Transition Period Of Economic Behavior Of Local Government Research

The paper researches on the local government's economic behavior in the course of China's transition, the hypothesis of the paper is that the local government is a rationally economic man. It is disputable on the question that the local government is an economic man or a public man. The paper has analyzed the local government and local official and concluded that the local government has the characters of economic man and China's local government's character of economic man is more obvious than other country's, so the paper's hypothesis of the local government's role of economic man is logical. The period limit of the research is the course of China's transition. Transition is a special period during which the economic and social system is changing and the government's role is transferring and improving. The local government is a double represent of the central government and the local citizen. The local government's economic behavior should satisfy the central government's need, prompt the local development and realize its own interest.The psychology theory thinks that the behavior of human and animal is a feedback to the environment. The local government's economic behavior also is the local government's feedback to the institutional environment. During the course of transition, the institutional environment is not hard but soft, it is always changing and makes freedom for the local government. There are a lot of institutional environment factors which can affect the local government's economic behavior. These factors are different by their role on the local government. Among these factors, the official administration system, the fiscal administration system and ideology are the most importance. The official administration system affects the local official's political interest. To some extent, some local government's behavior aims for the local official's promotion. The fiscal administration affects the local government's revenue and expenditure. The current fiscal system could ensure the central government's fiscal revenue, but put heavy fiscal pressure on the local government. The local government must increase its revenue by economic behavior. The ideology as informal institution affects the local government's thoughts and chooses. In the course of transition, the ideology is a economic development oriented value judgment which makes important effect on the local government. The local government implements special economic behavior under the special institutional environment. Many scholars have put forward some different viewpoints on the local government's economic behavior's character. The paper considered that the most important character is economic development-oriented behavior which means the local government's all economic behaviors'aim is to develop the local area's economy. The local government's development-oriented behavior results from the particular institutional circumstance in the transition which advocates and prompt economic development. Under the institutional circumstance, there are many development mechanism like the official examination and fiscal administration which are all development-oriented. These mechanism like an invisible hand which direct the local government's behavior. The development-oriented behavior is substitute to the market and this substitute is essential under the condition of imperfect market economy. In reality, the development-oriented behavior has many embodiments as increasing GDP, finding investment and attracting capital, building development area. The development-oriented behavior can be classified to three categories, drawing up development plan, prompting capital accumulation, fostering the development pole. Some scholars have researched the local government's economic behavior and put forward some viewpoints from different angles. The paper suggests that the research should be put in a frame so that we can understand the local government's economic behavior on the macro and micro angels. The paper researches the local government's economic behavior from the angle of the local government itself, the relationship between local governments each other and the relationship between local government and central government. From the angle of the local government itself, the local government develops economy by the means of institutional innovation. The behavior of institutional innovation not only release the local economy's energy, but also prompt the economy development and accumulate experience for the country's economic reform. Due to the institutional innovation's risk, the local government should take some strategies to escape these risks. From the angle of the relationship between local governments each other, due to the scarcity of the resource and the promotion competition between local officials, the local governments compete in development each other. The competition stimulates the local government's development enthusiasm, makes up the market and distributes the resource. The local government takes some tactics in the competition in order to get advantage. The competition is evolving on its content, means and relationship. From the angel of the relationship between local government and central government, due to the local government's administrative and economic power becoming stronger and stronger, the local government has the capability of playing game with the central government and the number of game tactics become more and more. The local government plays game with the central government in fiscal revenue, institution innovation and macro-economy control.The local government's economic behavior results in positive effect and negative effect. From the whole viewpoint, the positive effect is larger than the negative effect. The local government's economic behavior promote the country's economy development and reform. We should not simply justify the local government's economic behavior by its effect. We should justify it by the standard of the need of socialist market economy and improve the local government's economic behavior from the long run of building the socialist market economy. The paper suggests that it should improve the local government's economic behavior by the way of transferring the local government's role and function, improving the institutional environment, smoothing the relationship between local government and central government. The local government's economic behavior is path-dependent and continuous, it will take a long time to improve it and the improvement of the local government's economic behavior will not end up until the nation finishes its transition.