Research on the Reformation of Chinese Regulation System Based on the Theory of State Capture in Transition Economies(2006年公共管理国际会议论文).doc

Research on the Reformation of Chinese Regulation SystemBased on the Theory of State Capture in Transition Economies 1.LU Zheng-gang 2.ZHAO Ding-tao 3.WU Hua-qing 4.DU Shao-fu School of Management ,University of Science and Technology of China, He Fei, P.R.China, 230026 Abstract Based on the theory of state capture in transition economies, the factors existing in Chinese regulation system that could lead to state capture are analyzed, then some countermeasures are put forward such as promoting democracy, restricting the power of regulatory agencies and improving the transparency of legislation, constituting a set of scientific and effective evaluation system, making use of market mechanism and loosening regulation, counterpoising the power of interest groups and their influence on regulators, etc. Key words Transitional country, Regulation system, State Capture, Captor Firms 1 Introduction Since the theory of state capture in transition economies was put forward, more and more specialists and scholars in East Europe and the Former Soviet Union have paid attention to the theory and many of them begin to use it to analyze political and economical problems in their nations. In this paper, we want to find the factors existing in Chinese regulation system that could lead to state capture and bring forward countermeasures against it. 2 Brief introduction of the theory of state capture in transition economies The theory of state capture originates from economics of regulation. But Stigler and other economists limited their research and demonstration to western developed countries on the theory of regulation capture.[1] For a period of time, in-depth demonstration has not been conducted for developing countries. In order to measure and analyze the problem, Joel S. Hellman, Daninel Kaufmann, supported by The World Bank, EBRD, Inter-American Development Bank and the Harvard Institute for International Development, have investigated empirically almost 4,000 firms across