For underdeveloped countries bent on accelerating their economic development, there are two alternatives: one is a mixed economy compatible with democracy, the other is planned development under totalitarianism. What has been happening in Communist China during the past few years is a striking example of the latter case, and its degree of success will undoubtedly have far-reaching influences on other economically backward countries desiring rapid economic development. Since rapid economic development is unattainable without substantial investment, the sources of investment funds are of crucial importance in the whole development program. The purpose of this paper is to explore how public investment was financed in Communist China, and to estimate which population groups bore the burden of such financing.

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