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Regional Market Divisions in Northeastern China

Author: MaXiuYing
Tutor: ZhaoRuZuo
School: Jilin University
Course: Regional Economics
Keywords: Northeastern China regional market divisions Decentralization of Administrative Powers local protection industry structure
CLC: F127
Type: PhD thesis
Year: 2008
Downloads: 294
Quote: 2
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With the further development of reformation and further development, the socialist market economics in China has come into being. However, the relevant survey and study has shown that regional market divisions has been an extrusive problem. It is particularly serious in northeastern China, which has affected the implementation of the policy which can revitalize northeastern industrial base. Studying the phenomenon is the primary task we should deal with in order to further develop northeastern economics.The thesis has analyzed the reasons for forming local market divisions from the historical and realistic perspective. The following are the historical reasons: The unreasonable industrial structure under the system of market economy has provided the industrial foundation for local market divisions. Decentralization of administrative power has provided necessary policy reasons for local market divisions. The incremental reformation has provided various macroscopical market environments for local market divisions. The benefit main bodies’pursuit of local economic benefits is the realistic reason of local market divisions and the fundamental drive. Thereinto local officials’pursuit of self-interest is the deep-seated reason for the forming of local market divisions, and maximization of regional corporations’self-interest is the important drive for it.On the basis of studying reasons for regional market divisions, the inner system and the outer system for the forming the regional market divisions has been put forward. The basis for the forming of inner system is the local governments and regional corporations that are local benefit main bodies. Local enterprises’economic interests embodied their final benefits. Only by the guarantee of local enterprises’economic interests can we speed up the velocity of increase, increase the financial income of local governments, enlarge local people’s employment, and upgrade people’s living level. Local governments will protect the market of essential factors, products markets and service market to form market divisions. The outer system can generalized in the following way: Driven by local governments’political and economic interests, based on the industry structure formed by government planning, products and factors’flow barricade has been set up among local governments, which has led to market divisions. The forming has been driven by local interests no matter in terms of inner system and outer system. In fact, the development from local market divisions to regional market integration is the process by which local markets develop into regional markets. In addition, the local market divisions formed by high industrial isomorphism can form competitive market integration.The convergence of industry structure in different provinces has embodied the local market divisions in Northeastern Chinas. The convergence has been embodied in not only present industry structure but also in future plans. On the basis of it, the thesis has probed the special reasons for the forming of local market divisions in Northeastern China. The large scale investment in the early days of the establishment of the country has formed a relatively complete base for heavy industry. This is the main reason of industry convergence. Since reformation and opening-up, the economic gap among the three provinces has been bigger and bigger , because they haven’t enjoyed synchronous state policies. The gap has led to fierce competition from the perspective of policies. The market reasons for the divisions are the economic structure with inappropriate ratio of state companies and the underdevelopment of market economy are the market reasons of forming the divisions. In order to make a further analysis of the degree of market divisions in Northeastern China, we have chosen the typical conditionalβconvergence analysis model. We have introduced into the model the local market divisions in the form of administrative marginal effect. We will analyze the divisions from the perspective of space-time by applying internationally commonly used SPSS statistical software. The result shows that: Firstly, in various economic periods, the functions of market divisions are different. From 1998 to 2002 local market divisions has promoted the economic development of various provinces. From 2002 to 2005 the divisions has hindered the development. Secondly, the degree of market divisions has a close relationship with industry structure in different provinces. It is embodied in local market divisions of the industries of the three provinces under the idea of macroeconomic integration. The convergence of the industry structure in Heilongjiang and Liaoning Province has been relatively high. Therefore, the local protection in the two provinces is very strong and the market divisions is serious. The complementarity of the industry structure in Jilin and Liaoning Provinces has led to weak local protection, and the market divisions is not prominent. Thirdly, the establishment of attuning organization in high-level regions can be conductive to break market divisions. Since 2002, the economy in Northeastern China of China has come from diversification to convergence, market integration has been improved, which is closely related to the attuning organization in the northern part.The conditions in Northeastern China have been conductive to the regional market integration. The natural geographical conditions, affluent sources reserve, close economic relations and state promotion policies have provided advantages for the forming of integration. However, the three provinces in Northeastern China have been caring about their own business, and the process of integration has been very slow. We can tell there are many barricades to the break of the divisions. Firstly, the intensification of industrial isomorphism. However, for years the three provinces in Northeastern China have been doing own things in their own ways. The progress of market integration has been very slow. After the analysis, we have found out that there are lots of barricades to the breaking of market divisions in Northeastern China. Firstly, because of the clear industrial isomorphism it is difficult to make the interests in different regions compatible. Secondly, the low degree of marketization makes it difficult to break the administrative bondage. Lastly, the incentives to local officials are the biggest barricade to break the market divisions.On the basis of the comprehensive analysis of the market divisions in Northeastern China, the following measures to break the market divisions have been proposed after the quantitative and qualitative analysis. In the first place, the economic interests of all sides can only be coordinated effectively by the state’s industry structure coordination. Furthermore, the cooperation agreements among the provinces should be legalized to guarantee the purpose. Secondly, market system should be perfected. On one hand, we should develop private economy.The government should create a favorable external environment. The private economy should improve its quality. On the other hand, foreign capital should be introduced, especially the direct investment from the countries in the southeastern part of Asia. We should pay attention to the quality of foreign capital and the absorption and the use of technology. Thirdly, we should reform the incentive system to government officials. As a special interest subject, the officials’decisions represent the local interest and reflect their own economic and political interests. Therefore, the policies to break local market divisions can be divided into to types. On one hand, as to the officials’interest, the incentive system should be reformed. On the other hand, as to the local interest, the interest compensation system should be regulated.

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