Institutional Economics Analysis Of Chinese Private Economic Development

In recent years, the study of Institutional Economics is one of the hot issues in the area of our economics. New Institutional Economics provides theories and methods for analyzing the economic and social problems that arise in the process of substituting old system with new system. "Institution consists of a series of rules, law-abiding orders, morality and ethical norms. The aim of institution is to restrain the principal benefits or the behaviors of maximizing individual interests." North believes that it is the element of institution, not the technical element, which plays a decisive role for economic growth. Effective institution can reduce uncertainty of the market, restrain the tendency of opportunism behavior, decrease transaction costs, shorten the gap between individual interest and interest of society and can encourage individuals or organizations to engage in productive activities for economic growth. The speed of development for a country and a region not only depends on the inputs of labor, wealth, and material but also the condition of institutional arrangements. Making an analysis of the institutional environment of the private economic system with the methods of institutional economics will be helpful to system innovation to promote more rapid development of China's private economy.The concept of private economy refers to one kind of economic mode that in which the ownership of production belongs to individuals accompanied with certain size of employment relations within law permission. Private economics possesses characteristics of distinct private property, independent-management and flexible decision-making. Since reform and opening to the world, China's private economy has experienced rapid development with growing scale, increasing employment and constant adjustments of industrial structure whose contribution rate has reached 60% of the national economy. With the wider scope of industrial permission, private...