The Influence Of Industry Growth On Industrial Policy And Its Financial Consequences

In the early 1980 s,in order to promote domestic economic repair and industrial development and upgrading,the Japanese government formulated the industrial policy to intervene in the operation of the domestic economy,which led to the rapid economic development of Japan after the second World War(Johnson,1982).Subsequently,China also introduced the concept of industrial policy,issued a series of industrial policy tools of "national regulation of the market",and changed the management of microeconomy from strict planning to active intervention by using industrial policy.However,there has always been controversy about industrial policy in academic circles.Different camps represented by Yifu Lin and Weiying Zhang launched a series of debates on industrial policy,and deeply discussed the necessity of industrial policy in China,and whether the industrial policy is effective or not.Therefore,starting from the question of why the industrial policy is formulated,the author discussed the impact of industrial growth on industrial policy,the resource effect it brings to enterprises,and the financial performance ultimately reflected at the enterprise level,which provides a new perspective for the necessity and effectiveness of China’s implementation of industrial policy.Why make industrial policy? This paper argued that under the condition that the formal system of China’s factor market needs to be improved,industrial policy could be used as a formal alternative measure to guide the flow of factor resources to highgrowth industries,so as to improve the efficiency of the allocation of factor resources.On this basis,using the data from the industry and companies of A-listed companies in China during the 11 th five-year Plan,the 12 th five-year Plan and the 13 th five-year Plan from 2004 to 2018,this paper studied the logic,resource effects and economic consequences of industrial policy from the perspective of factor market failure.The results showed that industrial policy is more inclined to choose industries with higher growth before policy formulation as targets that explicitly encourage development.Further analysis showed that the formulation logic is more obvious in the case of high risk in the industry.The test of resource effect founded that companies belonging to high-growth industries before the policy formulation received more government subsidies and extra loans during the implementation of the policy.Finally,based on the study of economic consequences,it was found that companies that belong to highgrowth industries perform better during policy implementation.From the perspective of factor market failure,this paper explained the formulation logic of industrial policy,and provides theoretical and empirical support for "promising government theory".In practice,this paper proposed that the government should regulate the phenomena such as factor distortion and overcapacity in order to make up for the market failure.At the same time,the research results of this paper had strong policy enlightenment.Under the condition of China’s transitional economy,market failure exists widely,which is not conducive to the effective allocation of social resources.So it is necessary to carry out government regulation to make up for market failure,thus forming a two-wheel drive of the market and the government,so as to promote the high-quality development of China’s economy.The research of this paper showed that the imperfect formal system of factor market would lead to factor market failure.At this moment,industrial policy,as a government regulation measure,could make up for market failure and guide the flow of factor resources to high-growth industries,and then improve the efficiency of the allocation of factor resources.Therefore,on the one hand,while reforming the formal system of the factor market,we need to continue to strengthen the role of industrial policy to make up for the failure of the factor market.On the other hand,in view of other market failures such as serious overcapacity in low-end industries and lack of effective supply capacity in China’s transitional economy,while reforming the relevant formal system,the government should take the initiative to make up for effective control and give full play to the advantages of both the market and the government,so as to effectively solve the problem of market failure.Finally,it will promote the healthy and rapid development of China’s market economy.