A Study On The Relationship Between Informal Institution And China's Economic Development

Informal institution is gradually formed in people's long-term social life. It exists among the law, policy, regulation and other written formal institution. Usually it relies on people's consciously obeying, rather than the state enforcement. It includes ideology, custom, habit, morality, historical tradition, religion and even some basic belief and so on. Because informal institution has wide range of content, it's of great impact on people's thinking, behavior and economic development. In this paper, the author used example analysis, data comparison, and game theory model methods to research the relationship between informal institution and the economic development in China. This paper consists of five parts.The first part is the preface to introduce the background and significance of this topic.As the new institutional economics develops and grows, economists have been paying more and more attention to the factor of institution. But economists generally focused on formal institution, such as property rights theory, they haven't paid enough attention to informal institution. Compared with formal institution, informal institution is of greater and broader impact on economy and society. informal institution is also of great impact on formal institution, and the better informal institution and formal institution inosculate, the better institution acts. On the contrary, the institution efficiency will be greatly reduced, or even lead to economic and social chaos. Compared with the importance of the informal institution, the current research of informal institution is far from adequate. This article is exactly in this background to analyze informal institution's impact on economic development, hoping to make a modest contribution to the research of informal institution. The second part is the"informal institution summarization".In this part, the author firstly defined informal and formal institution, then introduced the origin and development of the informal institution, at last, analyzed the relationship between informal institution and formal institution in details. The author thinks that, as two components of institution, informal institution and formal institution has the following relationship. formal institution originated from informal institution. informal institution and formal institution can transform into each other. informal institution and formal institution relies on each other. Informal institution and formal institution organicly combines, then forms institution together.The third part is"the general introduction of the relationship between informal institution and economic development".In this part, the author firstly introduced several main economic growth theory, and emphasized some of North's institutional theory. Then put forward his own theory. The author thinks that, if the technical level T, the capital level K, labor L is all considered as endogenous variable, then informal institution's function is exactly like"f". Informal institution's function is more similar to the function of social capital. Therefore, the informal institution's impact on economic development is embodied in two aspects, one is its impact on all the endogenous variable, the other one is its impact on formal institution"f".The fourth part is"the specific analysis of the relationship between informal institution and the economic development in China".In the third part, the author analyzed the relationship between informal institution and economic development in theory. In the fourth part the author used the case analysis way to analyze the relationship between informal institution and economic development. The author selected the informal institution in China and other countries, such as ideology, historical tradition, custom, habit and so on, using these examples to analyze the relationship between informal institution and the economic development in China.The fifth part is the conclusion of this article. In this part, the author gave out the conclusion of this article. Government must pay enough attention to the factor of informal institution, try to achieve the perfect inosculation of informal institution and formal institution, and lead, rebuild, cultivate the informal institution that isn't suitable for the local economic development. But government must have a long-term plan in order to achieve a successful informal institution change, because it usually takes a long time.