The Change Of Industrial Structure And State Institutional Arrangements

It is a hot topic in China to restructure the industrial system or upgrade its structure. In contrary, few investigate the change of industrial structure in terms of state institutional arrangements. The paper attempts to historically and theoretically discuss the structure in accordance of methodological individualism, basing that the state institutional arrangements could be divided into two elements, fundamental institutional arrangements and applicable policy measures.The paper is organized as follows: In chapter 1, the introduction exhibits why and how to explore the issue and categorizes the state institutional arrangements, which lay the foundation of successive discussion. In chapter 2, we recall the traditional theories which explain the change of industrial structure, and expose how institution works. In chapter 3, historical investigation of the relation between fundamental institutional arrangements develops .In chapter 4, we discuss industry policy making and functioning theoretically .Both the chapters are the body of the paper. All the discussion concludes in chapter 5.The paper concludes that the industrial structure would evolve on the right way if we get incentive right. Comparative-Advantage Development strategy and property rights protection pave the way for industrial structure to advance in accordance with smart industrial policy including proper mechanism designing which guarantees the incentive compatibility between the policy makers and its executives.