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Entrepreneurial talent and economic development in China

Elsevier Ltd
Publication Date
DOI: 10.1016/j.seps.2010.04.003
  • Entrepreneurial Talent
  • Economic Development
  • Position-Based Rights
  • Property Rights System
  • Strategy
  • China
  • Agricultural Science
  • Economics
  • Engineering
  • Political Science


Abstract In this paper, we argue that the economic miracle of China in the past three decades can be attributed to the reallocation of entrepreneurial talent from the government/state and agricultural sectors to business activities. This change is unprecedented in the past two thousand years of Chinese history. When entrepreneurial talent was moved more to business activities, it created wealth, and the economy boomed. Three dominant groups of entrepreneurs are identified: (1) Peasants-turned entrepreneurs, (2) officials-turned entrepreneurs, and (3) overseas-returned, and engineers-turned, entrepreneurs. They have emerged sequentially, and successively led three decades of economic growth. The success of the Chinese economy arises from a gradual replacement of position-based rights with property-based rights that has triggered this reallocation of entrepreneurial talent. We also argue that when position-based and property-based rights coexist, value-creating and rent-seeking can be complementary. Therefore, one should not be puzzled by the coexistence of rapid economic growth and pervasive corruption in China. In order to improve the efficiency of allocation of entrepreneurial talent and efforts, it is important to further reduce the domain of position-based rights, and build a better-defined and more effectively-protected property rights system.

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