Institutional Analysis of Non-governmental Organizations in Market Economy

According to the theories of neo-institutional economics, non-governmental organizations are in fact an internal institutional arrangement in market economy, because it is democratic politics, market economy and non-governmental organizations that consist of the basic social institutional framework. Within this framework, democratic politics functions as substantial control, while market economy and non-governmental organizations exist as a more flexible instructional arrangement that grand mutual support. The development of non-governmental organizations is motivated by the institutional needs of market economy, which in turn promotes maturity and development of the civil society. Under circumstances of market economy, non-governmental organizations perform the internal institutional function, and help build up an institutional climate for operation of market economy.