Threshold Effect of Marketization and Differentiated Industrial Policy
Author(s): SUN Zao, XI Jiancheng
Pages: 23-31
Year: 2016 Issue: 8
Journal: Researcb on Economics and Management
Keyword: industrial policy; government subsidies; tax incentives; level of marketization;
Abstract: This paper investigated the relationship among government subsidies,tax incentives and the marketization level of a country(region)by using the relevant data of China's industry sector.It is found that:(1 )The positive role of industrial policy is closely related to the level of marketization.Theoretically,there is a threshold effect which depends on the marketization level of the country.When the level of the marketization index reaches a certain inflection point (threshold value),the positive role of industrial policy will be significantly enhanced;(2 )Different forms of industrial policy correspond to different levels of market threshold value.When the marketization level of the threshold value is between 5.37 and 6.93,the effect of government subsidies is better than that of tax incentives.Thus,the design and implementation of industrial policy in the new period should take full account of the marketization level of the country,and the industrial policy should be inclusive,and different regions with different marketization levels should make differentiated industrial policy.
Pages: 23-31
Year: 2016 Issue: 8
Journal: Researcb on Economics and Management
Keyword: industrial policy; government subsidies; tax incentives; level of marketization;
Abstract: This paper investigated the relationship among government subsidies,tax incentives and the marketization level of a country(region)by using the relevant data of China's industry sector.It is found that:(1 )The positive role of industrial policy is closely related to the level of marketization.Theoretically,there is a threshold effect which depends on the marketization level of the country.When the level of the marketization index reaches a certain inflection point (threshold value),the positive role of industrial policy will be significantly enhanced;(2 )Different forms of industrial policy correspond to different levels of market threshold value.When the marketization level of the threshold value is between 5.37 and 6.93,the effect of government subsidies is better than that of tax incentives.Thus,the design and implementation of industrial policy in the new period should take full account of the marketization level of the country,and the industrial policy should be inclusive,and different regions with different marketization levels should make differentiated industrial policy.
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