Local government competition and regional economic development research

Since the reform and opening up in 1978, economic decentralizationand political centralization has prompted the local government competingfor growth ". Competition has brought rapid economic and socialdevelopment, but also it has brought distortion of the allocation ofproduction factors, and a certain amount of economic loss. From theperspective of local competition, this paper makes a theoretical analysis andempirical analysis on economic efficiency losses caused by excessivecompetition to make research of co-ordinate regional economicdevelopment .Firstly, on the basis of research on the transformation theory, this papergives an entire history and a process of interests differentiation and cleargovernment stakeholders in China. This paper also gives mainmanifestations of competition from local governments. It includes thelongitudinal competition of the local government and central governmentand horizontal competition between local governments.Secondly, through the analysis of the competitive behavior of localgovernments and layers of retrospective, local government competition ismainly induced by two factors, intrinsic motivators and external motivators.The intrinsic induction of the Local Government Competition is to pursuethe acceptance of central and local social, and to pursue self-interest morestrengthen. The external induction is mainly institutional, legal, ideologicalchanges and so on.Thirdly, this paper gives that the competitive behavior of localgovernments has two kinds of economic effects, namely, positive andnegative effects, through the comprehensive analysis of local competitivebehavior and inducing factors. The positive effect is mainly reflected as theimprovement of regional economic development environment, the divisionand cooperation of labor between regions, and the increase of economicefficiency; while the negative effect is mainly reflected as redundantconstruction, local protection, segmentation, market failure, loss ofeconomic efficiency. Finally, this paper design a simple model to analysis the intrinsicconduction mechanism of market failure in the local competition throughthe Cobb - Douglas function and proves that the economic losses caused bymarket failure first; and then this paper selects the industry of China’sindustrial, makes an empirical analysis on the relationship between thelocal competition, protectionism and market segmentation, measures theeconomic efficiency losses caused by local protectionism and marketsegmentation by the DEA model, and puts forward countermeasures andsuggestions of competition and cooperation from the local government forregional development .Specially, this paper select local competing interests to the point ofview of co-ordinate regional development. This paper gives the analysis ofproblem from regional development, the expression of manifestation fromgovernment competition, the causal analysis of intrinsic and extrinsicmotivators, the to-effect, anti-effect effect analysis. This paper select thesample of regions, and gives the empirical analysis of regional competitionon the economic efficiency in order to provide useful suggestions, ideas andmodes ,a new way of thinking to co-ordinate regional development.