Escaping the poverty trap in China: the co-evolution of diversity in property and economic development

This chapter examines one of the most important factors contributing to China's escape from the poverty trap by looking at the ways in which diversity in property and economic development co-evolved from the late 1970s to the 1990s. It brings Darwinian ideas into the arena of studying the co-evolution of institutions and economic development, and develops insights from institutional and evolutionary economics, especially those of Veblen and Schumpeter, in the context of property regime transformation in China. In so doing, it offers a nuanced approach to studying the co-evolution of diversity in property and economic development, which contains key mechanisms including variation (diversity), inheritance, and selection (selective adaptation as well as innovation and emulation). This approach also extends the conception of the market as an intellectual ground to test different ideas and experiments. Institutions that build this kind of market are not necessarily 'good institutions' in the neo-classical sense. An analysis of China's long-term property regime transformation from the seventeenth century to the late 1990s has demonstrated that economic activities and diverse property institutions co-evolved with occasional institutional innovations underpinning upswings in (Schumpeterian) economic development.