Fiscal Policy To Promote Regional Economic Integration In The Prd

The Pearl-River-Delta regional integration (PRDRI) is a result of the contradictions between the inherent requirement of free trade of products and factors in market economy and the reality of regional administrative division. It is also essential for implementing "Reform and Development Plan for the Pearl-River-Delta Region (2008-2020)" to enhance the international competitiveness of Guangdong in the background of Guangdong's traditional development model being not adapt to the updating pace of the world industry.Chapterâ…¡introduces the theories, including regional integration theories, balanced and unbalanced regional developing theories and fiscal policy of regional coordination. Based on the historical fact that the domestic market in the developed capitalist countries being naturally integrated, the current theories of regional integration mainly focus on international process rather than domestic one, seldom or never existing literatures from the fiscal point of view. Through lacking of directly theoretical hierarchy or practice experience for domestic integration, the integration theories stress the importance of cooperation of governments to break barriers blocking free flows of products and factors, so as to create conditions for rational distribution of industry, thus improving the overall regional competitiveness. According to the arrangements of "problem-solution" idea, this chapter describes a clearer ideas of single theory and the theory hierarchy which providing governments of the Pearl-River-Delta the methodological guidelines on how to boosting the integration process. The necessity of fiscal policy for regional integration can be naturally found by this approach. Balanced and unbalanced developing theories discuss modeles of inter-region cooperated development and the roles of government. These theories provide policy suggestion that unbalanced means should be combined with balanced means during the integration process, basis for the discussion of regional industry distribution (Unbalanced one), the integration of basic public service and horizontal transfer payments (Balanced ones).Chapterâ…¢discusses the problems of PRDRI. This paper argues that the PRDRI is the process and result of improving the overall competitiveness of the Pearl-River-Delta region, through coordination between local governments to bulild a uniform policy environment, guiding a reasonable distribution and an optimization of coordination of industry. The key point of PRDRI is changing government's status of doing things on their own way to strengthening the coordination of policies to create a relatively uniform policy environment for enterprises in the Pearl-River-Delta region. Because regional competitiveness is mainly of the industrial competitiveness, the paper through empirical study of industry reveals the problems of the PRDRI, pointing out that the core of these problems is the fighting for interests, so the key is to achieve reasonable interest redistribution.Chapterâ…£argues that the finance should play four roles in the process of regional integration with comprehensively analyzing the role of both domestic and foreign governments in regional integration combination of the functions of finance as follows:The first is supporting role. Finance mainly provides, improves and integrates environments, including hard ones such as transportation, information and those soft ones like basic public services to build good basic conditions for regional integration; The second is boosting role. Achieving reasonable inter-region interest redistribution through horizontal transfer payments is important for the coordinated development of Pearl-River-Delta region; The third is coodination role. The unltimate goal of PRDRI is to maximizing the overall competitiveness which is actually a comprehensive industrial competitiveness. Industrial competitiveness comes from the optimization of industrial structure and the rationalization of the industrial layout. Fiscal industry supporting policy is a mean that government can use directly and efficiently to coordinate the reasonable industry aggregation and upgrade, which means financial participation becoming an inevitable choice for the integration; The fourth is assessing and guiding role. Local governments and enterprises are mainstays among the integration process, focusing the maximization of their own interests rather than the overall region. High-efficiency performance management system is needed to be established to assess and guide the action of local governments and enterprises to consistent with the requirements of regional integration. The performance management of all fiscal policy should be run through the whole process of implementation.Chapterâ…¤is on implementation of fiscal equalization of basic public services. This chapter has two innovations:First, the performance evaluation index system of equalization of basic public services from three dimensions of "inputs, outputs, outcomes" is proposed for the purposes of "evaluation, feedback, and guidance".The system is better than the existing index systems for basic public services in reflecting the process of equalization and comparing the performance of achieving process. Second, The relations of the integration of basic public services and the equalization of basic public services are discussed, arguing that the former focusing more on the implementation environmental construction and the latter more on the implementation result. Finally this chapter explores the four combinations of integration and equalization.Chapterâ…¥focuses on how to implement the horizontal transfer of the Pearl-River-Delta. A conclusion different from the traditional knowledge is drawn by a model that horizontal transfer payment is not purpose to achieve the equalization of basic public service, which is partly confirmed by the reality of little effect of horizontal transfer payment policy of Guangdong Province in 2010.Hornizontal transfer payment is suggested to be implemented combined with specific projects to achieve mutual benefits and win-win situation, and also to facilitate the performance management on both the donators and the recipients. The concept of threshold of horizontal transfer is proposed, and termination mechanism of horizontal transfer payment is proposed based on the concept. This chapter concludes with recommendations from the policy level and operational level.Chapterâ…¦discusses the fiscal industry-supporting policy. Based on the introduction of the fiscal industry-supporting policies of Zhongshan city, discount government loan and equity investment for private enterprises of emerging industries of strategic importance are proposed. Strengthening and improving the fiscal performance management is argued to cooperate with these industry-supporting policies. Constraints of actions of government departments and enterprises formed by the performance management guide their interest-pursuing behavior to meet the purpose of achieving regional industrial layout optimization and the industrial structure upgrade, and ultimately to improve the overall competitiveness of the Pearl River Delta region.Chapterâ…§discusses the performance management to ensure the effectiveness of fiscal policy to promote regional integration. This chapter proposes a brand new thesis that performance is the process and the result of human improving their behavior in pursuit of maximizing their own interests. From this point of view this chapter argues that rational mechanism should be designed to make the process of pursuing their own maximization of interest compliance the maximization of overall interests of the whole region based on recognizing and respecting their interest pursuit of local governments. Establishment of new performance management mechanism is proposed to stimulate all participants' initiative under the multi-agent relationships to fulfill their responsibilities, so as to achieve the provincial government's purpose of promoting the integration of the Pearl River Delta region. This new performance management system mainly consists of two aspects:First, changing the performance evaluation to overall process performance management, which is one of the financial sector has yet to explore, and should be the future direction of fiscal management reform; Second, changing performance management from the current situation of solely responsibility of finance department to the decentralized system of allocator and user. Due to the game of interests, this train of thought is yet attempted. As the end of this chapter, performance allocation index system for industry-supporting policy is argued based on the view upon.