Numerical Analysis on the Inclination of the Local Governments on the Transformation of Township-Village Enterprises

During the economic reform guided by the government, the behavior orientation of the local governments has great influence on the progress of the local reform and the achievements of the economic development. In the duration of the development of township-village enterprises (TVEs), the protection and support of the local governments are very important. In fact, the local governments controlled the township-village enterprises to some extent. The transformation process of township-village enterprises featured as "from top to down" which was encouraged and controlled by the local governments. Why were the local governments willing to give up their interests and give an active support to the reform? It seems to be a key to understand the interpretation of the property rights transformation. Through assumption, by using a mathematical model and statistics analysis, this paper is to verify the assumption that is due to financial targets and seeking the maximum benefits, local governments are actively encouraging and promoting the transformation.