Local Government's Industrial Policy And Local Industrial Transformation Research

With the economic growth continuously in our country, the low-level manufacturingand resource-consuming industrial structure formed in the past has not been able to supportour economy to developing sustainably, which makes us have to transform and upgrade theindustrial structure, and the government has take the transformation and upgrading ofindustrial structure as an important economic task in the new period, then the government’sindustrial policy can achieve the goal? This needs us to analysis our industrial policy’sworking mechanism and environment. In fact, in every stage of economic development inour country, the government all implemented the industry-development policy, but theeffects were not very good each time, one of the important reasons is the peculiar formingmechanism of our local industrial policy and enterprise’s behavior.As for the forming mechanism of our local industrial policy and enterprise’s behavior,our country has carried out the decentralization in economy among the variousgovernments as all levels, this made different local governments have doubledecision-making right interfering with economy and participating in market business, andalso made all local governments become the benefit individuals running for self-interest.From this, the local government comes to work out and carry out local industrial policyand choice the transaction mode with enterprises. As a resuit, this local industrial policyand enterprise’s behavior decide the effect of industrial transformation and upgrading.First, we analysis enterprise’s self-behavior participate in industrial transformationand upgrading. Because achievement of industrial transformation and upgrading dependson change of every enterprise’s operating contents, then if and to what degree enterpriseparticipates in industrial transformation and upgrading all depend on maximizing itsself-interest maximization. We combine the externality, capital cost and risk, technologycharacteristic and stage characteristic to analysis enterprises’ behavior choices and theeffect of industrial transformation and upgrading. Our conclusion is: enterprises’self-interest maximization lead to the effect of industrial transformation and upgradingbeing not necessarily the best.Then we analysis what change will happen for enterprise’s behavior and effect ofindustrial transformation and upgrading if local government change enterprise’s costs orrevenues through local industrial policy. We take different industrial subsidies and taxpolicy as industrial policy intervention. Our conclusion is: the proper industrial policycorrectly used in industrial transformation and upgrading of the corresponding phase canpromote industrial transformation and upgrading to be near the optimal result, otherwise, the effect of industrial transformation and upgrading is likely to get worse.Further, we analysis the local government will adopt what kind of local industrypolicies. We take local government and its officials’ pursuing their political and economicinterests in our system of transformation as the starting point to explain different economicand social conditions, the local government’s stage of tenure, the constraints of localoriginal industrial structure how to determine local government’s industrial policypreferences. Our conclusion is: owing to pursue its own interests, local government notnecessarily to select its industry policies according to the superior industrial policyrequirements or the optimal effect of industry transformation and upgrading.On the basis of the above analysis, we combine local government’s industrial policypreference and its impact on corporate behavior to explain the existing differences inindustrial transformation and upgrading in different regions and different developing stages.Our conclusion is: the better economic and social conditions are, the better the effect ofindustrial transformation and upgrading is, the more advanced industrial structure is, andthe more effective the economic operate. In addition, in the local government’s initial stageof tenure, the infrastructure industrial transformation and upgrading will be better, in thelate stage of tenure, infrastructure will be some poor. And the original industrial structurealso affects the effect of industrial transformation to a certain extent, but this effectdepends on the local economic and social conditions.Finally, we take industrial pollution treatment as an example to test the front analysis.Among them, the industrial pollution control is taken as industry transformation andupgrading of local economy, local finance income per capita is taken as local economicand social environments, the percentage of local industry is taken as the original industrialstructure. The empirical test results are basically consistent with the front analysis processand the conclusion.