The Fiscal Logic Of The Strategic Emerging Industries Development

The Historical significance of strategic emerging industry development of China is to take the advantage of the new industrial revolution and get the high ground of the new round of economic development, to occupy a place in the fierce international competition. The strategic emerging industries are in the incubation period and the running up, Chinese government worked out the development of its planning and layout proactively. To encourage innovation, the financial departments played an active role to increase financial support, supported the innovation of the strategic emerging industries strongly. Howerer, the background of the subsidies from all levels of government are the bureaucratic apparatus system. The development of strategic emerging industries is a nationwide project, Chinese public policy decision-making is highly centralized, because of the fiscal decentralization system, the relationship between the Chinese government and the industry is very unique. At the same time, the transmission mechanism of fiscal policy in the national economy is crucial for the development of strategic emerging industries. We are here to understand the function of government subsidies and fiscal decentralization system to the development of strategic emerging industries, to sort out the fiscal policy conductive route, make clear the fiscal logic of the strategic emerging industries development, and to provide suggestions to ensure the effective of the market mechanism and the correct use of government power.There are three aspects to analysisthe strategic emerging industries development, first of all, evaluated the incentive effect of the government subsidies to the strategic emerging industry innovation. Secondly, straighten out the logic and the conduction mechanism in the impact from the fiscal decentralization system to the industry development. Finally, make out how the fiscal policy effect the strategic emerging industries through the national economic departments.The core content of this article is, chapter3, chapter4and chapter5. Chapter3interpreted the uncertain effect of government subsidies to the enterprise innovation output. Enhance the level of industrial innovation is the core strategic of the emerging industries development, the government offered a wide range of financial support to the enterprise innovation, however, it is still needed to study whether the enterprise innovation output was energized. The paper learned from the endogenous sunk costs theory, designed enterprise R&D sunk cost model. The research found that the innovation encouraging effect of the fiscal subsidies was influenced by duration of subsidies and the R&D suck cost. If the subsidies are continuity, it won’t have effective encourage to the innovation, while it does if it is temporary. The effect of government subsidies is different, considering the difference exists in the R&D suck costs. When to test the encouraging effect of the financial subsides to the different R&D suck costs with Bootstrap sampling, the differences were statistically significant. The grouping methods were average packet and threshold packet. The research found that, the subsidies had a significant positive impact on the output of the innovation in companies from the strategic and emerging strategic industry. After subdividing the patent types, the subsidies increased the invention patents and utility model patents. And it was more positive for the lower R&D suck costs than the higher suck costs.Under the system of fiscal decentralization, the development of strategic emerging industries has unique logic, chapter4, from the perspective of fiscal decentralization, teased out the behavior and the transmission mechanism of government subsidies and the action logic of the role of government in promoting industrial development. First, affected the degrees of financial autonomy, there were differences in policy space for the local governments provided to the strategic emerging industries development. The higher the financial autonomy of local government was, the stronger the bargaining power of the government had, which could provide support policy fully according to local conditions. On the contrary, in the lower local government autonomy, its policy space was limited by special transfer payments, policy autonomous space can be achieved was limited. For the strategic emerging industries, with a higher degree of fiscal autonomy, local government can provide higher industry development subsidies and tax breaks, directly stimulate the industry development. Second, the fiscal decentralization system arrangement will affect local technical facilities, education and other aspects of public goods supply, there were significant differences of local government preference. Under financial pressure, in order to attract foreign investment to promote economic growth, the local government will adjust the expenditure structure of public goods, priority to ensure the government operation and the construction of infrastructure. For the lower fiscal autonomy region, local governments more rely on traditional industries, so the personnel training, technical support and other services of the construction for the strategic emerging industries are inadequate. Third, according to the local economic structure, there is a difference in the local government’s emphasis on the emerging industry. Because of gaps in the level of economic development around, configuration and other factors, the implements of the central government’s call were different. Compared with the rapid development of strategic emerging industries area, due to the pressure of economic development, the financial resources configuration in the underdeveloped regions often laid particular stress on traditional industries, the development of strategic emerging industries was insufficient.Chapter4found the role of government was restricted not only by the local economic development, but also the the local economic development. The improvement of fiscal autonomy for industry development will be completely the opposite result for different regions. The fiscal policy from the governments at all levels should consider the effect of the external force to the whole economy, and the fiscal policy conductive route among the national economic departments and strategic emerging industries, which was crucial for making the fiscal policy scientifically.According to the conclusion, chapter5analyzed the conductive route of the fiscal policy, social accounting matrix is used to describe the economy structure characteristics. After analyzing the development situation of China’s strategic emerging industries, there were two important impacts on its role in the fiscal policy. First of all, the trend of excess capacity appeared in strategic emerging industries, and in the name of developing strategic emerging industries, even appear the achievement engineering. Second, the strategic emerging industry agglomeration area began to appear. In order to play to the beneficial role of government in the process of strategic emerging industries grow, local resources endowment condition need to be considered, and the planning and layout must be reasonable. To solve the problem of excess production capacity, and to provide policy recommendations for the development of strategic emerging industry agglomeration, chapter5made the multipliers decomposition and path analysis of the national economy departments, analyzed the constraints of the government role in the development of strategic emerging industries. After the path decomposition, the results showed that for strategic emerging industries, the impact of100units of exogenous role into the second industry was less than primary industry and tertiary industry. This was meaningful observation for the development of strategic emerging industry in China. First of all, the first industry has the basic role of strategic emerging industries, the main performance was the great pushing effect for improving the residents’ income, which developed the market demand of strategic emerging industries; there was a large gap in the first industry in China in terms of technical efficiency and technical progress, in order to meet the requirements of the first industry upgrade requirements, the development of emerging industries such as biological, high-end equipment were requested; the first industry is an important raw material supply department, which has the important status of the stable supply for the development of strategic emerging industries. Second, improving the pull function of the second industry, the second industry is still the power industry in China’s economic growth, which had huge development potential. This is meaningful for promoting China’s industrial status of international division of labor, and the development of strategic emerging industry.For the local government, the work of strategic emerging industry development is not the work merely focuses on the industry itself, but with three industries, local residents income and capital, labor and other production elements match the configuration of the condition, coordinated the development of strategic emerging industries and traditional industries. The traditional industry should play the role of demand and supply matching for the strategic emerging industries, increasing the income of residents, fostering the market demand, improving the allocation efficiency of capital and labor, providing a good market environment for the development of strategic emerging industries. In particular, according to chapter4, in the regions which emerging industry development less developed, under the pressure of economic development, the focus of the Local government will be the traditional industries, the improvement of fiscal autonomy against the development of strategic emerging industries. Due to the lack of supporting social inputs such as school education, the necessary social basis for the strategic emerging industries was lake, which limits the development of the industry. According to chapter5, the further explanation is, for the strategic emerging industries, the multiplier effect of the second industry was too low, less than the first industry and the tertiary industry. The government support of the second industry, especially for the traditional industries, did not transmit to the strategic emerging industries. On the one hand, this is China’s stage of industrial development, it has been only a few years for China become the "world factory"; On the other hand, there were a big task and an opportunity for the development of China’s strategic emerging industries, Enhancing the second industry status in the world industrial chain, will provide the enormous market demand and raw material guarantee for the development of strategic emerging industry in China. It will greatly improve the effect of fiscal policy by getting through the conductive route between the second industry and strategic emerging industries.