Research On Innovating Investment Promotion Mode Of The Local Government

Since China's Reform and opening to the outside world, it has made great achievements in Investment Promotion. Some local governments have gradually formed their unique Investment Promotion Mode by constantly drawing experiences from practices. As an inevitable result of social division and fast growth of market economy, Investment Promotion is an effective way to absorb fund and technology, to carry out the surpassing development strategy. Rise and fast developed in the period transiting from planned economy to the market one, the government played a very important role in Investment Promotion. Some local governments even dominated the investment promotion work. Although the mode of government intervention in investment promotion has achieved great success, along with the process of economic globalization and perfection of China's market economic mechanism, it has been exposing more and more problems.By analyzing and comparing a few typical modes of investment promotion in China, the paper tries to find out some problems in common, and provide train of thoughts for innovating local government's Investment Promotion Mode and driving the development of local economy into a higher level.Based on the theories of government intervention, transaction cost, path dependence and institutional innovation in western economics, the paper explained the formation of government intervention in investment promotion, conceived a theoretical framework for researching, i.e. imperfect market mechanism and incomplete information in transitional period result in excessive transaction cost for main market body to carry out investment promotion, local government intervention in investment promotion is an institutional innovation to reduce transaction cost, but such intervention simultaneously intensifies local government's motivation of intervention, path dependence then come into being. Facing increasingly severe problems like imbalance of cost and benefit, economic externality and information asymmetry, local governments are no longer rational behavioral bodies in such a competitive field as investment promotion, a new round of institutional innovation is required to adapt the need of new situation.To make the research at global horizon, the paper uses the Investment Promotion Modes adopted by foreign governments as reference. Considering Singapore has similar cultural and political background with China, adopting government-dominated investment promotion mode, taking utilization of foreign capital as an important state policy as well as enjoying unique experiences in developing industrial zones, the paper chooses Singapore as a sample to study and compare, moreover, enlightened on transforming government function, upgrading development level of industrial zones and innovating the mode of investment promotion.The paper develops along with the route of"studying present situation– raising questions– analyzing reasons– countermeasures". After studying the current situation and problems of Investment Promotion Mode adopted by local governments, analyzing the reasons behind the problems, the paper raises the cause, goal and guideline of innovating Investment Promotion Mode adopted by local governments, conceives the function of Investment Promotion Mode, and finally puts forward the innovation path, i.e. reducing transaction cost to shape an efficient government in investment promotion, lessening government intervention to shape a limited government in investment promotion, correcting path dependence to form the institutional arrangement on innovating investment promotion mode.