Regional Economic Competition, Fiscal Subsidies, and Overcapacity

Abstract

Promotion tournaments theory and regional economic competition can be used to explain China's overcapacity. This study used the non-radial distance function to evaluate the overcapacity considering resource and environmental pollution, combined with Chinese industrial enterprise data, to evaluate the fiscal subsidies and their impact on regional industrial capacity. Empirical evidence based on provincial panel data shows that to strive for more foreign investment, local governments tend to increase fiscal subsidies to industrial enterprises and inhibit capacity utilization, but the technology diffusion and competitive effect of foreign investment can also weaken this adverse effect. The heterogeneity analysis based on geographical location shows that the fiscal subsidies to industrial enterprises weaken the improvement effect of economic competition on capacity utilization in coastal cities, but there is no such impact in inland cities. Reducing the government's excessive intervention and promoting orderly competition are essential to eliminating overcapacity.

Incremental Innovation, Government Subsidies, and New Venture Growth

“…Second, government subsidies have a significant role in promoting new venture growth. From the past development experience of countries worldwide, many countries have guided and promoted the development of specific industries through government subsidies (Chen et al, 2021). Government subsidies serve as "invisible credit guarantees" for start-ups, giving them an excellent reputation, credibility, and reliability.…”

Investimento Direto Chinês no MERCOSUL:

“…91-105 converge with the Belt and Road Initiative objectives?Source: American Enterprise Institute, 2023The above information shows that Chinese FDI in MERCOSUR countries is most prevalent in the energy sector, which is intimately tied to infrastructure development(WANG et al, 2020), apart from being one of the sectors suffering from excess capacity within the Chinese market (LIN; KHARL; LIU, 2018). That is also the case with transportation(CHEN et al, 2022), railways (LIN; KHARL; LIU, 2018), and aviation (BIALA; CHENG KA LAR, 2002) sectors.…”