By Tom Keifer, Fred Amendola
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In order to avoid an excessive number of foremen, each worker must be capable of following simple written instructions and be able to understand the meaning and importance of very exact time measurements. Transforming a person from a farmhand into a manufacturing worker requires some minimum of teaching of time discipline, reading and arithmetic. Data on the education levels of newly industrialized countries indicate that these minimum educational levels require two to three years of formal schooling.
However, it appears as well that the management has maximized the earnings of the employees, and the monopoly of their position has facilitated such behaviour. While the agricultural reform has resulted in a uniform structure (namely the household responsibility system), industrial reforms which began in 1984 have resulted in a property rights structure that varies greatly. Ingredients of marketization as well as privatization can be found for each step in different combinations. Although some kind of decentralization of property rights can be distinguished in the early reforms, it is quite evident that the major ingredient is that of marketization; that is, the major goal has been to make the market work perfectly, rather than to privatize the state sector.
Moreover, institutions must be seen in a dynamic perspective: they are path-dependent and must be placed in a historical context. In most economic theories, institutions often change only over a long period time. This assumption oversimpli®es the problem since it is not the case for China. Second, China's ability to grow rapidly despite a lack of traditional prerequisites can be attributed to the kaleidoscopic nature of China's economic experience. Three factors, in particular, may be highlighted: 1 At the beginning of the reform period, the most important driving force behind the institutional change was the high level of discontent 44 Asia-Paci®c Transitions among the population after the Cultural Revolution, and this made a renegotiation of the contract between the leaders and the population possible.