How could China privatize its industries without experiencing the cronyism Russia developed in the 1990s?
Russia embraced "shock therapy" in market liberalism in the 1990s, but critics argue that rather than foster economic entrepreneurship, it simply continued cronyism with allies of political leaders receiving the rents from privatization of different industries. It is argued that these "oligarchs," unlike entrepreneurs, frequently lack the skill sets needed to operate firms in an economically productive manner. As such, this institutional arrangement of top-down creation of firms through a central authority rather than an organic creation of firms through entrepreneurs has brought about a severely hampered economy with massive corruption and inefficiencies. If China's recent struggles is indicative that it must soon pursue further market liberalization, how does it avoid the fate of Russia?