to reap the fruits of international economic
integration.
While both scholars argue that the formula or magical policy to
address the problems of globalization remains undefined there are
numerous ways that the problem could be resolved. Rodrik sees this
solution in the form of Global federalism; however Freidan is committed to
maintaining strong nation-states together with correctly shaped
governance structure of international economic interactions. Going back
to Rodrik: economists rank second only to astrologers in their predictive
abilities the forecasts made by these two scholars might be accurate or
not, it all has to be proved by history.

Example B
Skoyles, Jan. 2013. Is bitcoin better than gold? Resource Investor, November 20,
http://www.resourceinvestor.com/2013/11/20/is-bitcoin-better-than-gold?t=precious-metals
(accessed December 14, 2013)
Krugman, Paul. 2013. The Antisocial Network. The New York Times, April 14,
http://www.nytimes.com/2013/04/15/opinion/krugman-the-antisocial-network.html?_r=0
(accessed December 14, 2013)
Jan Skoyles, the Head of Research at The Real Asset Company and an expert on gold price
and gold investing, compares bitcoin, a novel electronic money, to gold and discusses its
future as a replacement for gold. The Nobel Prize-winning economist Paul Krugman,
however, does not share any of the enthusiasm towards bitcoin in his article The Antisocial
Network. While Krugmans article tries to explain the surging interest in bitcoin by a
popular and fundamental misunderstanding about what money is, Skoyles takes a more wellbalanced position and discusses bitcoins advantages over gold as an asset.
Jan Skoyles notes the increasing interest in bitcoin and describes several aspects concerning
the establishment of bitcoin as a reliable currency. The author notes that the interest towards
gold is much more stable than that towards bitcoin. Still, Skoyles gives consideration to the
opinions that bitcoin is able to replace gold. She presents the generally positive reactions of
the authorities towards this new form of money. Most of the authorities seem to agree that
bitcoin is a legal tender, and if accurately regulated, can serve as a more efficient means of
transacting. Skoyles admits that although bitcoin lacks the huge legacy gold has, it still has
advantages over gold such as being much easier acquire, transfer and store. The author
concludes by predicting that bitcoin can become a medium of commonplace exchange,
something that gold has not been able to do.
Paul Krugman takes a very critical stance towards bitcoin and states that the excitement
surrounding it is only the consequence of inadequate understanding of what money is. He
argues that the extreme fluctuations that bitcoin recently experiences have no economic
significance, but are useful to once again see how little people understand money. Krugman
notes that the only reason bitcoin has a market value is that people believe that it will be

accepted as money in the future, which is not exactly the case with paper money and gold.
People wish to have a form of money that is, in their opinion, free of human manipulation,
but that is impossible due to the very nature of money as a social contrivance. Krugman
concludes by emphasizing that discussing the future of bitcoin as new money is worthless not
because of the flaws of bitcoin itself, but because the current form of money we have is in no
way misbehaving.
Jan Skoyles is mainly interested in comparing bitcoin and gold. She presents a balanced
viewpoint by describing both the advantages of bitcoin and the disadvantages. The author
also pays attention to the various public opinions about bitcoin, particularly stating that a
generally positive attitude was shown towards bitcoin at the latest U.S. Senate hearings.
Many precious metals fans, however, are very skeptical of the value bitcoin presents and
consider it a speculative bubble. Skoyles believes that bitcoin has future and justifies her
viewpoint by the fact that it is already being used in many transactions, both legal and illegal.
Besides, she notes that bitcoin is gaining momentum in countries such as China, Kenya and
Tanzania. The article is generally well written with interesting examples, graphs and up-todate data, although Skoyles has broken down the article into too many pieces and did not
manage to connect all the pieces coherently. Overall, the author provides a fair assessment of
the merits of bitcoin, but her analysis is restricted and somewhat superficial, since she does
not examine the fundamental reasons why bitcoin gains and loses its value.
Paul Krugman, in contrast, takes a much more negative position towards bitcoin calling it
the ultimate fiat currency, with a value conjured out of thin air. Unlike Skoyles, he does not
bother with presenting different viewpoints about bitcoin, or with describing the position of
the authorities. Being an academic economist, he examines the underlying reason why
bitcoins have value on the market. In effect, he treats the problem from a more theoretical
side. Another distinctive feature of the article is Krugmans sharp criticism towards those who
believe in this new currency. Krugman mocks the Winklevoss brothers, owners of a decent
share of Facebook, for ironically not noticing how the value of bitcoin is entirely a result of
the network of human expectations of each other (hence the title of the article). He asserts
that, unlike gold and paper money, bitcoin derives its value exclusively from the traders
expectations that it will be accepted as money in the future. Unlike the conclusion of Skoyles,
Krugmans conclusion does not even consider the possibility of bitcoin becoming a serious
currency; instead, Krugman dismisses the need to search for a new currency altogether.

Overall, Krugmans article is better structured, more coherent and has a clear message, while
Skoyles arguments seem scattered around and no unifying idea is visible. Skoyles reaches
her conclusions by considering examples, examining data and referring to the opinions of
others. Krugman, on the contrary, relies mainly on his expertise in economic theory to draw
conclusions.
In conclusion, both Skoyles and Krugman react to the unprecedented boom of attention
towards bitcoin as many consider it almost a revolutionary form of currency. Their reactions,
however, largely differ in the methods they use to argue and the conclusions at which they
arrive. Skoyles presents a slightly disorganized compilation of facts and figures about bitcoin
and concludes that it can become a successful means of transacting, while Krugman draws
upon his superb understanding of economic dynamics to illustrate that the belief in bitcoin is
nothing more than the result of misconceptions about money.

Example C

The prospects of economic development in Georgia: comparative essay

Biermann, F. (2014, 19.05). Becoming Rich Delayed. ISET Economist. Retrieved 2014,
December 22, from http://www.iset.ge/blog/?p=3274
Pellillo, A., Pignatti, N., Livny, E. (2014, 04.12). Agriculture: An Engine of Inclusive Growth
in Georgia? ISET Economist. Retrieved 2014, December 22, from http://www.iset.ge/blog/?
p=4262
The prospects of inclusive economic growth and job creation in Georgia are actively
discussed among the experts of the field. Two articles at ISET Economist blog suggest
alternative models that the country can adopt to facilitate optimal structure of the economy
with increased productivity and sustainable growth rates. On one hand, Biermann in his
article Becoming Rich Delayed suggests that the main driver of the Georgian economy can
only be the manufacturing of high quality simple goods. On the other hand, Pellillo, Pignatti
and Livny argue that differentiated agricultural production and related agribusinesses
represent the engine of inclusive economic growth and job creation in Georgia. After
comparing the characteristics of the two models and analyzing the feasibility of their
underlying assumptions, this paper argues in favor of the approach proposed by Pellillo et al.
As they examine the issue more thoroughly by discussing a higher variety of development
paths and indicating the potential relationships among them, the argumentation and
conclusions draws by Pellillo et al. sound more convincing to the reader. However, Biermann
also provides an interesting and well-structured point of view.
Biermann attributes Georgias economic prosperity after the Rose Revolution to catch up
growth, the expansion that follows after a country overcomes the chaotic state. He argues
that sooner or later the Georgian economy will exhaust its catch up growth potential and
will have to determine a feasible model of development given its constraints. After putting
forward the issue, Biermann moves on to evaluate the prospects of major economic sectors as
the possible drivers of the economy. He claims that technologies cannot serve as the engine
since the technological wave has already passed and the industry became mature relying on
sophisticated labor force, the production factor that Georgia is devoid of. Neither do tourism
nor financial services appeal to the author as the sources of growth. He argues that tourism
can only provide seasonal jobs for low-skilled labor whereas financial services are an
extension that need to be built on the real economy. So neither of them can play a major role
at the initial stage of development. He also excludes agriculture from the list of potential
development sources as modern agriculture requires capital-intensive technologies and little
labor input. Therefore, the lack of capital and the hazardous consequences of increased
unemployment after transforming the traditional rural sector make it less attractive. After
rejecting the previous alternatives, the author suggests that manufacturing of solid quality,
simple commodities as the substitutes of imports and potential sources of competitive exports
is the option that Georgia should embrace to attain sustainable development. Biermann

believes that the Georgian labors characteristic that they almost never cheat make them
suited for manufacturing. He argues that the simple commodities produced in Georgia can
easily attract foreign markets and generate high national income as they take the advantage of
low labor costs and lack of brand names which can be reflected in more competitive prices.
Pellillo et al. argue that during the last decade Georgia has had persistently high share of
employment in a low productivity sector, namely, subsistence agriculture. The country has
experienced limited structural change out of the rural sector. Accordingly, the portion of
employment in the services remains relatively lower while manufacturing employs even less.
The authors explain the insufficient support to develop agriculture in the previous years by
the assumption that developed countries have at most 4% of their labor employed in rural
sectors. This assumption was widely accepted by the previous Georgian government who
were more focused on urbanization. However, the authors note, the situation has reversed
today: agriculture is one of the fastest growing sectors in the Georgian economy. This is
due to improved export opportunities as well as more intensified legislative and financial
encouragement from the government and donors. This evidence makes the authors consider
agriculture as an engine of job creation and inclusive economic development for the
country. While evaluating the prospects of agriculture in Georgia, Pellillo et al. put forward
the theory developed by Rodrik to assess the relative strengths of alternative sectors
compared to agriculture to serve as the drives for the economy. According to this theory,
manufacturing is not a feasible option for developing economies as it has become capital- and
skill-intensive and countries like China have already occupied the worlds major markets.
Neither can the service sector work as the locomotive, the argument goes. Tradable services
such as banking can absorb limited amount of labor. Even though non-tradable services offer
much more employment opportunities, they usually provide the jobs with no higher
productivity than traditional agriculture. Having discovered the limitations of the alternative
options, the authors go on to provide several reasons why agriculture is eligible to serve as
the engine of the economy. First, productivity gains in agriculture can be attained with
modest financial resources as no radical structural change will be required initially. These
gains have spillover effects and can subsequently increase productivity in adjacent sectors.
Another advantage that can be exploited is an increase in the world demand for differentiated
agricultural goods. The authors conclude that these factors combined together make it
possible to transform the traditional subsistence agriculture into an exchange economy based
on producing and processing differentiated, not easily replicable, agricultural goods. Since
this type of production is labor intensive, it is the optimal solution for the Georgian abundant
rural labor force.
The authors of the both articles admit that current structure of the Georgian economy does not
promise any sustainable growth potential, so it must be modified to better respond to the
constraints facing the country as well as the opportunities in the world markets. Biermann
and Pellillo et al. agree that in order to maintain sufficiently high growth rate Georgia should
actively interact with foreign markets by offering high quality goods at competitive prices.
The authors also reach a consensus on the service sectors inability to serve as the engine of
the economy. However, they provide different reasons. Biermann considers services as an

extension of manufacturing and subject to large fluctuations, while Pellillo et al. emphasize
on its inability to absorb large amounts of labor and low productivity in non-tradable sectors.
Despite differences in argumentations, both of the articles conclude that promoting the
service sector alone is not likely to drive the Georgian economy to prosperity. The similarities
between the authors positions end here.
When it comes to the feasibility of manufacturing as the driver of the economy, the
differences between the authors attitudes start to emerge. While Pellillo et al. see no
opportunity in this sector due to its high capital-intensity and saturated markets, Biermann
believes that manufacturing of simple commodities is the strategy that Georgia should
embrace. Even though he admits that Georgia lacks capital and high technologies, Biermann
relies on the honesty of the typical Georgian employee. His proposition does not sound
convincing if we take into account the factors that Pellillo et al. mentioned. Indeed, honest
workers in manufacturing can contribute little when they work with scarce capital and
compete with giants like China. Accordingly, the stance taken by Pellillo et al. towards the
feasibility of manufacturing seems more realistic as it takes into account not only the supply
capacity of the Georgian manufacturing but also the sufficiency of demand for its products
around the world. Unlike Biermann, Pellillo et al. also consider the time and financial
resources necessary to transform the economy and state that it may take decades and vast
sums of money to tailor the economy for manufacturing.
The divergence of the authors views on the economic development prospects do not end with
manufacturing. Agriculture is another sector that becomes the subject of controversy between
the articles. Biermann rejects agriculture as the main source of growth because he discusses
only the type of this sector which relies on mass production of standardized goods using
capital-intensive technologies. His conclusion makes sense as the Georgian economy is
capital-scarce and even if the country could invest in capital, it would suffer a high rate of
unemployment resulting from the structural change. However, the validity of this conclusion
will be challenged as long as we take into account the other types of sector organizations
according to which agriculture can be arranged. Unlike Biermann, Pellillo et al. discuss
precisely one of these alternative agricultural organizations which can work with Georgian
resource endowments. They believe that highly demanded, differentiated agricultural
production and food processing which take advantage of country-specific resources and rely
on labor-intensive technologies can serve as the engine of the Georgian economy. They also
consider the positive effects that agricultural gains can have on adjacent sectors: with
increased productivity in agribusinesses the labor will get used to the dynamics of the
exchange economy which, in turn, is the prerequisite for effective industrialization. On the
whole, the argumentation put forward by Pellillo et al. is more persuasive compared to
Biermann as it takes into account different types of agricultural organization and its
interrelatedness with adjacent sectors.
To conclude, Biermann and Pellillo et al. provided two different economic growth strategies
in their articles. Even though their views as regards to which sector can serve as the engine
are divergent, they agree that structural change is inevitable to attain sustainable

development. As Biermann defines agriculture rather narrowly and makes an unsupported

assumption ignoring the links among sectors, his argumentation sounds less convincing. On
the other hand, Pellillo et al. put forward a solid and comprehensive argumentation backed up
by renowned theories and taking into account the relationships between adjacent sectors.
Therefore, their conclusion regarding the pivotal role of differentiated agriculture in the
Georgian economy sounds more reliable.

Comparative Essay Example D

Zhao, Suisheng. The China Model: Can It Replace the Western Model of Modernization?
Journal of Contemporary China 19.65 (2010): 419-36. Print.
Kennedy, Scott. The Myth of the Beijing Consensus. Journal of Contemporary China
19.65 (2010): 461-477. Print.
There is debate among economists as to what is the most appropriate development
strategy for developing countries in general. In 1990, US economist John Williamson
enumerated a set of policy prescriptions that he believed constituted a consensus among
economists in Washington, DC. He called these prescriptions the Washington Consensus.
Williamson identified ten policy areas: maintenance of fiscal discipline, reordering of public
expenditure priorities, tax reform, maintenance of positive real interest rates, maintenance of
competitive exchange rates, trade liberalization, elimination of barriers to foreign direct
investment, privatization of state-owned enterprises, deregulation of the economy, and
enforcement of property rights.6 The Washington Consensus is believed to be an extension of
neoliberal ideology and to be advocated by international financial institutions, such as the
World Bank and the International Monetary Fund. Consequently, the Washington Consensus
is perceived as a dominant development strategy.7 In 2004, Joshua Cooper Ramo, a former
editor at Time magazine, who Scott Kennedy (2010) describes as then being a managing
partner in the office of Goldman Sachs president John Thornton, published a paper describing
the developmental policies of China as constituting an alternative to the Washington
Consensus. Ramo named these policies the Beijing Consensus. 8
Kennedy and Suisheng Zhao (2010), both contemporary China scholars, have described
Ramos Beijing Consensus as being comprised of the following tenets: innovation-based
development, a focus on equality and sustainability as a measure of economic development as
opposed to GDP per capita, and self-determination in relation to the United States. Since the
publication of Ramos Beijing Consensus, there has been debate among economists and
6 Williamson, John. What Washington Means by Policy Reform. Latin American Adjustment: How Much Has
Happened? John Williamson. Washington, DC: Institute of International Economics, 1990. Print.Phillips,
Nicola. Globalization and Development. Global Political Economy. Fourth Edition. John Ravenhill. New
York, NY: Oxford University Press, 2014. 344-371. Print.

7 Phillips, Globalization and Development.

8 Ramo, Joshua Cooper. The Beijing Consensus. London: Foreign Policy Centre, 2004. Print.

China scholars as to whether or not a Beijing Consensus even exists, and whether or not
Chinas developmental policies comprise a model of development for other countries. Both
Kennedy and Zhao describe a China model of development as distinct from the Beijing
Consensus and discuss its implications for the development debate.
Kennedy does not consider the Beijing Consensus to be a useful substitute for the
Washington Consensus, and believes Ramos analysis to be a misguided and inaccurate
summary of Chinas actual reform experience.9 He asserts that although technological
innovation has been a significant factor in Chinas economic growth, it has not been a central
one. China has made numerous small improvements, or incremental innovations, to its
products, services, and processes in various economic sectors, especially in manufacturing.
The number of scientists, engineers, and entrepreneurs is growing, along with investment in
research and development, as evidenced by the increase in the number of filed patents,
copyrights, and trademarks. However, Chinas innovation lags behind that of advanced
capitalist countries. Most products and services produced in China have been designed or
invented elsewhere. Over 85 percent of Chinese information technology exports are
assembled and manufactured by joint ventures between Chinese companies and foreign
multinational corporations, while the greater portion of value added for these exports comes
from outside China. Efforts to promote what Chinas leaders call indigenous innovation,
whereby China would use its market size to compel other countries to produce to distinctive
standards developed for the Chinese market, have failed.10
Kennedy refutes Ramos claim that China measures economic success by its
sustainability and the level of equality. The goals of equality and sustainable development
have not been dominant in Chinese policy in the Reform Era. Instead, they are best described
as future goals. While China implemented environmental regulations, growth has usually
taken precedence over the environment. China has not allowed publication of green GDP
calculations (a measure of economic growth that factors in environmental consequences of
that growth) since 2004, as such calculations would indicate significantly lower growth rates.
Different measures of inequality confirm that Chinas growth has resulted in greater
inequality rather than equality, despite hundreds of millions of people escaping poverty.

9 Kennedy, The Myth of the Beijing Consensus. p. 462.

10 Kennedy, The Myth of the Beijing Consensus. p. 469.

Regional disparities between inland and coastal areas remain enormous, even though the
leadership has implemented policies to alleviate such differences.11
Kennedy counters Ramos assertion that Chinas economic development policies
constitute a unique strategy. He concedes that this assertion is partially accurate: China has
pursued a development strategy determined by its particular set of circumstances, such as size
and political institutions. It is unique in that it has achieved its developmental outcome with a
particular array of policies, and in that no other country has achieved the same outcome with
the same policies. However, Kennedy argues that this is not a sufficient justification for
singling out Chinas development strategy as an alternative to the Washington Consensus.
Indeed, he concludes that based on Ramos reasoning, any other countrys experience can be
held up as a model for successful development. The uniqueness of Chinas development
strategy is further called into question by the fact that China itself has adhered to eight of the
ten elements of the original Washington Consensus. Chinese leaders have depended on other
countries as the intellectual source of their reforms, which has made Chinas policies
similar to those of other countries. For example, Chinas government has used
macroeconomic policy tools to intervene in the economy. Kennedy argues against Ramos use
of sweeping generalizations in the Beijing Consensus, by noting that distinct elements of
Chinas economy are similar to those of different countries, both liberal capitalist and
developmental. For example, Chinas system of business-government relations is similar to
that of Russia and India, while its social welfare system is more similar to those of South
Africa and Egypt. Therefore, sweeping generalizations are less useful to understanding
Chinas development trajectory than fine-tuned comparisons across the constituent elements
of Chinas economy.12
For Zhao, the debate over the Beijing Consensus signifies that there is no more of a Beijing
Consensus than a Washington Consensus and the term is used by different people in different
ways.13 Rather than focusing on Ramos original tenets, Zhao assesses the validity of a
China model for economic development, which he defines as being comprised of high levels
of economic growth without major changes to the Communist one-party system. This model
is often conflated to a mix of economic freedom and political oppression. However, Zhao
argues that this description is incorrect. The Chinese economy is only selectively free.
11 Ibid. pp. 469-470.
12 Ibid. pp. 470-471.
13 Zhao, The China Model. p. 422.

Strategic sectors and core industries are controlled by the state, and attributes such as
transparent governance, independent courts, enforceable property rights, and free
information remain elusive. 14
Zhao relates the China model to the development experience of the East Asian newly
industrialized economies of Singapore, Hong Kong, and South Korea in the 1970s and 1980s,
referring to it as a twenty-first century variant of the East Asian model. Zhao identifies
three characteristics of the China model as a variant of the East Asian model. First, Chinas
approach to modernization is based on pragmatism and not on ideological principles. The
Chinese leadership has reformed its institutions pragmatically and gradually in accordance
with the modernization objectives. Second, the Chinese leadership is able to dictate a national
consensus and ensure a stable environment in order to pursue modernization reforms. In this
sense, Chinas authoritarian leadership and bureaucracy have an advantage over liberal
democracy, which is more volatile and emphasizes political change. Third, like Kennedy,
Zhao argues that China has borrowed intellectually from other countries, especially the
United States in forming its approach to modernization. However, he adds that China is
unique in that it has retained control over when, where, and how to adopt Western policies.
Namely, China has rejected those policies of the Washington Consensus that would diminish
the role of the state.15
Kennedy, on the other hand, finds problematic the claim that a consensus existed among
different groups in the Chinese state in relation to developmental goals. He argues that
Chinese leaders acted within numerous political and economic constraints, and that policies
were the result of compromise between different groups, such as the liberal and conservative
factions of the Communist Party during the Reform Era, and with various business interest
groups more recently.16
Kennedy also claims that China diverges from the East Asian NIEs in several ways. The
private sector in the coastal areas has survived and grown in a competitive environment
without the help of the central government. The government has been unsuccessful in
forming cartels and banning firms, and China has been more open to foreign direct
investment than its East Asian neighbors. Finally, Chinas model of government-business

14 Ibid.
15 Ibid. pp. 423-424.
16 Kennedy, The Myth of the Beijing Consensus. pp. 471-472.

relations differs significantly from those of Japan and the East Asian NIEs, and is more
similar to those of other countries, as mentioned previously.17
Nevertheless, Zhao touts the China model as a valuable development model for other
countries and as an alternative to Western models of modernization. He argues that the China
model is appealing for developing countries because it offers a path to economic growth
without the political disorder associated with democratization, which is vital to Western
models. The Chinese leadership has emphasized the instrumental value of democracy and
has worked to implement democratic reform with Chinese characteristics, in order to
achieve social harmony through better governance, rather than the opposition of private and
public interests. Another reason for the attractiveness of the China model for developing
countries is the waning appeal of the Western model in light of the recent economic and
foreign policy failures of the United States. Finally, China implements value-free
diplomacy with developing countries unlike Western countries, which attach principled
conditions to financial and economic aid packages, such as democracy, transparency, and the
rule of law. For this reason, Chinas influence among developing countries, which may be
weak in these areas, has increased.18
For Kennedy, this interpretation of the China model is problematic. The authoritarian
capitalism that is typical of the Chinese system cannot be the basis of a distinct Chinese
model, since many other countries have combined economic growth with authoritarian rule.
Kennedy uses Chinas neighbors after WWII, Meiji-era Japan and late nineteenth century
Mexico as examples.19
While the merits of the China model of development may still be debated among economists
and political scientists, it is clear that the model has posed a challenge to Western
development strategies and development orthodoxy, because it is now being considered as a
possible alternative to these strategies. The analyses by Zhao and Kennedy show that there is
still much debate about the political and economic feasibility of these strategies, and whether
they represent a real alternative to the development orthodoxy. Political economist Nicola
Phillips suggests that it is simply too early to know. However, the challenge of
development remains relevant for a large part of the worlds population, and students of

17 Ibid.
18 Zhao, The China Model.. pp. 424-425, 431-435.
19 Kennedy, The Myth of the Beijing Consensus. pp. 474-475.

development must work to alleviate the condition we presently find ourselves in:
development for the many, and underdevelopment for the few.20

20 Phillips, Globalization and Development. pp. 369.