Research On Regional Economic Externalities And Countermeasures

The studies for externalities has always been a long-lasting topic in the economic circles. The negative external effect which generated in pursuing the industrialization process by developed countries triggered the discussion on the limits of economic growth among economists, furthermore the economic sustainable development issue was raised.More than three decades since the Reform and Openning-up in China, the Chinese economy is also facing the situation of industrialization, urbanization and rapid economic development, the significant external effects generated during the fast regional economics growth, has been paid attention widely from the economics, regional economics and other related areas.From the unbalanced development strategy between the "Two big pictures", (i.e., Inland areas to support coastal areas' development, coastal areas to lead the inland areas's development) to form the pattern of economic development of the "Three zones to promote," and "Four blocks", The development of China's regional economics has been experiencing the change from the not balanced development strategy, to a harmony and balanced development strategy. In this process of transformation, the regional economic development has two outstanding performances:Firstly, the interaction effect is increasing among regional economies. Various factors of production have been breaking the shackles of administrative boundaries to achieve a cross-regional flow under the action of the market economy showing the inherent inter-regional economic ties and interdependence. Especially with the constant expansion of both size and the strength of the regional economy, the spillover effect generated by the scale economy that is formatted in the core area has been increasingly important to the economic development of the surrounding areas. This impact is seen as either the attraction of factors of production to the surrounding areas, or the contribution to the growth of regional economics growth of surrounding areas, in short, the factor of effect between regions has become an important factor that has significant impact on regional economic growth and development. Thanks to this mutual influence, in the circumstances of imperfect market mechanism and failure of market forces, accumulated a large numbers of regional economic externalities affecting the efficient allocation of regional resources, as a result, this would lead to the loss of the efficiency of regional economics and let it be out of order if the problems of regional externalities cannot be solved in time.Secondly, the effect of local government actions on regional economic development. China's special administrative system and government performance evaluation mechanisms make some of the local governments have the dual political and economic attributes, when the local government in regional economic development acts as the main body of the regional economic interests, it would tend to put the interest of local economic growth in first priority while making policies for the local economics growth. In this case, it has ignored the interest of regional economy as a whole and the coordination with the economy growth of other regions, which can be said to have certain exclusivity. All these factors of local government behavior will definitely have impacts on the economic growth of local region and the surrounding regions as the interaction and interdependence of the cross regional economy, hence, would have externalities on the economic development of other regions. It would lead to unbalanced development of inter-industry and inter-regional economies if this externality is not corrected promptly, and affect the coordination of regional economies and sustainable development at the same time because of the conflicts brought by the competitions between local governments.Therefore, the analysis of external effects of regional economy and related research seems to be meaningful and important to the promotion of regional economy and enhance the overall efficiency of the coordinated and sustainable regional economic development. This paper, based on the carding of the externality theory and research of related theories, has taken a further step in study the nature, classification and performance of regional economics externalities, and raised countermeasures in response.The specific content of the thesis, including the following eight chapters:Chapter I:Introduction section. Mainly clarified the background of research and significance of the problem. On the overview of relevant studies at home and abroad to explain the content of research papers, ideas and methods, proposed innovation of this paper afterwards.Chapter II:The relevant theoretical basis for analysis. Described the basic theories supporting this thesis, discussed the growth overflows theory, externality theory, regional economic theory, welfare economics theory and the theory of government action.Chapter III:The analysis of regional externalities. Based on the analysis of content of regional economic externalities, explore the general nature of regional externalities from the perspective that failure of both market mechanism and local government control; and expounded the special nature of regional externalities and its impact on regional economic growth from the three aspects of externalities of economy, society and policy. Finally, a theoretical analysis of the interaction between regional externalities and regional economies of scale, the impact on a balanced and stable development of regional economy and the performance of regional externalities.Chapterâ…£:Take the Northeast of China as an example, do empirical analysis on the impact of inter-regional external effects. When doing the empirical analysis, introduce the regional spatial factors to model design, in order to minimize the degree of deviation from our estimation to reality. Results of empirical analysis showed that a positive spatial correlation exists across regions, in other words, there exists the impact of inter-regional economics externalities, and this impact is related to the size of regional economic development. The larger scale, the more significant impact would be. This conclusion provides evidence for local governments when making policies for regional economy, that the policies should not only take the effect on neighbor regions into account but also the effect on local economy by policies made by neighbor regions when making the policies.Chapterâ…¤:Analysis based on the external state of China's regional economic development. Carding the 30-year China's regional economic development process and the pattern of regional economy formed during development, at the same time, take the perspective of regional externality to analyze the exist externality phenomenon, effect of positive externalities and negative externalities such as environmental pollution and ecological destruction caused by overusing the resources.Chapterâ…¥:The influence on regional externalities of the local government. By analyzing the dual nature of local government, game competition among central government, local government and inter-regional government, in order to analyze the impact on regional economic development of externalities caused by policy of local government; policy decision-making behavior of local and neighborhood governments and the impact on both regions. On the basis of theoretical analysis, based on the example of public infrastructure as an empirical test, to determine the external effect on economic development of neighborhood regions under the behavior of local governments.Chapterâ…¦Research on countermeasures to deal with regional economic externalities. On basis of the previous analysis, by measures such as establishing the cross-regional environment institutions, promoting regional integration and environmental compensation mechanism to respond to the externalities of regional market failure. Respond to the influence of externalities caused by local government failure through the establishment of cooperation mechanisms between local governments, the performance appraisal system of green GDP, and horizontal networks between local governments, also the establishment of cross regional administrative planning and regulatory agencies.Chapter VIII:Summary. Extract the main points of this article. The main conclusions of this paper are:firstly, the impact of regional externalities has been more and more significant on regional economy, and has become an important factor in the regional economic development that can not be ignored. Secondly, the regional economic externalities are mainly from market failures and the failure of local government. Thirdly, the impact of regional externalities can be reduced through both market and government methods, following the basic principle of internalizing the external problems.Innovations:(1) Breaks through the old-fashioned perspective of regional economic research, take the externalities into account when considering the factors influencing the regional economic growth. Also, on the basis of expanding the concept and connotation of externalities, analyze the influence by the factor of regional externalities on regional economic development of factors of regional externalities.(2) Treats the overall effect of regional economy as the object, analyze the regional externality problems brought by inter-region economic impacts. Currently, the analyses made are lack of systematical research on regional externalities theory. This article attempted to discuss from all aspects such as the concept of regional externalities, performance, classification and researches on countermeasures.(3) Consider on the basis of regional spatial factors, use space econometric analysis of regional external impact on the regional economy, hence test the theory using empirical analysis.