A Research On The Functions Of Local Governments In The Development Process Of Private Enterprises

Local government behavior has been attached more and more importance to recentlyin China. In the course of reform and opening up, government behavior has been exercising influence over the progress of economic system transition and the performance of private enterprises, playing a major role in institutional innovation.This essay analyses the documents, which issued by local governments of Wenzhou and Lishui since the reform and opening-up policy was adopted in China. Providing a process of policy development, the essay sums up the features of different stage of policies, and after showing a contrast of documents between the two local governments, the essay generalizes similarities and differences between the policies of Wenzhou and Lishui.The paper also gives a transmission mechanism theoretically which determines the government policies how to control and adjust the operation of private enterprises. The documents and policies can offer policy permission for the entry of private enterprises, digest some costs of institutional innovation, provide property protection for private enterprises, and exert an influence directly on production function of private enterprise with the result of reduced costs and fixed orientation for private enterprise development.Besides, the essay presents achievements of private enterprises in some key periods, and finds that greater effects appeared after the documents aimed at supporting development of private enterprise. Therefore, we find out that there is relevance between the development performance of private enterprise and local government behavior.Through text analysis of documents and the facts mentioned above, the paper at least could draw a conclusion that there exists a difference of government behavior, as well as a gap of economy between Wenzhou and Lishui.