A Study On The Development Environment Of Private Economy In Guangdong Province

Since the reform and opening-up, private economy has become increasingly essential in the development of China’s economy. As a frontal zone of reform and opening-up, the private economy in Guangdong province has enjoyed great achievement. It plays a pivotal role in promoting economic growth, stabilizing employment level, optimizing industrial structure and advancing social creativity. Nevertheless, compared with the developed Yangtze River Delta region, Guangdong’s private economy is still in the primary phase which is driven by labor force. Recently, China’s economy has entered the new normal stage while Guangdong’s economy is in the key process of adjustment and optimization. The private economy in Guangdong is an important carrier of this development transition. Improving the development environment and taping the economic potentials will facilitate the economic upgrading of Guangdong’s economy and maintain its leading position. Therefore, there is practical significance in studying the development environment of private business in Guangdong and promoting a better development of private economy.This dissertation focuses on the quantitative study of private economy in Guangdong from the perspective of transaction cost. First and foremost, the dissertation summarizes the influence the environment has on private economy, transaction cost and its application in the development environment of private economy. Secondly, it analyses the history and current situation of Guangdong’s private economy and figures out the restriction factors by horizontal comparison. Moreover, this dissertation analyzes the Guangdong local environment for private economy and establish transaction cost evaluation index system based on transaction after which the entropy evaluation method, a scientific evaluation approach will be adopted to help analyze the changes in transaction cost of Guangdong local private economy from 1985 to 2013 and help make comparisons between the costs of Guangdong and the Yangtze River Delta during 2004-2013 as to figure out the differences in essence. Besides, this essay logically analyzes the principle that the better the private economy environment is and the lower the transaction cost is, the better its economy develops. Finally the essay makes pluralism analysis by using the findings of Guangdong private economy costs and its economy development and tests mutual relations based on statistics as well as gives some policy suggestions.Based on the research findings above, it is clear that there are positive correlation between private economy and its development environment, that is, the more optimized the environment is, the lower cost will be and therefore the better the private economy will be. From horizontal analysis, the Guangdong private economy has been characterized by under-developed industries, irrational industrial structure and relatively high transaction cost. From vertical analysis, as Guangdong private economy develops rapidly, its transaction cost continues to decrease. That is why a better local private economy in Guangdong needs an improved environment for its growth.