Research On Development Zone Approval Mechanism

In the later half of the last century, whether developed or developing countries and regions are willing to build various types of development zones, including export processing zones and scientific industrial zones, in order to promote economic and technological development of regional industries. In the early eighties, government of China started up to build development zones, forming a development zone system with High-tech Industry Development Zones and Economic and Technological Development Zones. With all kinds and levels of development zones being established, the approval number of China’s development zones appeared explosive growth. At the same time, there has been a lot of problems in the zone approval process, the administrative approval mechanism also been criticized.After the analysis of the reality, based on auction theory framework, we built a theoretical model about development zone approval, then we simply analyzed the models in this setting. Central government of different types make approval decision with restrictions under different conditions and local government investment decisions. In the basic model, we can learn about the basic characteristics of the approval, but this model is set too complex to directly obtain explicit solutions, we will use a simplified model for analysis and to develop the model. In the simplified approval model, with given constraints, under different approval mechanisms affect the actions of local government, as well as different approval mechanism decide whether the central government of the objective function is satisfied, and in the further study, we consider the approval under dynamic conditions and with government officials. Finally, we consider the reality of the phenomenon of the zone bubble, and get the reason of this problem.After analysis.of the real situation and the theoretical model, we draw the following conclusions: First, there is a close relationship between the number change of approved zone and reform of administrative examination and approval. Second, due to asymmetric information, any approval mechanism can not reach the Pareto optimal. Third, because of institutional constraints, efficiency losses of various phenomena appear in the zone approval.