Both Russia and China have experienced radical economic, social and political change in recent years, characterized by a previously nonexistent warming in attitude toward the philosophies of capitalism and democracy in each country. At one point Russia and China's institutions were fully based on communistic principles. The difference between absolute communism and absolute capitalism, though vast and varied in consequence, really boils down to property rights.
Quite simply, the privileges of ownership are accompanied by the powers to set prices, form incentives and determine resource allocation (Carson, part 1, 168). Both countries have now evolved into more market-based systems. In some respects their paths have run parallel. In others, the course has been radically divergent.
This paper seeks to examine the transitional phases and outcomes of Russia and China in the hopes of learning which features of each are worthy of and possible to emulate, and what the future may hold for them. This is an important study, particularly given the economic importance and sheer physical size of each of these nations, and also in terms of the alarming rate of population growth in China.
In the first section Russia's transitional experience is described. Next China's reform efforts are examined. Comparisons are made between what these countries experienced, and their situations are then contrasted. A section on the implications that can be drawn from the examination of similarities and differences follows. The conclusion is centered on the economic outlook for these two internationally significant countries.
Russia's economic transition began with the collapse of the United Soviet Socialist Republic which coincided with the fall of the Berlin wall and the end of the Cold War with the United States. The economic conditions in Russia at this timer were atrocious, exemplified by the long lines citizens were forced to wai...