Economic Transformation: Lessons From History - The first part of Policy Exchange’s

It included, perhaps most importantly, a transformation in the role of the state which included radically shrinking the power of the central government vis-a-vis the economy and society, and the creation of genuine local government. [...] Accordingly, we do not examine the case of the dramatic transformation of the Chinese economy after 1978, nor of the later take-off of the Indian economy, nor umpteen other examples of drastic economic improvement in Asia or other parts of the emerging world. [...] In the cases of Germany and France in the early years at least, this was partly a reflection of the global economic conditions of the time. [...] These include factors such as the efficiency of the transport system, the effectiveness of public administration, the cost effectiveness of regulatory systems, the good functioning of the housing market, low crime and many more. [...] The policy was supposed to reduce inflation but in the first months inflation rose, as Chart 1 shows, thanks to a combination of the rise in global oil prices, the increase in wages in the wake of the Clegg Commission’s Report on public sector pay and the effects of the near- doubling of VAT in the Conservatives’ first budget.