Research On Government’s Intervention In Economic Development Of Underdeveloped Areas:

The widening development gap between eastern and western China since the Reform and Opening-up shows a failure of the market-oriented regional development strategy which is based on the mainstream economic theory. Especially, the socio-economic development of undeveloped areas is in a more and more difficult position. This situation makes a reflection on the market function necessary and it also reminds us of government"s effective intervention in the process of economic development.This paper analyzes the industrial competition between undeveloped areas and developed areas by using the relevant theory of international trade, which gets a conclusion that due to economies of scale, the undeveloped areas, though they do have some comparative advantages, are in an inferior position to the developed areas in the competition. And from here, we find a theoretical basis for government intervention into the economic development of undeveloped areas. According to the basic features of economic development in underdeveloped areas, this paper inquires the mode of government intervention. Then, from the viewpoint of input-output, this paper analyzes the existing state of Dingxi’s government intervention, and assesses its effectiveness in an empirical method. Based on the study above, this paper proposes some policy suggestions to optimize the mechanism of effective government intervention.This paper argues that the following suggestions could be taken into account to achieve effective government intervention of undeveloped areas:creating new regional competitive advantage to achieve industry-supported economic growth; fostering more market players to produce a fair and orderly market environment; introducing scientific and technological brains to cultivate regional innovative ability; reinforcing government’s ability of providing public sevice to achieve a coordinated economic and social development.