Abstract
Government research and development (R&D) subsidy is one of the main policy instruments to deal with market failure, and its effectiveness has attracted attention increasingly. This study investigates the impact of two types of government R&D subsidies on innovation using the data of Chinese listed enterprises from 2010 to 2016. We find that compared with ex-post rewards, ex-ante grants have a better effect on innovation performance by stimulating private R&D investment. Additionally, the effectiveness of government R&D subsidies is weakened in enterprises engaging in rent-seeking and political connections. This study provides a new perspective for understanding the effect of government R&D subsidies, and the research conclusions are the relevant reference for the government to improve the efficiency of allocating public funds.
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Notes
Data source: National Bureau of Statistics of China http://data.stats.gov.cn
The industry distribution of the sampled enterprises is shown in Appendix A. In this study, 79.1% of the sampled GEM enterprises belong to high-tech industries defined by the China National Bureau of Statistics.
CSMAR database: http://www.gtarsc.com/.
RESSET database: http://www.resset.cn/.
The larger the index (Mkt) is, the higher the level of marketization will be. Since the indexes for 2015 and 2016 have not been announced, this study adopts data from 2008 to 2014 to estimate the marketization index in the former two years using the exponential smoothing forecasting method.
National Bureau of Statistics of China: http://data.stats.gov.cn
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This work was supported by the National Natural Science Foundation of China (Grant No.: 72004150) and the Fundamental Research Funds for the Central Universities of Sichuan University (Grant No.: skbsh2020-06).
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Appendix A: Industry distribution of the sampled enterprises
Appendix A: Industry distribution of the sampled enterprises
Industry description | Frequency | Percent |
|---|---|---|
Chemical raw materials and chemical products | 79 | 7.82 |
Medicine | 93 | 9.21 |
General-purpose equipment | 52 | 5.15 |
Special-purpose equipment | 110 | 10.89 |
Transportation equipment | 22 | 2.18 |
Electrical machinery and equipment | 112 | 11.09 |
Computers, communications and other electronic equipment | 164 | 16.24 |
Measuring instruments and machinery for cultural activity and office work | 37 | 3.66 |
Information transmission, software and information technology | 129 | 12.77 |
Others | 212 | 20.99 |
Total | 1010 | 100 |
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Liu, S., Du, J., Zhang, W. et al. Opening the box of subsidies: which is more effective for innovation?. Eurasian Bus Rev 11, 421–449 (2021). https://doi.org/10.1007/s40821-020-00178-2
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DOI: https://doi.org/10.1007/s40821-020-00178-2