Strategic Interaction, Coordination And Regional Economic Development

The history of Economic development proves that there is a positive relationship between effectiveness of allocation and utilization of economic resources and the coordination of economic development which contributes to the free flow and optimized allocation of production factors, and the promotion of regional competitiveness and strengths. Since reform and opening-up, a pattern that regional economy driven by growth pole has formed in China gradually. The economic developments of Peer River delta, Yangtze River delta, and Bohai Rim have already been put on the national 11th Five Year Plan agenda. However, over competition and other isolation strategies still obstructing regional development. Thus to achieve the goal of coordination development of regional economy, we must improve and solve the discoordination between local governments.Facing the above issues, many researches have already provided lots of work. Basing on the former academic results, this article tried to probe the causes of coordination failure between regional actors, how to overcome coordination failures and then enhance regional development level.Firstly, this paper did full scale investigation about the correlation between regional economic development and local governments' behaviors, as well as their mechanism of interaction. Current studies can be mainly classified into two categories. One is focuses on the comparison of economic performances between regions as well as the causes of their differences. The other is focuses on the intraregional study about each economic region. In the paper, the author studied the process of coordination games and its equilibriums between different local agents by building a coordination game analytical framework. Then the author investigated the ways and incentive mechanisms of coordination development.Basing on reviewing existing researches, this thesis expatiated the theoretical foundation and analytical framework about the strategic interaction of local government and regional economic development. Then in the coordination game framework, the author analyzed the preferences of local governments, the process of strategic interaction, and choices of strategies. This paper discussed the equilibrium conditions, major types of coordination game, and then causes of coordination failure. After this, this paper discussed about how to solve coordination failures theoretically and provide corresponding suggestions, such as strengthening the reciprocal mechanisms for local actors' strategic interactions, policies from central government to promote regional integration, and so on.Basing on game theory model, this thesis did empirical investigation about three economic regions on solving coordination failures, which tried to seek practical ways of enhancing regional economic development through strategic interaction among local behaviors.Finally, this paper provided realistic suggestions according to the transition process of market economy construction in China.