Government Under Law And Economic Transition

During the period of economic transition, government has played an important role. But while original interest structure is adjusted by institutional variance which mastered by government lacks of rule of law, institutional risk of corporation faces increases rapidly. Agents are inclined to complete in a non-marketable manner for the benefit from the institution redesigned or new institution. It makes the institutional risk more serious, destroying the market order, and the spread of the corruption. The government behavior validates the paradox of nation which Douglass C. North brought forward. It tells us that we must prevent the government from abusing the power when the government functions properly.The practice of western country has made it clear that government under law is compatible with modern market economy. Government under law is required in our country, too. It avails to keep the business in order, protect the property rights, keep the fair competition, mediate the conflict and solve the problem of institutional risk. Democracy, civil society, political institution and jurisprudence, which governments under law of western countries are based upon, are obviously needed to be meliorated. It makes many conflicts between government and market. Recently, the request that reforming government to make market actions in order appear in the whole country, which compels the government to regularize its actions for its validity. Building up the modern economy market interacts with the construction of government under law.