Reasearch On Provision Mechanism Of Public Goods Enhancing Industrial Competitiveness

With China's accession to the world trade organization (WTO),the economic market will be further opening and China will face the fierce international competition. In this situation, how to improve the industrial competitive advantage has became the focus in entire society. According to the principle of economics, a country can use trade policy and industrial policies to support the development of domestic industries. But in the international economic system nowadays, the influence which made by the WTO rules on domestic policy is much more strong and far-reaching than the GATT period. Multilateral trading system that based on the framework of WTO has been deeply affected domestic industry policy areas, at the same time, wide friction in China trade and the huge pressure of competition system in our country also give rise a serious challenge to the implementation of the policy of industry constitute. Given this situation, our country should be combined history with reality in trade management system; also in industrial policy implementation means, more and more skillful use of the industrial policy which does not conflict with WTO rules, those enables trade policy and industrial policy to get good aspect of coordination. From the view of industrial policy in the form of local public goods supply, this article means to study how the public goods supply promote competitive advantage under the precondition of inviolate the rules of WTO premise of industrial. In the study of competitive advantage improvement caused by the local public goods promote industrial, the paper constructs general explanation framework of this theme.First of all, we introduce the definition and mechanism of "rent". Secondly, during the study we found that government could work out resources allocation for a specific industry through the industry policy, and the central and local government expenditure can form "rent" effect for those industries. Once again we learn about the direction of public goods supply of local government by the sources and expenditure structure. Finally, we discuss the way how public goods supply mechanism is beneficial to industrial competitive advantage. Respectively:①cost allowance for independent innovation activities;②public R&D investment;③financial support to bear the risk;④support to technical training;⑤regional development programme. At the same time, we select China regional data and empirical research further validated our theoretical analysis results. At last, based on the empirical results, we will put forward relevant policy suggestions on the side of further growth on industrial competitive advantage caused by local public goods supply.