| During China's transition from centrally planned economy to market economy, one remarkable feature is the quick development of non-state enterprises (NSEs) outside of the planning system. It has been proved by many researches that the sustaining growth of NSEs is the main source of China's economic growth in the post-reform period. Most of the literatures on NSEs focused on their contributions to economic growth and endeavored to explain where their vigor comes from. By doing so, these researches tended to treat the institutional environment as an exogenous variable and only noticed the influence of environment on the development of enterprises. However, the purpose of this article is to try to treat the institutional environment as an endogenous variable. That is, we want to study how the development of NSEs has influenced the transition of institutional environment.The change of institutional environment is the result of the games among all the economic entities. So far as this article is concerned, we try to understand how NSEs help to improve China's institutional environment from low levels of commercialization and marketization to high ones through the interaction between NSEs and other entities of the economy.In order to start our research, we must first understand how those newly emerged NSEs began to go upon the stage of China's economy. Therefore, by adopting New Institutionalism's theory of institution change and institution innovation, we present in chapter 2 a new explanation to the entry of NSEs of China after reform. This chapter points out that the entry of NSEs is the result of a series of spontaneous institution innovation activities which have been initialized by certain entities aiming at getting the potential profits of institution innovation.The next three chapters constitute the main parts of our research. We will in turn study the influence of NSEs on three entities of the economy, which are the state-owned enterprises (SOEs), the government and the individuals. In chapter 3, we first provide a new perspective on the efficiency difference between SOEs and NSEs with the new theory of the Anticommons. Then we prove that the rapid growth of NSEs have not only reduced the proportion of SOEs in the economy and affected the latter's profit and productivity rate, but also have relaxed many restrictions disturbing SOEs reform, which helps to further improve the property rights reform of SOEs. As to the government, the effect of NSEs' development canbe studied from two visual angles. First is the change of property right rule. We prove through game theory analysis that the change of China's property right rule from a highly unequal one to a fairly equal one has been an induced institutional change. It is the economic interests which are produced by NSEs, especially by those non-public enterprises, that induced the government to change the property right rule it ever established under centrally planning economy. The other angle is that the rapid growth of NSEs has forced the government to change its usual way of managing the whole economy. Chapter 5 focuses on the influence of NSEs on individuals. Through an empirical analysis, we draw the conclusion that the growth of NSEs is beneficial to the diffusion of entrepreneurship in China. It is also evident that a strong non-state sector helps to enlarge individual's set of choices, which in return will increase their sense of independence and civism. Through the work of the above three chapters, we have analyzed the counterforce of NSEs on the transition of institutional environment. Then in the end of our research, that is, in chapter 6, we make a brief review on the changes of NSEs themselves along with the transition of institutional environment. We also make an outlook on the future of NSEs and China's economic transition. We are confident that, as time goes on, NSEs will become the central participants of economic activities and China's transition to market economy will surely have a bright future. |
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