The Cooperation Mechanism Between Shenzhen & Hongkong And Its Improvement

Shenzhen and Hong Kong started cooperation ever since the establishment of the Shenzhen Special Economic Eone. After 30 years, Shenzhen and Hongkong are related by complementary advantages and common benefit. In 2003, The central government made "Closer Economic Partnership Arrangement (CEPA)" with Hongkong. In 2004, Shenzhen and Hongkong governments agreed to held "Shenzhen & Hong Kong Cooperation Conference" every year. Since then.two cities have put a lot of effort on the research around "cooperation", and have signed a series of important agreements. Since then,the cooperation mechanism between Shenzhen and Hong Kong has gradually established and improved, greatly promoting the regional economic development. But now the institutional problems have become increasingly prominent.In the tide of economic globalization and regional economic integration, strengthen the cooperation between Shenzhen and Hong Kong will help two the cities to face the challenges and grasp the opportunities.Shenzhen is Hongkong’s neighbor and the "frontier" of China’s reform and opening up. How to deepen the cooperation with Hongkong, in order to further implement the "one country two systems" policy, to maintain long-term prosperity and stability of Hongkong, is the concern of central government and the public of two cities. According to the new institutional economics theory, effective institution is conducive to promoting cooperation, resolve conflicts, and promote economic growth. This paper uses "transaction cost theory", "institutional change theory", "reciprocal institution theory" of the new institutional economics theory to analyze Shenzhen-Hongkong cooperation, explain the institutional obstacles, and propose the establishment of reciprocal cooperation relation between Shenzhen and Hongkong.This paper is divided into seven parts:The first chapter, introduction. Describes the background and significance of this study, review the domestic and foreign research on regional cooperation, and put forward the research ideas and methods.The second chapter, the theoretical basis of this study, definites the concepts of "system", "mechanism", "transaction cost", sums up "transaction cost theory", "institutional change theory", "reciprocal institution theory" of the new institutional economics theory, puts forward the theory the hypothesis of this study and the main points of this paper.The third chapter, review and prospect of the cooperation between Shenzhen and Hong Kong. Describes the evolution of the cooperation mode, the innovation of the system and mechanism, and underline the quality of this cooperation relationship.The fourth chapter, the trend of globalization and the cooperation between Shenzhen and Hong kong. Analyses the trend of globalization, regional economic integration and the city development, and the significance to deepen the cooperation between Shenzhen and Hong Kong.The fifth chapter, institutional obstacles of the cooperation. Analyses how institutional obstacles hinder the cooperation, including ideological conflict, administrative system difference and imperfect cooperation mechanism. Then, explains the necessity of mechanism innovation and underlines Timing and conditions are now ripe for innovation.The sixth chapter, how to build up reciprocal cooperation mechanism. put forward the implementation strategy.The last chapter is the conclusion.In this paper, the new institutional economics theory is applied to analyses the Shenzhen and Hong Kong cooperation mechanism, pointes out that the institutional problems is hindering the cooperation between Shenzhen and Hong Kong, and put forward a suggestion to build reciprocal cooperation relation between Shenzhen and Hong Kong, which enriches the research on Shenzhen-Hong Kong cooperation. However, because of the new institutional economics theory involves a wide range, and available information is limited, and the Shenzhen-Hong Kong cooperation itself is very complex, this paper may have some shortcomings.