National Governance Mechanisms in the Digital Age:Balancing Development and Security
Since the 18th National Congress of the Communist Party of China,China has accelerated its entry into the digital age.At the same time,the national governance system,especially the official governance mechanism,has undergone significant changes:first,in terms of governance methods,from emphasizing incentives to emphasizing supervision;second,in terms of performance evaluation,from emphasizing a single economic indicator to emphasizing diversified indicators.To rigorously examine the changes in the governance mechanisms of officials in the digital era,we construct an organizational economic model that includes the higher-level government,who focus on both the development and the security,and subordinate officials.We compare three typical contracts:development-oriented contracts,security-oriented contracts,and multi-task contracts,and the key findings are as follows:First,a development-oriented contract is clearly preferable to a security-oriented contract,unless the security externalities are very large or the probability of a safety accident is very high.Second,if the principal cares about both development and security,she will definitely implement a performance evaluation mechanism of"one-vote veto"for safety accidents.Third,an inverted U-shaped relationship exists between the supervision cost and the development orientation.When the supervision cost is very high,the principal should adopt a development-oriented performance evaluation mechanism;when the supervision cost is moderate,a multi-task performance evaluation mechanism should be adopted;when the supervision cost is very low,a development-oriented performance evaluation mechanism should be adopted.Fourth,the greater the negative externality caused by safety accidents,the more inclined the principal is to adopt a multi-task performance evaluation mechanism to ensure that the agent does not neglect safety issues while pursuing economic development.On the contrary,if the negative externality of safety accidents is relatively small,the principal may tend to adopt a performance evaluation mechanism that pays more attention to economic development.Compared to existing literature,this paper integrates information technology with governance mechanisms,endogenizes information structures,and re-emphasizes the value of supervision.It expands the literature on incentive mechanisms and performance assessment from a dynamic perspective,arguing for the endogenous evolution of the assessment mechanism(in three stages).It also discusses a special type of nonlinear incentive mechanism,namely the one-vote veto,and demonstrates its effective scope.The research in this paper provides theoretical insights for optimizing official incentive mechanisms and for balancing development and security,and enriches the literature on Chinese official governance.
digital agenational governanceofficial governancedevelopmentsecurity
NETL
NSTL
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