Understanding a Development Miracle - Assignment Example

It had also adopted ‘active industrial policies’ that lured foreign investment in exchange for knowledge transfer. Another important element of its success has been its proximity to Hong Kong where the inflow of capital and know-how was easy. By focusing on backward areas that were near Hong Kong, it introduced the reallocation of labor from agriculture to other activities. The local government and entrepreneurs were given incentives to introduce reforms. The reforms and industrial revolution were accompanied by high-quality low waged human skill and infrastructure that was able to mass produce.

China has not followed the traditional western culture of best practices but has concentrated on improved performance through an incentive-driven approach, especially during the transition period of growth and development. Indeed, while China lacks freedom, the billion-plus population is a high-growth market for foreign investment. It has introduced fresh reforms to incorporate the concern regarding environmental concerns, human rights, and more conducive environment for foreign business. This is a way to declare that its growth is not merely a bubble with a short life span.