Compare and contrast the ""shock therapy ""of the USSR with ""’the open door’ policy of China.
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Open door policy involves generating higher productivity by investments of capital and technology from abroad. However, Shock therapy is the model of transition in Russia, Central Asia and East Europe that was influenced by the World Bank and IMF.
Explanation:
- Deng Xiaoping adopted the open door policy. The Chinese did not go for shock therapy but opened their economy step by step.
1. 1982= China started privatization in the agriculture sector.
2. 1998= China started privatization in the industrial sector.
3. Trade Barriers were removed from SEZ (special economic zone) where foreign investors could set up their enterprises.
4. In China, the state played and continues to play a central role in setting up a market economy.
- USSR has, however, taken the following steps.
a. Shock therapy: Gorbachev ahead of his time with Perestroika and Demokratizatsiya and Glasnost.
b. The sudden shift to Liberal Capitalism collapse of the Economy. Rise of Mafia-Garage sale of industries.
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