Economic Development in Shanghai and the Role of the State

Abstract

This article examines the economic development process underlying Shanghai's rapid urban transformation in the 1990s. It analyses the key factors that have contributed to the economic development there and assesses critically the role of the state in this process. It concludes that the sheer scale of investment and the national contexts, rather than far-sighted economic management at the local level, are the keys to its economic success. The article further argues that the prevailing views regarding the local state-market relationship in Shanghai need to be revised: beneath the façade of a proactive and omnipotent state are numerous instances of failure and ineffectiveness. Moreover, the market is much more than a tool in the state's decision-making. It is a growing force that the state is trying hard to control, but with increasing difficulties.