| dc.description.abstract | China’’s township and village enterprises (TVEs) have made impressive achievement in China’’s economic development of 1980s, and the non-private nature of its ownership has raised a challenge to the traditional economic theory based on private ownership. Thus, by surveying of the relevant literature, this paper reviews various explanations of the puzzle of TVEs, and attempts to conclude the reason of the success of China’’s TVEs.
Some studies focus on the market opportunity and factor advantages that TVEs obtained in 1980s, and contributed that as the cause of TVEs’’ success. Some emphasize the “informal privatization” of TVEs, therefore integrate the specific characteristics of TVEs into the framework of traditional economic theory. Another theory takes China’’s cooperative culture as the reason why the collective ownership could work well, yet the other one highlights the role of local governments, and considers that the institutional complements provided by the local governments were the key to TVEs’’ development. These theories provide certain explanations for the puzzle of TVEs, but each of them did not fully explain the process of TVEs’’ rise and fall. Another point of view stresses the role of local governments, and provides a more completed image of TVEs’’ rise and decline.
Stressing the importance of history and political continuity, Local State Corporatism (LSC) focuses on the fiscal incentives and political structure that local cadre faced, explains the strong need of local governments for economic development, and sheds light on TVEs’’ rise and downfall. This point of view shows a comprehensive idea of TVEs’’ development, and therefore gains a lot of attention. On the other hand, some studies agree with the importance of local governments, but they emphasize more on the market discipline, while another theory takes local institutions and social relationship as the supplements of LSC. Finally, responding to the above mentioned critiques, the revised LSC reiterates the cadre’’s motivation for economic growth, and enhances its explanation by revealing the fact that local governments value the efficiency of enterprises more than the type of ownership. Consequently, the revised LSC illustrates a full image of TVEs’’ development, and gives a better answer to the puzzle of TVEs. | en_US |