How to assess the effectiveness of industrial policies?

Lin Yifu and Zhang Weiying's industrial policy "The Debate of the Century" has gone beyond the discussion of the economics field and has become a hot topic in the country. The core of the academic debate between Lin and Zhang is that "the industrial policy is effective", the essence is in the analysis The boundary between the government and the market, I am engaged in industrial policy and planning, and the 2016 Sidi Academic Annual Meeting will be the subject of discussion on the effectiveness of industrial policy. This article will give you some ideas for discussion.

First, is it necessary for the state to formulate industrial policies?
The American economist Coase starts from the concept of transaction costs to explain the root causes and boundaries of the company. Coase believes that there are costs in the market operation, including price search costs, market transaction negotiations and contract fees, etc. If the market arranges the cost of coordinating resources Exceeding the cost of internal management resources, the resource allocation of internal management is very necessary. With this academic achievement, Coase won the Nobel Prize in Economics.
A good company can stand out from the competition of many companies and must have strategic goals and management methods. In the same way, on the basis of division of labor, political recognition and cultural identity, a country will gradually be formed. If the country wants to pursue it, it will not follow the trend and avoid the survival dilemma of “800 million shirts for an Airbus aircraft”. We must strive for our own strategic goals like a company, combine the global economic development trend, and tap the country's superior resources to be able to stand in the world's national forest with a more stalwart posture.

Second, what is the pursuit of industrial policy?
In the battle of the commercial sea, most enterprises can only achieve average profits, and some enterprises have made rapid progress and become the leader in the industry and the field. Because the company has set a strategic goal that is suitable for the market, mobilize the company's resources to focus on solving problems and realize its products. Market value (famousness, occupancy, etc.) ultimately achieved the company's profitability.
The ultimate goal of the state to formulate industrial policies is to improve the country's comprehensive competitiveness, give play to its own resource factor endowment advantages, encourage or inhibit certain activities, and promote the development of specific industries through the formulation of policy measures. It should be noted that at present, the world-class products of manufacturing industries that have been cultivated in China are closely related to industrial support, such as high-speed rail, nuclear power, aerospace, and marine engineering. These industries have profoundly affected the economic life of people across the country.
The criterion for evaluating an industrial policy is not to make money, but to have obvious spillovers in the industry. An industry has a strong spillover, and even if there is no investment income, the state should invest. For example, the space utilization technology involving national and industrial security has long been monopolized by the US GPS in the global satellite navigation market. After more than a decade of continuous support, China's Beidou Navigation System (BDS) has occupied a place in the global space development camp. For products like Beidou, the profitability of GPS will be magnified hundreds of times, such as increasing the authorized price of GPS chips in each of our mobile phones. At present, the rise of the Beidou industry has driven the industry's upstream antennas, chips, software and other industries. The downstream applications are becoming more and more extensive, from defense expansion to aerospace, agriculture, geology and many other fields. The investment in the scale of this basic application should be said to rely solely on national industrial policies for investment and support.
The first category is the key technology for tackling basic and commonalities. Basic common technology is the bottleneck restricting the competitiveness of a country. For example, in the manufacturing sector, industrial bases such as molds and CNC lathes constrain China's industrial quality. In January 2016, Premier Li Keqiang said that China has not been able to produce mold steel so far. For example, the “ball” of ballpoint pens needs to be imported. Therefore, accelerating the improvement of industrial base capacity and promoting industrial strength is an urgent task to enhance China's industrial core competitiveness. Industrial strong foundation projects (key basic materials, core basic components, advanced basic processes, industrial technology foundation, referred to as industrial “four” "Base" has become the technical direction of key industrial policy research.
The second category is the development of forward-looking future technologies. In the criticism of many industrial policies, the doubts mainly focus on the government's support for future scientific and technological innovation. Due to the uncertainty of scientific and technological innovation, the industrial policies that support the future scientific and technological progress are supported by the direction, the main body of implementation, and the implementation effect. , all have high risks. For example, although people have reached a consensus on the revolution in energy use, they have not recognized the major scientific and technological issues such as the application mode of photovoltaics and light and heat, and the development path of new energy vehicles. In the fuzzy stage, the state supports these industries. It is necessary to bear the policy risks brought about by the uncertain development track of the industry.

The third is how to realize the industrial policy?
Good things don't go out, bad things pass thousands of miles, and people's doubts about the effectiveness of industrial policies are that there are certain problems in individual industrial policies. Therefore, at present, whether or not there is a necessary debate on industrial policy, its intent and preoccupation is to establish an assessment of China's industrial policy.
Every year, China has formulated a large number of industrial policies, which consume a lot of resources, land, talents, and factors. After each government takes office, it has to formulate a large number of industrial policies. Each industry has a basket of industrial policy documents. From each five-year plan to the implementation rules, to the specific support policy documents, this requires a large amount of human and material resources.
The problem now is that the government lacks some reflection on industrial policies. Various industrial policies have analyzed the development status and trends of the industry, and various measures have been introduced, and the policies have been implemented. However, after five or ten years, what is the effect of policy implementation, whether there are side effects, and these reflections. It is only sporadic in the folk. With the change of government, leadership change, a new round of industrial support will be carried out, or reinvented, or abandoned, and a complete assessment of the policies that have been implemented is rarely carried out.
In essence, the suspicion of industrial policy is the supervision of the government, and it is an incentive to the government to ask the government how to formulate industrial policies more scientifically. This puts higher demands on the administrative capacity of the government. It must not only simplify the administration of power, but also deepen the reform of the system and mechanism, fully absorb the opinions of the industry, fully accept the supervision of the media, open the black box of industrial policy formulation, and evaluate the implementation of the field. The merits of industrial policy, summing up lessons and learning, and drawing on good working methods.
Therefore, the industrial policy should be transparent in the process of publicity and implementation in the formulation process, and there must be an assessment link to achieve objective and coherent assessment of policy effectiveness, through the mid-term evaluation of industrial policy implementation and the final implementation effect after several years. Assessment, accumulate experience for future industrial policy implementation.
(The author of this article: Associate Researcher, CCID Think Tank.)

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