Abstract:

Why can the project system be implemented in a stable, widespread and highly pervasive manner, and what operational logic does it demonstrate in specific governance practices?This paper distinguishes between two levels: the observational perspective and the analytical dimension. The former encompasses the relationship between the central and local governments, as well as that between the state and society; the latter includes the essential intent of the system, and the interactive practices of multiple subjects. Based on these two levels, this paper identifies four typical mechanisms: externality, principal-agent, legitimacy, and embeddedness, thereby providing a holistic interpretive framework for project-based governance. The externality mechanism addresses the spatial and temporal spillovers of project costs and benefits, while the ambiguous division of rights and responsibilities between central and local authorities leads to significant tensions. Moreover, it emphasizes the logic of public goods while failing to adequately capture the logic of modernization and development. The principal-agent mechanism focuses on analyzing the organizational transmission between central and local authorities, especially the multi-tasking problem, as well as the information asymmetry and ambiguity arising from different directions of specialised and localized knowledge. It also helps explain the bundling practices of economic development and social welfare, and the emerging phenomena of hybrid governance and project package contracting. The legitimacy mechanism explores how performance, procedural, and moral legitimacy are isomorphically and heterogeneously intertwined in complex project governance practices, and how are they manifested in grass-roots project operations. The embeddedness mechanism aims to clarify the "dual-track" politics and how it influences project operation modes and effectiveness.It also helps analyze the heterogeneity of project system, as well as the institutional changes of state governance. In addition to focusing on each mechanism separately, this paper also provides certain prospects from the perspectives of multi-dimensional and comprehensive interactions between multiple mechanisms.

Key words: project system paradigm, externality mechanism, principal-agent mechanism, legitimacy mechanism, embeddedness mechanism