Horizontal Innovation Model in China
Discussion
Copied from a slide presentation by David Ellerman:
- Horizontal Learning in Chinese Reforms
General theme:
• allow decentralized experimentation in agriculture and industry,
• successes will spread through unassisted P2P learning, and finally
• successful reforms given blessing of Beijing to spread faster.
Family responsibility system with long-term land leasing in agriculture, and
Township/village enterprises (TVEs) in industry.
These innovations in 70s and 80s ushered in the greatest growth episode in history.
- Everett Rogers on Chinese Reforms
“The diffusion of innovations in China is distinctive in that it is
1) more horizontal in nature,
2) less dependent upon scientific and technical expertise, and
3) more flexible in allowing re-invention of the innovation as it is implemented by local units.
These aspects of decentralized diffusion are facilitated by China's use of such diffusion strategies as models and on-the-spot conferences. The ‘learning from others’ approach to decentralized diffusion in China was adopted officially as a national policy in the national constitution in 1978.” (Everett Rogers )
General theme about innovations:
“Instead of coming out of formal R&D systems, innovations often bubbled up from the operational levels of a system, with the inventing done by certain users. Then the new ideas spread horizontally via peer networks, with a high degree of re-invention occurring as the innovations are modified by users to fit their particular conditions.” (Everett Rogers)
...
In Stanford economist John McMillan’s 2002 book praising markets, Reinventing the Bazaar: A Natural History of Markets, he contrasted the Chinese reforms with the Russian reform debacle.
In Harvard economist Greg Mankiw’s review of the boo “Our profession lent some of its best and brightest to the transition effort, such as my former colleague Jeffrey Sachs. Most of these advisors pushed Russia to embrace a rapid transition to capitalism. If this was a mistake, as McMillan suggests, its enormity makes it one of the greatest blunders in world history.” (Mankiw)
Thus in the transition-to-market strategies of China and Russia, we have a natural experiment in horizontal-experimental learning versus socially-engineered vertical “learning” with the results:
• China: greatest growth episode in history,
• Russia: “one of the greatest blunders in world history.”
One could not ask for a clearer natural experiment to show that it is not the What but the How that counts!"
More Information
David Ellerman, http://www.ellerman.org ; http://www.blog.ellerman.org
Book version of the story:
- Helping People Help Themselves: From the World Bank to an Alternative Philosophy of Development Assistance.
University of Michigan Press, 2005.