SFeDu
of.211, Gorgoko St., 88 
Rostov-on-Don
Russia
344002
+7 (863) 250-59-54
This email address is being protected from spambots. You need JavaScript enabled to view it.
te@sfedu.ru

TERRA ECONOMICUS

  • Home
  • Issues
  • 2025
  • No 4
  • Socialization of investments as a driver of economic development: The case of the People’s Republic of China

Socialization of investments as a driver of economic development: The case of the People’s Republic of China


TERRA ECONOMICUS, Vol. 23, No 4

Citation: Kirdina-Chandler S.G. (2025). Socialization of investments as a driver of economic development: The case of the People’s Republic of China. Terra Economicus 23(4), 6–20 (in Russian). DOI: 10.18522/2073-6606-2025-23-4-6-20


“Economic development” is increasingly gaining priority over “economic growth” in both theory and practice. Economic development assumes a broader and more qualitative improvement in economic and social conditions, while economic growth is primarily focused on quantitative increases in GDP and income. Therefore, economic development is becoming a more comprehensive and sustainable goal. This paper summarizes the results of a comparison of the theoretical concept of “economic growth”, which is considered part of the orthodox school of neoclassical economic theory, and “development economics”, which is part of the heterodox school of economic research. I analyze the phenomenon of socialization of investment in China and show the practical application of “development economics” approaches. In China, the socialization of investment is essentially linked with the leading role of the state in organizing the external and internal flows of funds used for investments aimed at improving economic performance and increasing the well-being of the population. The paper presents the main institutions of socialization of investment, demonstrating that they are constantly evolving and becoming more complex in response to internal and external challenges. It is concluded that the socialization of investment provides a practical illustration of how modern China, where X-matrix institutions historically dominate, has achieved a balance between dominant redistributive economic X-institutions and complementary market economic Y-institutions that ensures sustainable economic development. The paper also substantiates the feasibility of applying the Chinese experience to Russia, where X-matrix institutions also historically dominate.

Keywords: development economics; socialization of investment; Chinese economy; heterodox approach; institutional X- and Y-matrices theory
JEL codes: B52, B41, E02, E42, O10, O53, P21


References:
  • Balatsky, E., Ekimova, N. (2022). New Approaches to Modeling Economic Development. Moscow: INFRA-M Publ. (in Russian)
  • Veselov, D. (2025). From growth theory to development theory: Beyond stationary trajectories. AlterEconomics 22(1), 83–102 (in Russian)
  • Volynskiy, A., Plushchevskaya, Yu. (2024). The coming systemic cycle of accumulation and China. Journal of Institutional Studies 16(4), 113–127 (in Russian)
  • Yefimov, V. (2018). On two types of social orders. Part 1. Issues of Economic Theory (1), 7–25 (in Russian)
  • Karagiannis, N., Cherikh, M., Elsner, W. (2022). Growth and development of China: A developmental state “with Chinese characteristics”. Journal of Economic Regulation 13(1), 6–19 (in Russian)
  • Kirdina, S. (2014). The Institutional Matrices and the Development of Russia. Introduction to X-Y-theory. Moscow, St. Petersburg: Nestor-Istoria Publ. (in Russian)
  • Kirdina-Chandler, S. (2024). Theories of economic development vs. theories of economic growth: An instutionalist’s perspective. Problems in Political Economy (4), 142–162 (in Russian)
  • Likhacheva, V., Oleynik, G. (2024). Banking sector of China: Development trends and problems. Bulletin of the Altai Academy of Economics and Law (3-1), 80–87 (in Russian)
  • Lvov, D. (2002). Development Economics. Moscow: Ekzamen Publ. (in Russian)
  • Maevsky, V. (2025). Blind spots in orthodox economic theory. The Economic Revival of Russia (2), 40–56 (in Russian)
  • Mayevsky, V., Malkov, S., Rubinstein, A. (2023). Macroeconomic conditions of Russia’s transition to high growth rates: China’s experience. Voprosy Ekonomiki (10), 98–123 (in Russian)
  • Polynov, M. (2024). Economic policy in the Soviet Union during the years of Perestroika. Vestnik of Saint Petersburg University. History 69(2), 371–386 (in Russian)
  • Tolkachev, S., Levin, S., Makarova, I. (2024). The new Development Economics as a methodological and ideological discipline. Journal of Economic Regulation 15(1), 105–117 (in Russian)
  • Barcelona, W., Cascaldi-Garcia, D., Hoek, J., Van Leemput, E. (2022). What happens in China does not stay in China. International Finance Discussion Papers № 1360. Washington: Board of Governors of the Federal Reserve System.
  • Bresser-Pereira, L., Oreiro, J. (2024). A brief history of development theory. From Schumpeter and Prebisch to new developmentalism. Revista de Economia Política 44(1), 5–28.
  • Broadberry, S., Campbell, B., Klein, A., Overton, M., van Leeuwen, B. (2015). British Economic Growth: 1270–1870. Cambridge: Cambridge University Press.
  • Burlamaqui, L. (2015). Finance, development and the Chinese entrepreneurial state: A Schumpeter-Keynes-Minsky approach. Revista de Economia Política 35(4), 728–744.
  • Campos, J., Root, H. (1996). The Key to the Asian Miracle: Making Shared Growth Credible. Washington: Brookings Institution Press.
  • Chen, K., Ren, J., Zha, T. (2018). The nexus of monetary policy and shadow banking in China. American Economic Review 108(12), 3891–3936.
  • Chen, K., Zha, T., Amstad, M., Sun, G., Xiong, W. (2020). Macroeconomic Effects of China’s Financial Policies. Princeton: Princeton University Press.
  • Cho, D.-S. (1994). A dynamic approach to international competitiveness: The case of Korea. Asia Pacific Business Review 1(1), 17–36.
  • Davis, J. (1997). Government investment programs (The socialization of investment). In: Cate, T., Harcourt, G., Colander, D. (eds.) An Encyclopedia of Keynesian Economics (pp. 210–214). Cheltenham, UK: Edward Elgar Publishing.
  • De Paula, L., Jabbour, E. (2020). The Chinese catching-up: A developmentalist approach. Journal of Economic Issues 34(3), 855–875.
  • Dillard, D. (1980). A monetary theory of production: Keynes and the institutionalists. Journal of Economic Issues 14(2), 255–273.
  • Foley, D. (2014). Varieties of Keynesianism. SCEPA Working paper, March. New York.
  • Čajková, A., Čajka, P. (2025). Economic and institutional aspects of India’s economic development in the 21st century. Terra Economicus 23(1), 103–117.
  • Heise, A. (2023). Keynesian–Minskian perspective on the transformation of industrial into financial capitalism. Journal of Evolutionary Economics 33, 963–990.
  • Hsueh, R. (2016). State capitalism, Chinese-style: strategic value of sectors, sectoral characteristics, and globalization. Governance 29(1), 85–102. 20 С.Г. КИРДИНА-ЧЭНДЛЕР / TERRA ECONOMICUS, 2025, 23(4), 6–20
  • Jabbour, E., de Paula, L. (2020). Socialization of investment and institutional changes in China: A heterodoxy approach. Forum for Social Economics 50(3), 316–329.
  • Jomo, K. (2005) (ed.) The Pioneers of Development Economics: Great Economists on Development. New Delhi: Tulika Books.
  • Kaboub, F. (2008). Socialization of investment. In: Darity, W., Jr. (ed.) International Encyclopedia of the Social Sciences, vol. 7 (pp. 649). Detroit, MI: Macmillan Reference USA.
  • Keynes, J. (1973a). A monetary theory of production. In: Moggridge, D. (ed.) Collected Writings of John Maynard Keynes, vol. 13. The General Theory and After, part 1 (pp. 408–411). London: MacMillan.
  • Keynes, J. (1973b). The General Theory of Employment, Interest, and Money. Cambridge: Macmillan, Cambridge University Press.
  • Kirdina-Chandler, S. (2017). Institutional matrices theory, or X- and Y-theory: A response to F. Gregory Hayden. Journal of Economic Issues 51(2), 476–485.
  • Kregel, J. (1985). Budget deficits, stabilization policy and liquidity preference: Keynes’s post-war policy proposals. In: Vicarelli, F. (ed.) Keynes’s Relevance Today. Keynesian Studies. London: Palgrave Macmillan.
  • Milhaupt, C. (2025). Party-state, Inc. – Chinese state capitalism 2.0. In: Ringe, W.-G., Gordon, J. (eds.) The Oxford Handbook of Corporate Law and Governance. Oxford Handbooks Online.
  • Naughton, B. (2017). Is China socialist? Journal of Economic Perspectives 31(1), 3–24.
  • O’Hara, P. (2025). Long Waves of Growth, Hegemonic Power, and Climate Change in the World Economy. Dutch, British, US and Chinese Capitalism and Structural Polycrises. Singapore: Springer.
  • Robinson, J. (1973). What has become of the Keynesian revolution? In: Robinson, J. (ed.) After Keynes (pp. 1–11). Oxford: Basil Blackwell.
  • Rolf, S. (2021). China’s Uneven and Combined Development. London: Springer.
  • Rolf, S. (2023). The revenge of multiplicity: Chinese capitalism under systemic competition. Global Political Economy 2(1), 121–138.
  • Schumpeter, J. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Cambridge, Massachusetts: Harvard University Press.
  • Tessari, C., Ferrari-Filho, F. (2025). Considerations about the economic growth of the Chinese economy since the 1990s. Chinese Studies 14(32), 114–127.
  • Walter, C., Howie, J. (2012). Red Capitalism. New Jersey: Wiley & Sons.
  • Wang, G., Lin, N. (2020). 70 years of China’s foreign exchange market development: History and experience. China Political Economy 3(1), 3–17.
  • Wiemer, C. (2026). Exchange rate policy. In: Schramm, R. (eds) SAGE Hand Handbook of Modern China: Economy (forthcoming). Цит. по: Wiemer, C. (2024). Making sense of China’s exchange rate policy. Preprint, October. DOI: 10.13140/RG.2.2.19771.94242

Publisher: Southern Federal University
ISSN: 2073-6606