A Study On The Market-augmenting Behavior Of China's Local Government And Its Performance

This dissertation analyzes the source and boundary of the Chinese local government's market-augmenting behavior in theory. And the author also estimates the impact of Chinese local government's market-augmenting behavior to economic growth empirically.Firstly, the dissertation summarizes the researches of market-augmenting government, there are:(1) The researches from the angle of coercive power and encompassing interests by Olson etc.; (2) The researches of market-preserving federalism by Weingast etc.; (3) The researches of promotion tournaments by Li'an Zhou etc. Then the author summarize the criticism of market-preserving federalism and promotion tournaments, and the author finds the researched of point 2 and point 3 ignored the coercive power and the boundary of preserving, the author also finds the promotion incentive is only the power enhance the market preserving, not the basis of market preserving federalism.Secondly, the dissertation analyzes the source and boundary of Chinese local government's market-augment behavior from the angle of encompassing interests. the author finds when the capital is immbile, the government will choose a optimal tax rate to maximize the extraction from the society and do not extract to much; the government will also invest on the market-augmenting behavior for the purpose of maximize the extraction. When the government shares the economy in the market, the encompassing interests is strengthened. So if the government group extracts the economy equally, the government group will reduce predatory, and invest more on the market-augment behavior; but if the government group extract the economy outside the group more, the predatory of the government group unchanged, but they will invest more on the market-augmenting behavior than the government without the share of economy. When the capital is mobile, the competition effect coming from the competition of local governments force the governments invest more on the market-augmenting behavior, but the polarization effect will strengthen the market-augmenting behavior in the rigions with good endowment while the market-augmenting behavior in the poorly endowed rigions will be weakened.In the third part, the author adds the promotion incentive to the model, and finds the government will maximize the utility between the promotion interests and redistribution interests. Like the share of ecnonomy, the promotion interest cause the governments extract less and invest more on the market-augmenting behavior, the degree of which depend on the promotion interests. When the capital is mobile, the competition effect force the government invest more on the market-augmenting behavior; the polarization effect also strengthen the market-augmenting behavior in the rigions with good endowment and weaken the market-augmenting behavior in the poorly endowed rigions.Finally, the dissertation estimates the impact of Chinese local government's market-augmenting behavior, contract preserving and property preserving, to economic growth. The result is both the contracting institution and property institution positively influenced the Chinese economy significantly, which is still significant when we control the history human resource, geography and the policy. Then the author compares the impact of contracting institution and property institution. The estimation showes that the contracting institution still influence Chinese ecnonomy significantly. The interpretation is when we consider the institution within the country, maybe we will find the improving of government quality because of local government competition improve the economic like property preserving.