In the process of China’s rapid growth, the gap between the East and the West always exists, but the West which lacks of endogenous growth power is not caught in a vicious cycle, and maintains a relatively rapid development. Because of the runoff of talents with entrepreneurship in the market, the local governments in the West have been directly interfering with the economy as an entrepreneur for a long time, and they have introduced main projects to regional economies relying on their entrepreneurships to have realized sustainable economic growth in the West. While in the New Normal, this economic development strategy is facing challenges because the local governments can allocate few resources. On the contrary, institutional innovation, which can motivate the cooperative development of innovations of various scales in the market, will become an alternative strategy compatible with the New Normal. The local governments in the West should scientifically make development objective, actively change the duty, and use the institutional innovation to let the market play the decisive role in resources allocation so as to effectively motivate the entrepreneurship in the West.