Many scholars have lauded Taiwan's successful democratization as a "political miracle," parallel to its well-known "economic miracle" of the 1960s and 1970s. This paper argues, however, that the fulfillment of formal, procedural conditions of democracy conceals the development of a distorted democracy in Taiwan. An iron rectangle of the state, the ruling party, local factions, and conglomerates have gradually dominated Taiwan's political economy at the expense of distributional equality and economic efficiency. In addition to the analysis of these four institutions, this paper extends the neo-institutional analysis to a comparison with the cases of Korea and Japan. These cross-country comparisons disclose the gradual convergence of the Taiwanese case with the Korean and Japanese models.

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This article suggests that China's public and collective enterprises have contributed to its economic growth and socio‐political stability. The efficiency of these enterprises has been improved not through the privatization of the state (transferring public ownership to private hands) but privatization within the state (decentralization, appropriation, and marketization). This article first provides statistics to juxtapose the growth of the Chinese economy to the continued expansion of public and collective enter‐prises. I t then explains the causes and benefits of privatization within the Chinese state. A case study of privatization within the state in Shanghai City follows. The article concludes that China's economic reform has been a transformation of socialism, not a transition to capitalism, and that it is a less costly but more effective alternative to the privatization of the state approach. The former communist countries in Europe have painfully followed this latter approach and have suffered from its political, social, and economic consequences.

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