Studies On The Economic Analyses And Strategies Of Preferential Policies For Inviting Outside Investment

The preferential policies are always the main means for the Economic Development Zones (E.D.Z.s) in China to invite outside investment, which is of great significance to the local economic development. But there appears a trend that E.D.Z.s compete lower preferential policies to get outside investment. This paper, by analyzing the effect of foreign capital to the economy and the allocation of resource in China as well as the roots of the questions appeared in the process of carrying out preferential policies, tries to discuss the strategies to improve the governance of preferential and to make the economy develop in a higher degree.This paper, by setting up a game theory model, analyzes the cause of why some E.D.Z.s offer foreign investors very low land price (sometimes free); by building an optimal control theory model draws the condition and scope to carry out Financial Supporting Policy and the optimal ratio of subsidy to the financial income, using the data and files in Shanghai measure the role of financial subsidy to the local economic development. The discussion of Tax Preferential Policy is among the discussion of land price and Financial Supporting Policy for their strong linkage. This paper also by extending the famous Solow model to the case of two countries and three goods, analyzes how those capital invested to other countries is produced in the developed countries, who face the demand of the globalization of economy and the internationalization of specialization, and its scale, and also analyzes its effect to the economic growth, export and social welfare in the least developed countries (L.D.C.s). From the analyses above, in the current stage we should shift our emphasis to the adjustment of industrial structure and the perfection of the mechanism of markets, should take full advantage of the rules of World Trade Organization (WTO) and the good situation of the Western Development, should create new means to invite outside investment, and should help national companies invite outside.