Coevolutionary Development: Ten Years After How China Escaped the Poverty Trap

ABOUT THE SERIES

How China Escaped the Poverty Trap is an award-winning book published by Yuen Yuen Ang, Alfred Chandler Chair Professor of Political Economy, in 2016. The book received the Peter Katzenstein Prize in Political Economy and the Viviana Zelizer Prize in Economic Sociology, and was recommended by The Economist and Foreign Affairs. It has appeared in multiple translations and continues to be read and commented on by readers worldwide. 

To mark the tenth anniversary of its publication—and its forthcoming appearance in open access format—this series revisits the generative system of concepts, theories, and methods introduced in the book. Together, these ideas form an intellectual forest that Ang now formalizes as AIM (Adaptive, Inclusive, Moral) Political Economy.  

“ Coevolutionary Development is a theory developed by Yuen Yuen Ang in 2016 that explains political-economic development as a non-linear (mutually adaptive) process in which the economy, governance, or institutions evolve together over time, through zig-zag causal chains, rather than in a linear sequence. ”
Headshot for Yuen Yuen Ang

THE CHICKEN-AND-EGG PROBLEM OF DEVELOPMENT

How China Escaped the Poverty Trap begins by redefining the chicken-and-egg problem of development: which comes first, growth, good institutions, or fortunate colonial legacies? Dominant schools of thought offered “straight-line arguments.” Yet, as Ang writes:

“Despite a dazzling concentration of intellectual prowess, all three schools failed to find a way out. Why? Because they took an inherently endogenous process—economic and institutional development—and forced it to fit within their linear, static models.”

Her answer begins with a deceptively simple observation:

“Development is a coevolutionary process. States and markets interact and adapt to each other, changing mutually over time.”  

The hard work lies in investigating how coevolution begins and unfolds from early to late stages of development.  

METHOD: MAPPING COEVOLUTION

In How China Escaped the Poverty Trap, Ang does not treat coevolution as a metaphor. She develops a qualitative method for tracing and modeling endogenous change over time—mapping coevolution—producing many zig-zag causal maps across the book (see example below).  

“My first task is to develop a method for systematically mapping the coevolution of states and markets… My empirical approach generates multiple snapshots of reciprocal feedbacks between states and markets. When these snapshots are strung in sequence, it reveals a causal logic that integrates and yet departs sharply from the conclusions of conventional theories.”  

Ang applies this method not only across historical cases—reform-era China, late medieval Europe, 19th-century United States, and post-1990s Nigeria—but also within China itself, tracing divergent subnational paths that evolved over time.

COEVOLUTIONARY DEVELOPMENT IN THREE STEPS

 In its most distilled form, Ang explains that development is best understood as a three-step, coevolutionary process: 

 Step 1: Harness normatively weak institutions to build new markets. 

Step 2: Emerging markets stimulate and enable strong (modern) institutions. 

Step 3: Strong (modern) institutions preserve markets.  

Her theory distinguishes between the methods and institutions that build markets and those that later preserve them—“market-building vs. market-preserving.” It also distinguishes between institutions that appear weak by first-world normative standards and the functions they may serve at a start-up stage—what Ang terms “normatively weak, functionally strong.” 

As she writes: 

“I show that the practices and features that defy norms of good governance—normally viewed as ‘weak’ institutions—are paradoxically the raw materials for building markets when none exist. By contrast, the ‘good’ or ‘strong’ institutions found in wealthy economies are institutions that preserve existing markets.” 

 This is where Ang’s complex adaptive analysis blends with her decolonizing and moral critique of political economy: if we insist on benchmarking “good” against Western standards, then we cannot see the potential solutions in non-Western societies, even if they are right in front of us.  

CHINA AS DEMONSTRATION  

Ang first demonstrated Coevolutionary Development using reform-era China (1980s–2012) as a high-resolution case. She traced how state–market relations coevolved across regions and sectors, including property rights, bureaucratic incentives, and types of corruption. 

 China did not begin with so-called good governance. Instead: 

“Deng [China’s reform-era leader] crafted a set of conditions [directed improvisation] that empowered… local state and market actors to pursue development adaptively… thereby fueling a coevolutionary process of development.” 

Depending on where and when one looks, there is evidence for “developmental vs. minimalist states, private vs. collective property rights, orthodox vs. unorthodox institutions”—with no single, fixed “China model.” What remained consistent was the adaptive process itself.  

BEYOND CHINA: EUROPE, NIGERIA, AND THE U.S.

China was the primary demonstration site—not the boundary of the theory. In the book’s conclusion, Ang shows:  

“Development is a coevolutionary process, not only in China but also in other parts of the world and in recent and historical periods.”  

In Nigeria’s Nollywood, piracy functioned as a market-building, informal distribution network that sparked a new industry, before demands for intellectual property enforcement emerged.

In 19th-century America, state governments relied on risky, corruption-prone methods of taxless public finance that helped build large infrastructure but also precipitated financial crises. Post-crisis reforms later on established a modern taxation system. [See also Ang’s concept of Adaptive Fiscal Capacity in her 2025 article “Fairy Tales of Western Development.”]  

In short, across China, Europe, Nigeria, and the U.S., How China Escaped the Poverty Trap identifies a consistent pattern of economic and institutional coevolution, overturning the implicit assumption that Western societies followed a linear “good governance -> growth” path whereas non-Western ones either failed to do so (Nigeria) or are exceptionally deviant (China).

TEN YEARS LATER

Ten years after its publication, Coevolutionary Development remains a foundational theoretical outgrowth of Ang’s AIM, a systems-centered, pluralistic, and reflexive paradigm she seeded and demonstrated in How China Escaped the Poverty Trap and formalized a decade later.  

Coevolutionary Development centers endogeneity rather than abstracting it away. It shows that development does not begin by copying an idealized Denmark, but rather by repurposing indigenous knowledge and resources—“using what you have”—to kickstart change.

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