Institutional Change With Special Economic Zone Demonstration

Since the reform and opening up, China’s economy has achieved rapid development, and China has become the fastest growing economy of the world. Therefore,"the miracle of China" has become the focus of researchers all over the world. Among the research, discussing China’s structural reform from the perspective of institutional change is the most unique part. In the system evolution of China, Special Economic Zones have played a good trial and exemplary role. Moreover, being the best development Special Economic Zone of China, Shenzhen’s development can be said to be a microcosm of China’s overall reform process. This paper is going to make Shenzhen Special Economic Zone as a starting point, use the theory of institutional change in North, consider China’s basic national conditions, therefore try to establish a new perspective and propose a new theory of institutional change hypothesis-Institutional Change with Special Economic Zone Demonstration, thereby use the above theory to interpret China’s reform and summarize its own characteristics and route.First, this paper takes a brief combing and review of the theories of institutional changes. After pro and fro analysis, this paper thinks that North’s theory is the most suitable one to explain China’s institutional reform.Second, according to North’s institutional change theory, this paper proposes the hypothesis of Institutional Change with Special Economic Zone Demonstration, and analyzes how institution changes with Special Economic Zone demonstration. In details, at first, this paper reviews the generation and development process of China’s reform and opening-up as well as Shenzhen Special Economic Zone. By analyzing that Shenzhen Special Economic Zone turned from "test area" into a "demonstration zone", this paper proposes the hypothesis of Institutional Change with Special Economic Zone Demonstration. Then from the three aspects of cost-benefit, security and cultural intention, this paper analyzes the location choice of the Shenzhen Special Economic Zone:From the perspective of cost-benefit, the excellent location, the relatively weak economic system and the urgent need for reform make the Special Economic Zone reform in Shenzhen get the maximum benefit at the minimum cost. From the perspective of security, reforming in the surrounding areas of our land will make the impact smaller if the reform fails. From the perspective of cultural intention, setting Shenzhen as a Special Economic Zone can attract invest from overseas Chinese. After that, this paper makes performance analysis of Institutional Change with Special Economic Zone Demonstration:The reform and opening up has led to the establishment and development of Special Economic Zones, and the successful experience of the Special Economic Zones has promoted the comprehensive and profound changes in national system, therefore the Institutional Change with Special Economic Zone Demonstration has brought the country’s rapid economic development. At last, by analyzing the realization of demonstration, this paper describes the demonstration effect of Institutional Change with Special Economic Zone Demonstration and divides the demonstration and diffusion process into five steps:setting innovative pilot, summarizing experience, imitating, re-practice and re-innovation, and a comprehensive institutional change, which suits the features of the progressive reform with Chinese characteristics.After that, this paper describes the disadvantages of Institutional Change with Special Economic Zone Demonstration in the perspective of the long-term dual system, the unbalanced step-by-step promotion and the political restructuring resistance. Moreover, combined with Chinese unique characters, this paper puts forward some suggestions on the future development of the Institutional Change with Special Economic Zone Demonstration.In conclusion, the Institutional Change with Special Economic Zone Demonstration can promote Chinese structural reform at lower cost and risk. Furthermore, this kind of institutional change suits China’s characters and can comprehensively summarize the institutional change process of China. In the new period with new challenges, it is imperative to make institutional reform in China, and Special Economic Zone is especially important during the institutional change process of China. Special Economic Zone should have a clear understanding of the challenges and inadequacies, dealing with difficulties, finding new opportunities, thereby brings better development for China.