Differences In Institutional Factors Of Regional Economic Development Study

With a synthesis of theories on regional economic development and institutional change, this thesis represents an attempt on the part of the author to explore the role of institutional factors in the non-equilibrium development of economy in the hope of providing a roadmap for the reform of regional economic systems and a theoretical framework for the transition of regional economies from the non-equilibrium modes to equilibrium modes.The non-equilibrium of regional economy is an unavoidable stage in the takeoff of an economy. The non-equilibrium of Chinese regional economic development is displayed in the explicit context as follows: a) the institutional transition from the planned economy to the market economy; b) the overall transition from closed economy to open economy; c) the substantial transition from government-dominated economy to the multi-sector economy dominated by non-public sectors. The large scale institutional change has precipitated the non-equilibrium process of regional economic development, hastening the transition of regional economic development from non-equilibrium. The difference in regional economic development, as well as the optimization of developmental modes, has drawn attention from the political and academic communities alike.The thesis holds the following institutional factors as attributable to difference in regional economic development: rural reforms, the reform of enterprise system, open policies, government innovation mechanisms and regional developmental policies. These institutional factors have changed the way resources are combined with production factors, which makes possible the division of industries, the competition of enterprises and technological innovations. Therefore, the institutional change at the national level, and the consequent region-specific differentiation of institutional changes, has been reflected in the performance of regional economic development through the quantitative and qualitative expansion of factor accumulation.By way of seeking the quantitative indices, an empirical evaluation has been made, based on panel data, of the correlation between regional institutional change and the performance of regional economic development from 1999 to 2002. with a theoretical analysis, a study has been made of the impact of various factors on the difference of regional economic development, such as the marketization of the allocation of resources, the decreased governmental interference with the enterprises, the level of the development of private sectors, the marketization of credit allocation, the openness of the economy and the legal safeguards. Three samples, obtained respectively at the national level and regional level, with one from the coastal region and the other from the great hinterland, have examined the relative role of institutional factors in regional economic development. It is made explicit from the comparison between the coastal regions and the hinterland model that a benevolent interaction has been achieved between the government and the market, between the micro-economic entities and the macro regulations while the great hinterland remained stuck in the relatively closed trap of internal friction.The conclusion drawn from the thesis is obvious: China's policies on the regional development in the future will be based not only on the force of the government but also on differentiated objectives defined by the comparative advantages specific to individual regions. The coastal regions are to achieve a quality, efficient and balanced socio-economic development by way of establishing an environment of interactive dynamics between economic development and institutional optimization by deregulating governmental controls and opening-up and economic reforms. The great hinterland is to quicken the development of private sectors and formulate the mechanism of independent development by picking up the pace of integrating into the domestic marketization on the one hand and break away from development trap of underdeveloped regions by committing itself more to the transfer payments made by the central government for the provision of public goods so as to provide an equal opportunity of development for the underdeveloped hinterland.