This paper evaluates the role of self-employment in China's rural economy, while paying attention to whether the rise of self-employment promotes entrepreneurship and is a sign of development, or whether it is a stopover for disadvantaged workers and a sign of distress. Using data on 20-year labor market histories of a nationally representative sample of individuals, we provide descriptive evidence that self-employment in rural China, unlike in some other places, is a sign of development. Econometric evidence from a random-effects probit model and a continuous-time Markov model shows also that self-employment in rural China shares many features of a productive small-business sector.

In a book assessing the development of China during the People's Republic era, it is of interest to know how well agriculture has performed and the role that it has played in the development process. Has China produced food and other commodities that have contributed to China's growth? Has it been successful supplying labor to the off farm sector? How has agriculture contributed to the rise in rural incomes and growth, in general? In short, one of the overall goals of this chapter is to document the performance of the agricultural sector and use the criteria of Johnston and Mellor to assess how well the agricultural sector has done.

This chapter, however, seeks to go further than describing the achievements and shortfalls of China's agricultural economy; we also aim to identify the factors, both domestic policies and economic events as well as foreign initiatives, that have induced the performance that we observe. To create an agricultural economy that can feed the population, supply industry with labor and raw materials, earn foreign exchange and produce income for those the live and work in the sector and allow them to be a part of the nation's structural transformation requires a combination of massive investments and well-managed policy effort. The process can only proceed smoothly if an environment is created within which producers can generate output efficiently and earn a profit that can contribute to household income. Policies are required to facilitate the development of markets or other effective institutions of exchange. Although the sector is expected to contribute to the nation's development and allow for substantial extractions of labor and other resources, large volumes of investment also are needed. Investment in education, training, health and social services are needed to increase the productivity of the labor force when they arrive in the factories. Investment is needed in agriculture to improve productivity to keep food prices low, allow farmers to adopt new technologies and farming practice as markets change, and to raise incomes of those that are still in farming. Investment is needed in technology, land, water and other key inputs that are in short supply. In this chapter we seek to point out both policies that have facilitated the performance of the agricultural sector and those that have constrained it.

A key issue in political economy concerns the accountability that governance structures impose on public officials and how elections and representative democracy influences the allocation of public resources. In this paper we exploit a unique survey data set from nearly 2450 randomly selected villages describing China's recent progress in village governance reforms and its relationship to the provision of public goods in rural China between 1998 and 2004. Two sets of questions are investigated using an empirical framework based on a theoretical model in which local governments must decide to allocate fiscal resources between public goods investments and other expenditures. First, we find evidence, both in descriptive and econometric analyses, that when the village leader is elected, ceteris paribus, the provision of public goods rises (compared to the case when the leader is appointed by upper level officials). Thus, in this way it is possible to conclude that democratization, at least at the village level in rural China, appears to increase the quantity of public goods investment. Second, we seek to understand the mechanism that is driving the results. Also based on survey data, we find that when village leaders (who had been elected) are able to implement more public projects during their terms of office, they, as the incumbent, are more likely to be reelected. In this way, we argue that the link between elections and investment may be a rural China version of pork barrel politics.

Although the initial reforms in China and other successful transition nations centered on improvements to property rights and transforming incentives (McMillan, Whalley and Zhu, 1989; Fan, 1991; Lin, 1992), the othe , equally important task of reformers was to create more efficient institutions of exchange (McMillan, 1997).

Markets, whether classic competitive ones or some workable substitute, increase efficiency by facilitating transactions among agents to allow specialization and trade and by providing information through a pricing mechanism to producers and consumers about the relative scarcity of resources . But markets, in order to function efficiently, require supporting institutions to ensure competition, define and enforce contracts, ensure access to credit and finance and provide information. These institutions were either absent in the Communist countries or, if they existed, were inappropriate for a market system. In assessing the determinants of success and failure of 24 transitions during their first decade of reform , Rozelle and Swinnen demonstrate that improved institutions of exchange were absolutely essential for nations to make progress. deBrauw et al. (2004) have shown the positive effect that market development had on the efficiency of China's agricultural producers and their welfare during the 1980s and early 1990s. Continued success of transition nations during the second decade of reform and beyond almost certainly also will depend on continued market development. Somewhat surprisingly, despite the importance of market performance in the reform process there is little empirical work on the success that China (or any other transition nation) has had in building markets.

China has been highly successful in electrifying rural areas in the past half century. Institutional structure and its reform are important for investment and, therefore, development of rural electrification. Over time, there have been three major institutional changes initiated by the central government; When the People's Republic was founded in 1949, it was short of capital, technology and management professionals to promote rural electrification, so rural electricity had a separate administrative system from the urban areas.

From 1949 to 1977, China established a comprehensive vertical system of rural electricity administration under strict central planning. At the end of the 1970s, with the adoption of economic reform policy, the central government handed over the management of the local electricity system to local government. County level has proved the most effective implementation unit for both planning and project implementation of the rural electricity system. From 1998 to 2002, the central government has been separating local electricity supply from local governments to facilitate the commercial operation of the utility market. After 2002, the rural electricity system was merged with the urban system, forming an integrated national electricity administrative system in China.

The purpose of this executive summary is to provide a concise statement about what we have learned about investment into China's rural environment. The overall purpose is to help the Bank understand what is happening in rural China, what farmer's are thinking about the current trends and what they are hoping will happen in the future (if they had a say). One of the most important questions is answer what should the role of the state be.

The Northeast Asian region has witnessed phenomenal economic growth and the spread of democratization in recent decades, yet wounds from past wrongs - committed in times of colonialism, war, and dictatorship - still remain. Of all the countries in the northeast region coping with historical injustice, the Republic of Korea has the rare distinction of confronting internal and external historical injustices simultaneously, both as a victim and as a perpetrator. Korea's experience highlights the major forces shaping the reckoning and reconciliation process, such as democratization, globalization, regional integration, and nationalism, in addition to providing valuable insight into the themes of historical injustice and reconciliation within the region.

Although there is no universal formula for reconciliation, the contributors examine the reaction of society from the perspective of citizens' groups, NGOs, and victim-activist groups toward such issues as enforced labor, ,comfort women, and internal injustices committed during the wars to foster a better understanding of the past and thus aid in future reconciliation between other Northeast Asian countries.