Institutional Change and Policy Analysis in Small Towns

Author: Zou Bing
Publisher:
Publish Date: 2003-12-01
Features: This work is a treatise on the institutional and policy issues of China's small-town development, with the theories and methods of new institutional economics serving as the author's theoretical foundation and basic analytical approach for conducting research. The function of institutions lies in providing people with more opportunities for choice and facilitating the operation of market mechanisms. Institutional change is essentially a process of conflict of interests among people and the resolution of such conflicts. The process and methods of institutional change determine the efficiency of policy implementation and should serve as an important basis for policy selection and formulation. These three viewpoints form the fundamental starting point for the research in this treatise. On this basis, the author conducts a systematic analysis of the institutional factors influencing the development of China's small towns during three different historical periods: the feudal traditional society, the planned economy system period, and the reform and opening-up period. These studies show that whether there is an institutional environment conducive to the effective functioning of market mechanisms is the key determinant of the development process of small towns. Additionally, the work points out that the choice of small-town development as the leading strategy for China's urbanization is determined by the policy of gradual urbanization, which shares a similar nature with the gradual economic reform path. The smooth progress of small-town development benefits from the obvious advantages of this reform approach, while the various problems encountered during the development process are closely related to the inherent flaws of gradual reform. The incompleteness of the reform of the old system and the new institutional constraints generated during the reform process have become obstacles to the further development of small towns. However, the nature of China's institutional change determines that gradual reform will still be the path relied upon for institutional innovation in small-town development and the starting point for policy formulation in the future. In the conclusion of the treatise, the author analyzes the situation and policy objectives faced by small-town development at the turn of the century and proposes countermeasures and suggestions for institutional innovation to promote the healthy development of small towns.