Research For Local Government Influence To Industry Upgrading

There is rare literature on local government influence to industry upgrading in the present world. However, the influence is obvious. In this paper, based on the government's economic function research literature, internal mechanism of government influence to industry is especially discussed by theory abstraction from Taizhou experience on promotion of industry upgrading. On this basis, the rational framework for the behavior of local government will be tried to build, whether in theory or in practice.In this paper, the possible theoretical innovation is mainly in the following three points. Firstly, the two variables including developmental stage and institutional environment are added to the traditional Analysis Framework for the governmental economic functions, which makes the conclusions of the article more feasible in China. Secondly, it is possible that "North paradox" directly results from moral hazard, cognitive lag and values of non-adaptive, which bases on more realistic assumptions on patterns of local government behavior; Thirdly, the methods to reduce the negative effects on industry upgrading from local government are different when they are resulted from different factors, which is found by classification of the government impact way.This article is divided into five parts. In part one, basic concepts, fundamental assumptions and research significance are introduced. And the theoretical basis for this article is built by theoretical overview. In part two, characteristics of industrial upgrading in Taizhou is concluded, which is based on review of the industrial upgrading process in past 30 years of reform and opening. In part three, theory abstraction from Taizhou experience on promotion of industry upgrading is well done, and then the limitations of Taizhou experience in the new era are also pointed out. In part four, on the basis of analysis about internal mechanism of government influence to industry upgrading, the rational framework for the behavior of local government is tried to build, whether in theory or in practice. In part five, the main conclusions of this paper and its related inspiration are introduced.