The Research On Governance Structure And Local Government Behavior-oriented In China

The important function of institution is to form the incentives and constraints for the subject. A good institution is very important to the development of a country,especially China in transition. China has realized high growth being lack of perfect institution in the sense of North, but it depends on another transitional institution. The paper is to research the impact of governance on the behavior orientation of Chinese local government from the perspective of institution.The governance of political centralization and economic decentralization is a unique institution arrangement in China. It provides political and economic incentive influencing the behavior of local government deeply. The unique governance in China shapes entrepreneurship of local government, stimulating their enthusiasm in developing local economy. It means that Chinese governance shapes growth-orientation rather than development-orientation government, local government competes for growth rather than development. The orientation is from the intensity and bias of incentive in political organization from the perspective of incentive. At the same time, the constraints from the public are weak in the current governance. Therefore the local government is responsible for the superior,,not the masses. So, the local government ignores the livelihood. It causes the high growth of economy at a great price. It shows some negative effects such as environment pollution and lack of public goods. So the paper is to research how the current governance influences the orientation of local government and the mode of economic development along the logic of institution-structure-behavior-performance, then the paper discusses it from the theoretical and empirical perspective deeply. The results show that local governmental competition from unique governance is the institutional source of the orientation of local government. The governmental competition is from the mixde motive of local government, such as political incentive, economic incentive and reputation incentive.Except the part of introduction and literature review, the rest part is arranged as follows:Chapter3is the part of theoretical analysis, discussing the incentive in political organization mainly. We discuss the importance of incentive in political organization, research the particularity of incentive in political and economic organization extending the incentive mechanism, then derive the mode of best incentive contract of government by mathematical methods, analyse the impact of change of assessment weight from higher levels of government on the behavior of local government; investigate the governance of U and M form and the feature in information coordination and rights allocation and so on. That provides the theoretical evidence for researching government decentralization. Chapter4is the part of historical evolution and review of behavior of local government. We analyze the government decentralization and its effect on behavior of local government in different system divided by1978, then remark it. That research is helpful to deepen the understanding of relevant background of local government behavior in order to realize the importance of institution to the behavior of local government.Chapter3is the part of analytical framework. On the basis of Chapter3and4, the paper raise up the political and economic logic in the process of growth in China. The analytical logic is institution-structure-behavior-performance, discussing the behavior orientation of local government in the process of development in the current governance of political centralization and economic decentralization. Theoretical analysis shows that the high growth is the result of incentive to the local government and other subjects brought by economic decentralization. But political centralization and the evaluation system political achievements in which GDP is the center is the root of many social and economic problems.Chapter6,7and8is the part of empirical analysis. On the basis of theoretical research, we use the econometric method and panel date mode(including the dynamic panel data mode)to test the negative effect of orientation of local government in the current governance of political centralization and economic decentralization. It includes3parts: firstly, the distortion of fiscal expenditure structure of local government realizes the short-term growth at the price of long-term growth; secondly, the distortion of environment policy by local government aggravates the pollution in the orientation of GDP; thirdly, the unequal factor preference policy of local government cause the unequal status of labor and capital, declining share of labor income and capital deepening seriously. So, Chinese governance influences the orientation of local government deeply. The empirical analysis supports it.The last is the part of conclusions and suggestions. We raise up4conclusions:(1)the mode of incentive in Chinese political organization decides the road of development;(2)Chinese style governance shapes the growth-orienting of local government.(3)the competition between local governments distorts their behaviors.(4)the weak constraints from the third party aggravate the deviation of local government behavior. So, in order to change the mode of economic development in China and the distortion of growth-orienting, the paper raises up the suggestions:(1)change the evaluation mode to the local government, improve the mode of government incentive;(2)rationalize the division of financial authority and powers of local government, and optimize the structure of fiscal expenditure;(3)strengthen the importance of voting by feet mechanism in governance;(4)improve the decentralization from government to market, specify the order of competition between local government.The innovation of the paper may be shown in3aspects:firstly,we research the behavior of local government in China from the beginning of the incentive in organization and gonvernance.Most of previous studies study the government function only, paying less attention to the external constraints and incentive compatibility condition of local government. Researching the preference of local government from the perspective of incentive intensity,incentive bias and governance may be a innovation. Secondly, the paper discusses the distortion of local government behavior from specific area and analyse it empirically. We test the specific effect of gonvernance on the behavior from the perspective of growth effect of distortion of fiscal expenditure structure of local government,the distortion of environment policy and unequal factor preference. Thirdly, being different from previos relevant studies,we focus on not only fiscal discentralizaiton(discentralization from central government to local government)but also other forms of discentralization(the discentralization from local government to other subjects). The paper argue that the local government competiton deriving from governmental discentralization is the institutional reason of current development mode,not fiscal decentralization only.