An Empirical Study On The Effect Of Local Governments Intervention On Overcapacity

In the past 40 years of reform and opening up,China's economic development has achieved a "quantity" promotion and a "qualitative" leap.The local government has made a great contribution as an important participant in the socialist market economy,but it has also caused some problems,for example,overcapacity is one of them.The promotion mechanism of officials at the core of GDP and fiscal decentralization greatly give the enthusiasm of the local governments to intervene in the economy greatly.The government behavior induces the expansion of the production capacity,the production scale is expanding,a large amount of invalid supply is produced,and the serious problem of overcapacity is finally formed.The relationship between the local government intervention and overcapacity has been deeply studied in academic circles,and the results are quite fruitful.By summarizing the existing literature on overcapacity,this paper finds that most studies focus on the idea of " the local governments intervention-over investment-overcapacity",and there are few studies on other formation mechanisms between them.Therefore,combined with the motives and means of local government intervention,this paper reexamines the transmission path of excess capacity caused by local government intervention from the perspective of local government competition,technological innovation and upgrading of industrial structure.The zero sum game of the local government and the contention of economic resources make the regional governments mimic and compete with them,causing the emergence of administrative barriers and market separations,such vicious competition or excessive competition makes the local government's intervention behavior across geographical constraints,affecting the capacity utilization rate of the local area,and exacerbating the excess capacity in the surrounding areas or similar economic areas.this paper uses the supply side and the demand side measures of China's 30 provinces,autonomous regions and municipalities(except Tibet and Hong Kong and Macao)2002-2015 years of excess capacity,in the time trend,China's overcapacity in line with the economic cycle,and in regional differences,the capacity utilization rate of eastern China is higher than that of the western region.In addition,by setting up the spatial econometric model,this paper empirically tests the effect of the local governments intervention on over capacity from the perspective of geographical matrix,economic matrix and gravity matrix.The results of the study found that the local government intervention,while affecting the overcapacity in the region,through the effect of space spillover,alsorestraining productivity utilization in other areas of similar geographical proximity or economic status,especially in the area of local government tax competition and environmental indulgence.Through the system GMM model,this paper empirically tests the excess capacity of the local government intervention through mediating effect(the effect of innovation and industrial structure imbalance).Among them,the effect of innovation constraint is greater than the effect of industrial structure imbalance.Finally,this paper,based on the conclusions of the above research and the existing research on overcapacity,puts forward the policy recommendations for production capacity.Due to the availability of space and data,the research in this paper did not discuss more about overcapacity in prefecture level cities,but to some extent,it enriches the regional research of overcapacity in China,and gives some reference and inspiration for the industrial research of overcapacity.