The Study Of Local Government Behavior Under The Perspective Of Entrepreneurship

How to correctly view the role of China’s local government in the economic development is the key to understand that the achievements exist alongside the problems since reform and opening-up. Based on the Entrepreneurship Theory of the Austrian School, this paper analyzes the behaviors of local government and tries to interpret the reasons of the duality of China’s local government that deregulating to promote the freedom of the market as well as using a variety of economic policies to intervene the market economy in the economic development. In current situation, the GDP growth is slowing down obviously and the transformation of economic growth mode is urgent. What should the local government do in this case? Does he continually bear the responsibility of the omnipotent government to regulate the economy with the invisible hand or undertake the obligation of service-oriented government to turn to create a good institutional environment for market participants? This is an issue worth discussing.This study is conducive to define and standardize rational behaviors of local government, clarify the features and problems of current activities of local government and put forward some improvement measures. Meanwhile, this study can put forward some suggestions on the transformation of local government which are beneficial for local government serving for the market economy and promoting the economic development well. This paper extends the entrepreneurship theory which is confined to the economic market into the researches on political market, enriching the depth and breath of this theory. The main parts of this paper can be divided into four groups.The second chapter is the theoretical foundation of this article. Firstly it discusses the entrepreneurship theory of the Austrian School, analyzing its ideological foundation and basic meaning. Through comparing the similarities and differences between local government and enterprise, this paper tries to explore the possibility of applying the entrepreneurship theory to study the behaviors of local government. This paper defines the local government officials with entrepreneurship as official entrepreneurs and elaborates their basic features. This paper suggests that official entrepreneurs are the competition subjects at the core of the political market and make the institutional creation to gain political profits via entrepreneurial alertness. The third chapter mainly the general analysis of the behaviors of local government. It first analyzes the essential characteristic of the behaviors of local government that competition, considering that official entrepreneur is the key to understand the behaviors of local government. The competitions among local governments are manifested as the competition of institutional innovation among official entrepreneurs inherently. As with the market entrepreneurs, official entrepreneurs have the selfish and ignorant characters. Official entrepreneurs do the competitions of institutional innovation in the political market in order to obtain political profits. Besides, this paper raises the dynamic efficiency standards which need to be matched by local government. If local government wants to reach the economic dynamic efficiency, it should provide an effective institutional guarantee for the competitions of market entrepreneurs. That means to make the market entrepreneurs discover and accumulate knowledge through the free play of their creative talents to promote the market process on the basis of defining and maintaining the private property. If the behaviors of local government promote the freedom, we can say it really promote the economic development. At last, this chapter builds a reasonable interaction framework between official entrepreneurs and market entrepreneurs. As long as the interactions between official entrepreneurs and market entrepreneurs conform to the given two frameworks, the institutional innovation of official entrepreneurs will develop towards the direction of conforming to the basic principles of market economy and the dynamic efficiency of economy will be improved.The forth chapter focuses on the analysis of the competitive behaviors of local government. It thinks that the behavior pattern of local government generally accords with the above theory framework since reform and opening-up. Under the unique system of political centralization and economic decentralization, local government has changed its old behavioral model of obeying orders of central government passively and become competitive, so that local official entrepreneurs have the spaces for them to play entrepreneurship. This paper tends to illustrate the contributions of local official entrepreneurs in the aspect of institutional innovation from the reform of property rights, administrative approval system and public goods supply system. These institutional innovations are related to deregulation by government and market liberalization, so that market entrepreneurs can have more free space for their own activities, which beneficial for them to use entrepreneurship without restrictions. Therefore, when our local official entrepreneurs compete for their own interests, they also bring positive externalities, namely to protect the competitive process. Official entrepreneurs’action is in line with the market entrepreneurs and official entrepreneurs’"interactive framework I ". It is also the underlying reason that why China’s economic has developed rapidly after reform and opening up. However, it is just because of our unique political and economic system, our official entrepreneurs and market entrepreneurs do not fully comply with the interaction " interactive framework II", while showing out a " interactive framework III" features.The fifth chapter mainly analyzes the phenomenon of competition failure in the competition among China’s local governments. This paper suggests that the interactions between official entrepreneurs and market entrepreneurs conform to the framework III makes official entrepreneurs intervene the economy when focusing on institutional innovation according to dynamic efficiency, resulted in generation of the phenomenon of competition failure. In addition, this paper is prone to construct the interaction framework between China’s official entrepreneurs and market entrepreneurs and imposes reasonable restrictions on the competitions among official entrepreneurs, making it actually turn to create a good institutional environment for the activities of market entrepreneurs.