Between Weak State and Shallow Market: Local Government and Market Building in China

While debates on the role of the state in development have largely focused on configuring and reconfiguring the balance between the government and market, a key challenge in many developing countries is that the capacity of... [ view full abstract ]

While debates on the role of the state in development have largely focused on configuring and reconfiguring the balance between the government and market, a key challenge in many developing countries is that the capacity of both the government and market is low, and governments in these countries are confronted with three potentially competing imperatives: to reconfigure the balance between government and market given their existing level of capacity, to enhance government capacity in order to alter this configuration, or to build up market capacity to do the same. In this paper, through a case study of the rise of Yiwu from a small agrarian county to a global commerce hub in under three decades, we demonstrate that local government innovations can play a critical role in unraveling challenges stemming from these three competing governance imperatives.