Economy reform has tremendous potential for the economic growth of a country. Economic reform helps enhance the living standard of a country’s people. It helps the country to ermerge strong from economic and political crisis.
Distinctive Measures: Economy Reform
Normally a country initiates economic reforms if it faces an economic crisis, such as technological change favoring capital and skilled labor, increased vulnerability, economic risks, or shift of economic power.
In such situations, a country adopts distinctive measures to stabilize its economic condition:
- Devaluation of the national currency. This makes exchange rates more idealistic in nature.
- Elimination of limitations on imports.
- Elimination of the balance of payment deficits.
- Relaxation or removal of all subsidies.
- Encourage investment by foreign financial establishments.
- Autonomy of the Central Bank
As distinctive measures, the country also carries out some structural adjustments:
- Liberalization of industries.
- Encouraging privatization of government entities.
- Promoting export oriented growth.
- Encouraging foreign capital and technologies.
- Exchange of capital and funds with foreign countries.
- Encouraging foreign financial and services industries.
- Safeguarding intellectual property rights.
- Initiating a sound climate for implementing legal contracts, industrial farms, and private property rights.
Chinese Economic Reform
China’s economic reform started in 1978. It was initiated to generate surplus funds for modernization of the Chinese economy. At the beginning, the economic reform was initiated to incite workers and cultivators of China to grow larger surpluses and eradicate economic the country’s imbalances.
The economic reform in China helped millions of Chinese people overcome poverty. In 1981, the poverty rate in China dropped to 53%. In 2001, the poverty rate in China was 8 percent.