Effective Analysis Of Policy Incentives In Development Zones Based On Total Factor Productivity Of Enterprises

Since the establishment of the first development zone in China,Chinese development zones have experienced more than 30 years.Establishing development zones is an important means to stimulate the local economy,and the incentive effect of its policy has also attracted much attention.In the process of development,development zones have attracted a large amount of foreign investment,and have absorbed many international R&D institutions to set in zones.The function of development zones has also been transformed from an initial single economic function to an integrated and comprehensive multi-function.Development zones have gradually become a driving force for China's economic development.However,as local governments recognize development zones' importance,some places begun to blindly set up development zones,and constantly increase policy incentives.Gradually,regional competition has become more vicious and has caused some serious problem.On the one hand,ignoring their own characteristics and advantages,many development zones use low land prices,low-tax and other preferential policies to attract investment.On the other hand,some companies overlook the production facilities and industries chains,blindly enter the development zone in order to enjoy preferential policies.Under this pattern,the growth of the development zone is mainly driven by high investment.Although it promotes the development of regional economy in the short term,in the long run,this kind of growth is harmful to the healthy and sustainable development.In order to analysis the incentive effect of development zones' policy,this paper firstly has calculated the total factor productivity(TFP)of enterprises by using the OP method.Secondly,we have make an empirical test by using the fixed effect model.The data used in this paper is the database of Chinese industrial enterprises from 1998 to 2007.As a result,we found that the preferential policies of development zones reduced the TFP of enterprises.The TFP of enterprises in development zones was lower by 1.7 percentage than the TFP of enterprises outside development zones.And the result was still significant after solving the endogenous issues of model.Furtherly,considering that the policies of development zones vary with enterprises' scales,we introduce the interactive items of the development zone policy and the size of enterprises as an explanatory variable.And we found that the inhibitory effect of the development zone policy on the TFP of enterprises is directly proportional to the size of enterprises.In other words,the larger the scale of enterprises,the stronger the suppression effect of the development zone policy,which verifies the marginal rule of financial incentive allocation.Finally,we have make the robustness test by removing the data of four municipalities and using the system generalized method of moments,which further supports our research conclusion.The research results show that the motivation of policies in the development zone is distorted,which reduced the total factor productivity of enterprises in zones.Therefore,we must pay attention to the deficiencies of the development zone policy,continue to optimize and improve its defects.Further more,guiding the reasonable and effective resources allocation by designing scientific systems and management models.Through these methods,we can optimize the policy incentive effect of the development zone so that promoting enterprises to increase productivity.Only in this way can we ensure the sustainable development of economic development zones.