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Market-preserving federalism is a special type of federalism that limits the degree to which a country's political system can encroach upon its markets. Weingast notes that there is a fundamental dilemma facing a government attempting to build and protect markets: the government must be strong enough to protect property rights and enforce contracts, but weak enough to credibly commit the state to honoring such rules. Montinola, Qian, and Weingast argue that this form of federalism was critical for the success of China's reforms in the early 1980s.

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  • Market-preserving federalism (en)
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  • Market-preserving federalism is a special type of federalism that limits the degree to which a country's political system can encroach upon its markets. Weingast notes that there is a fundamental dilemma facing a government attempting to build and protect markets: the government must be strong enough to protect property rights and enforce contracts, but weak enough to credibly commit the state to honoring such rules. Montinola, Qian, and Weingast argue that this form of federalism was critical for the success of China's reforms in the early 1980s. (en)
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  • Market-preserving federalism is a special type of federalism that limits the degree to which a country's political system can encroach upon its markets. Weingast notes that there is a fundamental dilemma facing a government attempting to build and protect markets: the government must be strong enough to protect property rights and enforce contracts, but weak enough to credibly commit the state to honoring such rules. Market-preserving federalism is a means by which some countries address the fundamental dilemma of government. By decentralizing the authority to make economic policies, market-preserving federalism reduces the ability of both the central government to act arbitrarily (it has given up these powers) and the subnational governments (they face competition with one another for scarce capital and labor). Montinola, Qian, and Weingast argue that this form of federalism was critical for the success of China's reforms in the early 1980s. (en)
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