Abstract
This paper investigates the impact of research and development (R&D) subsidies on R&D inputs and their wider economic effects. The empirical analysis employs a structural vector autoregressive (VAR) model using a panel of Chinese provinces during the 2000–2010 time period. In support of a partial crowding-out view, public R&D subsidies allocated to large and medium-sized enterprises (LMEs) are found to increase total R&D inputs proxied by total R&D personnel, despite reducing privately-financed R&D inputs. Specifically, we find that an increase of R&D subsidies by one standard deviation decreases private R&D expenditures in LMEs by 6.5%, but increases total R&D personnel in LMEs by 2.6%. We also find evidence that the effects of R&D subsidies extend beyond their main effect on corporate R&D, promoting technological upgrading, capital deepening, and economic growth. We further find evidence suggesting some misallocation of research-oriented public funds. The findings help shed important insights into the ongoing debate regarding the role of the state in promoting innovation in a transitioning economy context.
Original language | English (US) |
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Article number | 121212 |
Journal | Technological Forecasting and Social Change |
Volume | 174 |
DOIs | |
State | Published - Jan 2022 |
Keywords
- China
- Panel VAR
- R&D inputs
- R&D subsidies
- Regional development
ASJC Scopus subject areas
- Business and International Management
- Applied Psychology
- Management of Technology and Innovation