Political conditions for reform: China vs. Eastern Europe revisited

The long literature of former socialist systems concludes that any effort to reform the economy without drastic. political change is believed to be doomed to fail because tight political control and nonmarket coordination mechanisms are intertwined with each other. Indeed, the history of economic reform in Eastern European countries has confirmed this logic. So far, however the experiences of China and Vietnam seem to have defied this logic. We argue that the puzzle of China or Vietnam can be explained by the ruling party's strong initial and more efficient control, which allow the party to reform the economy without losing political control.