Government Intervention And Industrial Development:a Case Of Ten Industrial Adjustment And Revitalization Plan In2009

The government intervention on industry is a power force for industrial development. The experience from the world tells that the role of government is essential for industrial development. However, the government intervention just means a necessary condition for industrial development, not a sufficient condition. Comparing with the East Asian countries, government in Africa and Latin America has become an obstacle to industry development finally. The intervention in these country results in rent-seeking and corruption. The question today is not if government needs to intervene, but how to realize the effective intervention.Especially in China, the hand of Chinese government is very important. As an important intervention way,Chinese government has been making industrial planning since the planned economy period. With the establishment of market’economy, government has made enterprise decentralization come true and has changed its intervention way at the same time. Industrial planning is an important means in government intervention of industry, which represents the effect of Chinese intervention. But now, we also need to answer the question that whether the intervention has promoted the industrial development.The ten industrial adjustment and revitalization in2009fully reflect the ability of government. This research builds an industrial planning analysis framework, which is on the base of intervention theory and planning theory. In this analytical framework, the paper analyzes the effect of the government intervention. The result shows that, although the ten industrial adjustment and revitalization stimulates the growth of ten industrial effectively, fails to adjust the industrial structural and push the industrial transformation.Morever, the planning overemphasized the revitalization, producing a series of consequences and risks, for example, excessive production, exectutive-led mergers and acquisitions and government investment, survival difficult for SMEs. In general, government intervention is inefficient.Why government fail to intervene in the industry? The first reason is that the objectives are unreasonable, the division of tasks is national, the government departments are uncoordinated. The lack of central government coordination, local industry homogeneity and policies inconsistent, is direct reason. The industrial planning is also subject to specific institutional environment. For now, the market-oriented reform is not complete, the economic system is not perfect, and the administrative system lags behind.The key to improve the intervention on industrial is that,first, the industrial planning should be based on the division of the government and market; second, the industrial planning should respect the objective laws of industrial development, focusing on endogenous development; government also needs to set reasonable goals, tasks and measures; it’s necessary to coordinate different policy. At the same time, the government should further promote the economic and administrative reform for institutional environment.