SAQ1 From the early 1980s to 1990s, a list of former socialist countries initiated economic reforms e.g. opening- up policies to engage in more international trade, privatising government- owned enterprises, etc. In contrast with many East European countries such as Russia, Poland, the Czech Republic using 'shock therapy' (or 'big bang approach"), China gradually changed to a market economy. Based on the figures shown in Table 1 below, why did the Chinese economy's gradual approach seem to work much better than Russia's 'shock therapy'? [Hint: also read ' Gradualism Versus Shock Therapy: (Re) Interpreting the Chinese and Russian Experiences'] Table 1: GDP Indexes 1989- 1999 for China, Russia, Central-East Europe (CEE) and Poland. China Russia CEE Poland 1989 100 100 100 100 1990 103.8 96 93.3 88.4 1995 183 59.6 88.5 98.6 1999 251.9 52.5 100.6 121.2 Source: Shiu, 2003. SAQ2 Answer the following questions about the Middle-Income Trap (MIT): a) What is MIT? b) What is the evidence that China might be caught in MIT? c) By drawing empirical evidence, discuss what you believe are the important steps that China should take to overcome MIT? SAQ3 Answer the following questions about the World Economic Forum (WEF) and its Global Competitiveness index: a) How are 'competitiveness' and 'productivity' of a country defined by WEF? b) List 12 pillars used to construct one country's Global Competitiveness Index. c) Which pillars does China do very well, quite well, reasonably well or needs improvement