Research On Local Government’s Investment Strategy

After the founding of PRC, the strategy of giving priority to the development of heavy industry has resulted in a special divisional system in China, which is called ’urban-rural dualistic structure’. Taking the rural household contract responsibility system and a series of rural reform measures as a breakthrough, we once narrowed the gap between rural and urban areas. When we transformed the reform focus from rural areas to urban areas later, the gap between them has gradually widened again. Currently, how to balance urban and rural development has extensively become the focus of attention.In the process of balancing urban and rural development, the government should think deeply about what kind of role it should play in resources-allocation and compensation for market imperfections. One thing important is that the government should make an effective choice in investment. This means that the government should firstly make effective choices in investment scale, investment structure, investment mode, etc. and secondly consummate investment systems.The paper is made up of three parts, the introduction, the body, conclusions and prospects. The paper has firstly made a theoretical analysis, secondly made experience-verification, and thirdly made countermeasure analysis. On the background of balancing urban and rural development, the focus of this paper is on the theoretical analysis of local government investment, and the choice-analysis of investment scale, space structure of urban and rural areas, and industrial structure. The main contents include:First of all, on the basis of summarizing the theories of balancing urban and rural development, we presented the connotation of balancing urban and rural development. And then, we took an analysis on the theoretical and practical basis about the local government’s action in balancing urban and rural development. We also discussed the effect of local government investment in balancing urban and rural development. We finally proposed the evaluation frame of local government investment and proposed five choices for local government investment in balancing urban and rural development. For example, the investment strategy of local government should shift from urban bias to balancing urban and rural development, and the investment structure should shift from competitive investment bias to public goods supply.Secondly, we made an analysis on the investment scale and its determinants of local government investment. We examined the best demand scale for local government investment, evaluated the scale efficiency and its causes, and then made a proposal for optimizing the choice of the scale of local government investment.Thirdly, we analyzed the present industrial structure of local government investment, evaluated the efficiency of industrial structure of local government investment, discussed the restricted problems of optimizing industrial structure of local government investment, and finally made proposals for optimizing the industrial structure of local government investment.Fourthly, we made an analysis on the urban and rural space structure of local government investment. We analyzed then present situation of urban and rural space structure of local government investment. On the base of theoretical exploration on urban and rural space structure of local government investment, we offered our proposals.Fifthly, we made a research on the optimizing choice of local government investment system. We expatiated the present investment system, and then made some proposals for establishing and consummating investment system of balancing urban and rural development. We also made some research on the supporting policies of local government investment.The possible innovations of the paper come mainly from the following aspects:Firstly, on the basis of document study, we pointed out the connotation and basic implementation path of balancing urban and rural development. The connotation of balancing urban and rural development is not mean to eliminate the differences between town and country. It is to take rural and urban economy and society as a unified system to realize sustainable and harmonious development of economy and society, and equalize developing opportunities of urban and rural residents. The basic implementation path is Government-Domain-and-Market-Participation. The key point is to develop productivity and promote employment and entrepreneurship for urban and rural residents to realize coordinated development of economy, society and culture.Secondly, on the basis of the basic connotation of banlancing urban and rural development, we put forward the five changes of local government investment choice:shifting investment strategy from urban bias to balancing urban and rural areas, shifting local government investment structure from competitive investment bias to public goods supply, shifting local government investment from scale expansion to the construction of supply ability, shifting local government investment system from an individual rural-urban system to a coordinated rural-urban system, shifting investment patterns from government direct investment to government-led multiple investment.Thirdly, considering the space structure choice of local government investment, we proposed that market regulation should be the foundation, and we should also make some adjustments for the investment focus. According to the different demands for public products, we should make some adjustment to the priority of local government investment. On the assumption of increase the investment level in rural areas, we should continue strengthening investment in urban areas to meet the demands of urbanization. Local government investment should also made some adjustments according to urban and rural employment structure, urban and rural population structure level, urban and rural space distance, etc.