China - Facilitating investment and innovation : a market-oriented approach to Northeast revitalization
Dewitt,Nicolette K.
While the Northeast has significant potential, its economic growth has steadily lagged behind China's more rapidly growing Southeast provinces. While history and geography play a part, so do government policies and programs. The Northeast's lagging growth reflects both a lack of private sector development and an inadequate transformation of Northeast industry away from state control. The government's current program to "revitalize" the Northeast includes a mix of measures, including direct interventions, some public-private partnerships, and some initiatives to encourage market investment. In general, Northeast revitalization would benefit from less emphasis on government direction and intervention, and more emphasis on private-sector investment and innovation supported by appropriate public-private partnerships. Since dominance of Northeast economies by state-owned enterprises (SOEs) "crowds out" private sector development, it is important to transform this sector. Investment climate improvements are needed to attract both more domestic and more foreign private direct investment and to make the Northeast more competitive vis-à-vis China's Southeast provinces. Finally, the government needs to change its own approach, and move from directing economic activity to facilitating private-sector investment and innovation. The private sector needs more effective means for organizing itself and representing its interests and views if it is to fulfill its potential contribution to Northeast investment climate improvements.
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