Abstract: Under the current institutional and regulatory framework, it is a dilemma to determine how local governments can promote economic development through investment attraction activities while not hindering the construction of a unified national market. By analyzing the practical logic behind the shift from a preferential policy-based investment attraction model to a fund-based investment attraction model, this study reveals the potential negative impacts of the fund-based investment attraction model on the construction of a unified national market and proposes corresponding prevention and control measures. The research points out that the fund-based investment attraction model does not fundamentally change the basic logic of competition among local governments. Instead, it merely repackages subsidy policies as investment competition, and deep-seated issues such as homogenization, short-termism, and administrative intervention still persist. Fund-based investment attraction has become a suboptimal choice for investment attraction, which needs to be understood from the combined constraints of local governments' institutional structure-capability structure-time structure. The fund-based investment attraction model represents a path dependence and practical compromise in institutional evolution. At this stage, without denying the basic functions and roles of fund-based investment attraction, it may be a transitional choice for local governments to ultimately move towards an institution-service-ecology investment attraction approach in the process of promoting the construction of a unified national market, through measures such as unifying government behavior standards, de-risking fund-based investment attraction projects, and establishing a full lifecycle service chain for construction projects.
