Economic Transition and Entrepreneurship Development in China

Abstract

One of the most prominent features of China’s transition from a centrally planned economy to a market-based economy is the emergence of entrepreneurship, although previous literature discusses this phenomenon descriptively rather than prescriptively. In this article, we consider entrepreneurship developments in China since the end of the 1970s and argue that the role of entrepreneurship in the economy has changed considerably over the last four decades. Our perception is that initially, China’s entrepreneurship development stemmed from China’s economic transition, but currently, entrepreneurship is both influenced by and influences economic development. We propose a conceptual model of the role of entrepreneurship in China’s contemporary economy, which we test using a unique database for 31 Chinese regions during the period from 1997 to 2009. Our analysis shows that two types of entrepreneurial organizations (siyingqiye and getihu) in China play important but distinct roles in stimulating China’s economic development.