Regional Industiral Policy: Institutional Foundations, Implementation Path And Effects Measurement

Regional impacts of economic globalization have defined an increasing trend ofintegration between branches of economic thought. Regional industrial development,focusing in localities of a nation as basic units of global competition analysis, hasbecome a common research area for both regional and industrial economics. However,regional industrial policy research is hampered by incomplete theoretical foundations,inadequate empirical evidence, the lacking of policy objective-orientation, and the useof illustrative examples rather than policies prescription.This study aims to advance the theoretical basis of regional industrial policymaking, its implementation and measurement, using the China context.Contemporary regional development in China faces many challenges due to its largeterritory and population and diverse industrial regional concentration. Given thisparticular national context with no benchmark previous experiences to relate to, it isimperative to develop a suitable framework to optimize its regional industrial policymaking process. Through redefining concepts of regional strategy, policy andplanning, this study examines external and internal dimensions of regional industrialpolicy and it establishes an analytical framework consisting of formulation,implementation and measurement of policy.We start by categorizing national policy decision making models based on theinstitutional foundations of regional industrial policy. We draw lessons from theJapanese advance context, and we use the Holmstrom and Milgrom’s methodology toquantify welfare and efficiency effects of different models of decision-making,explicitly dividing the functions and powers of central and local governments.Then we examine the concept of implementation policy path using both a centralmacro-policy and a local micro-policy approach. We propose a logic framework forpolicy implementation; involving a macro-micro focus for the central governmentregional industrial policy process, and a three-step course for the local governmentalregional industrial policy. This three-step course consists of structural, organizationaland technological policy factors. Using empirical data, we summarize China’s regional development strategy,industrial spatial patterns and industrial policy development. We estimate anEvaluation Index System of policy effects derived from our theoretical propositions.This index is intended to measure the effects of regional industrial policies since theimplementation of the China’s development national strategyWe conclude by discussing China’s problems in regional industrial policymaking and implementation, and put forward solutions drawing insights from theproposed theoretical framework and empirical survey results.