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The Role of Government in the Process of Industrial Upgrading

Author: HuangLiTang
Tutor: GuoAiJun
School: Lanzhou University
Course: Regional Economics
Keywords: Globalization Industrial upgrading New industrial policy Shenzhen Hi-tech industrial policy
CLC: D035
Type: Master's thesis
Year: 2009
Downloads: 762
Quote: 1
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Abstract


As the world economy is still going down,the exterior environment for industrial upgrading become worse than before. On the new condition, China govnernment proposes new macroeconomic goal,called"keep growth, adjusting structure, expanding domestic demand,emphasis on people’s livelihood", industrial upgrading is still imminent. Because of globalization magnify the possible opportunity and challenge ,how to design good industrial policy to accelerate industrialization on the process of industrial upgrading is the key issue of policy discussion.On the background of globalization,the meaning of industrial upgrading is expanding,the way of industrial upgrading is diversifying.Based on the summarization of the controversy about the necessity and validity of industrial policy,it is considered that industrial policy have been to make some change in order to take effect.The constant argument of industrial plicy, actually reflects the rise of a new kind of growth strategy,called "Diagnostic Approach".The globalization is also putting forward new requirement on the implement of industrial policy.There are many flaws in the theory of traditional industrial policy, mainly because of the gap between theoretical assumptions and the reality, thus the performance of industrial policy which has the featuresof supply-oriented, static and exogenous only achieve limited success. Based on general rules of industries evolution found in the latest literature, this paper presents a new way of thinking about industrial policy. With the comparison of the traditional industrial policy, the paper stresses the role of strategic partners for the government in helping businesses to achieve dynamic matching with the environment.The success of Shenzhen Hi-tech industrial policy provides a more ideal version of the practice for the new industrial policy. On the condition of almost zero starting point and any advantage, to rely on more sophisticated high-tech industrial policy, Shenzhen High-Tech Industry has growth rate of more than 40% in eighteen years, and lead to Shenzhen’s industrial upgrading successfully. On the summarization of the main contents of high-tech industrial policy, this paper found that government was playing a very crucial role, which to be a coordinator and serve, and the industrial policy to be demand-oriented, dynamic and endogenous, emphasizing on a combination of "carrot and stick" in the operation.

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