On Development Of Private Economy And Government Functions

During China's transition from a planned economy to a market economy, one remarkable phenomenon is the quick development of private economy outside the planning system. As a natural market-friendly strength, the private economy has achieved a rapid growth in the past two decades since the reform and opening-up. The private economy has made important contributions to socio-economic development in China. Thus, it set the foundation of the market-oriented reforms, and also let itself move from periphery to center.Based on the theories of new institutional economics, this paper use empirical approach and normative analysis to analyze the evolution process of private economy, and its contributions to socio-economic development, and the barriers and opportunities it faced. I hope it will be a useful reference in promoting the development of the private economy, both in theory analysis and policy implement.The paper is divided into six parts as follows:Part 1, introduction, mainly explains the background, purpose, significance, method of the study.Part 2, analyzes the subject of the paper. Based on the institutional change theory in new institutional economics, to define the content and scope of private economy, and discuss the characteristics of private economy and the functions of government.Part 3, emphatically discusses the evolution process of private economy and government, and gives an explanation in perspective of new institutional economics. Finally makes commentary and summarization on the private economy development.Part 4, use empirical approach to analyze the private economy's contributions to socio-economic development, and the obstacles in the developing process of the private economy. It emphatically analyzes three central barriers, including the barriers of financing, the barriers of market access, and the defect of property rights.It also discusses the opportunities the private economy faced, and deduces that the private economy will move from periphery to center.Part 5, use a case study of F city to analyze the government functions in a private economy.