Question

Case 1 Professor Robert Pollin argues that State owned enterprises played a very important role in the economic growth of China. But many other economists around world and other reports from the Chineese government showed that, the state-owned enterprises failed to achieve efficiency. The main reason for the failure is that budget constraints, government intervention and lack of innovation. Mr. Minsky another economist is of the opinion that a huge government sector is always required to protect the market economy and maintain macroeconomic stability to avoid the recession in any economy. According to a study conducted by the Professor Pollin an increase in aggregate demand of the workers will improve their productivity. The improvement in productivity will help the state-owned enterprises to come out the current situation. In the year 1980 many countries in the world started privatizing their state-owned companies. The world bank also wanted many countries to privatize the state-owned companies. China followed a different path in this regard. Chinese people did not even know what is privatization until 1990. The state-owned enterprises contributed to nearly 50 % of the GDP of china until 1990. It is found from the experience of developing countries is that the privatization failed in in real meaning. The reports that were criticizing Chinese state-owned enterprises were not calculating the value of these enterprises as it is backbone of health care, education system and social security pension payments. Instruction: Please make sure that each answer is having 150 - 175 words (3 x 5 Marks = 15 marks) 1. Discuss the types of economic systems discussed in the above case study. With suitable arguments. 2. Do you think government owned companies are required in china? justify your answer. 3. What are the techniques that can be used by Chinese government to help the state-owned companies?

Answer 1

Answer :-

Given that ,

A case study that consists of robert pollin owned an enterprise and it was failed due to lack of efficiency and lack of budget constraints and lack of innovation

A study conducted by pollin increase in aggregate demand of the workers will improve their productivity

chineese people donot even know what is the privitization untill 1990

The state owned enterprises contributed to nearly 50% of the GDP of china untill 1990

(1) Here we need to discuss trhe types of economic system and suitable arguments explained below briefly

we already know that there are 4 types of economic system they are

• Market economy
• Traditional economy
• Command economy
• Mixed economy

This above casestudy belongs to traditional economy because the statistical and financial belongings are completly belonging to a private person who does not have any central and state government belongings anywhere

All in all, in a conventional monetary framework, an overflow would be uncommon. Every individual from a customary economy has an increasingly explicit and articulated job, and these social orders will in general be extremely affectionate and socially fulfilled. Notwithstanding, they do need access to innovation and propelled medication.

(2) Here we need to analyse that government owned companiees are required in china

Nope, Because in some enterprises there are certain interference of government in such prolonged conditions and active participants of governemnt employees and their possible worth with it.

but here by the use of above case study here we have certain enterprise included state owned enterprise

(3)Here we need to discuss what are the techniques that can be used by chineese government to help the state owned companies

A State Owned Enterprise (SOE) is a body framed by the legislature through legitimate methods with the goal that it can partake in exercises of a business nature. Basically, SOEs are made to attempt business exercises. Deals and exchanging is the backbone that represents the deciding moment a protections firm for the benefit of the government

• social security pension payments
• backbone of health care
• Education system
• calucating the value of enterprise

By the use of these techniquesthat can be used by chineese government to help the state owned companies

Thank You