Study On Guangdong Province Industrial Transfer Overflow Effect Under Financial Support

As the frontier of china economy reform, Guangdong province has recently launched a vast scale in-province industrial transfer to switch to a new economy growth model and to upgrade its industrial structure. Industrial structure transfer process which is applied herein is basically the re-allocations of economic and social resources between different industries and geographic areas hence the needed or undersupply resources could be used in optimize way. During the process of transferring factors and resources, capital is playing the leading and directive role and therefore only if the capital transfer between industries and geographic areas is implemented effectively, then the transfer of industrial related factors, the industrial structure upgrade; and the transition to new economy growth mode could be done accordingly. In sort, financial support is one of the most important factors to implement resources optimal allocation through industrial transfer.Based on reviewing pertinent literatures from international and china economy academic community, this paper examines and discusses industrial structure and financial development theory, analyzes the relationship between industrial structure upgrade and industrial transfer; the association between economy development and financial development; the connection between industrial structure upgrade and financial development; and the interaction between industrial transfer and financial support. In summarization, it indicates that the international researches are mostly focuses on studying the relationship of financial development and industrial structure upgrade through financial support of new technology innovation, little has been done from the aspect of how the financial support affects the industrial structure upgrade. From a higher stand point, the research on relationship of financial development and industrial development is yet to establish a relative complete framework, therefore further in-depth research in this area is demanded, especially on the mechanism of how financial support affects the industrial structure promotion. Further more, empirical analysis on china financial support effect to industrial structure upgrade hasn’t been widely applied; most of the domestic literatures do not include systematical empirical analysis on effect of financial support to industrial structure upgrade from different financial organization. Focusing on Guangdong province’s industrial transfer process, this paper analyzes the overflow effect of financial support during the transfer. First of all, this paper reviews the history of Guangdong province’s industrial development, analyzes the current status and future development trend of industrial structure upgrade, and apply descriptive statistics analysis on the financial support values from Guangdong province government, financial organizations, financial representative organizations, foreign direct investments. Base on the review and statistics, the modeling concept of industrial transfer overflow effect under financial support and the model parameters system are defined, the mechanism of industrial transfer overflow effect under the financial support from financial market; government and foreign direct investment is analyzed, and further, the analyze of Guangdong province industrial transfer process is classified into three categories; Pear river delta area industrial transfer process, non-Pear river delta area industrial transfer process and international industrial transfer process. Based on the proposed model, the industrial structure upgrade process under the financial support is evaluated.This paper establishes a structure equation model (SEM) for the transfer process, apply the 2004~2008 statistical data of Guangdong province’s financial support from government and financial organizations; and the statistical data of corresponding industrial transfer overflow effect into the model to analyze Pear river delta area industrial transfer process and non-Pear river delta area industrial transfer process, model design adjustment and significant test are performed. It concludes; first, the government financial support of Pear river delta area industrial transfer process and non-Pear river delta area industrial transfer process has positive effect on the industrial transfer overflow parameters, the government financial support also influences the financial market to deliver financial support and provide positive effect on the industrial transfer process, second, the government financial support effect is larger than the financial market.The international industrial transfer process through foreign direct investment is studied by a dual-mechanism two factors model, the 1995~2009 time span is divided in to two periods for empirical analysis, this paper examines the overflow effect of Guangdong province’s high tech industry development under foreign direct investment, it indicates that during the early stage of foreign direct investment (1995~2001), the local enterprises development overflow effect was mostly from the high concentration of foreign direct investment. In the second period thereafter 2002~2009, the high concentration level of foreign direct investment by number of foreign enterprises on the overflow effect has been decreased and at the mean time the efficiency overflow effect by the quality of foreign enterprises has been increased.Lastly, this paper applies System Dynamic Model to simulate and evaluate the industrial transfer process under financial support and examines the process’s destination - industrial structure upgrade, a system dynamic model is designed and applied to simulate Guangdong province 2000~2009 industrial upgrade process, based on the model, five system plans are designed for optimizing the industrial structure upgrade under financial support. The optimized plan is selected and presented according to the result of system dynamic model simulation.