Governance and Effects of Public R&D Subsidies: An Evidence from China

69 Pages Posted: 27 Jun 2014 Last revised: 16 Dec 2016

See all articles by Di Guo

Di Guo

Brunel University London

Yan Guo

Peking University

Kun Jiang

University of Roehampton

Date Written: December 12, 2016

Abstract

We examine whether and how government-subsidized R&D programs affect the productivity of firms. On the basis of a panel dataset of Chinese firms, we estimate ex-ante and ex-post effects of the Innovation Fund for Small and Medium Technology-based Firm (Innofund), one of the largest Chinese government programs that support corporate R&D activities. Furthermore, a quasi-experiment environment is used to investigate how the governance of Innofund influences the aforementioned effects. We find that Innofund chooses to support productive firms, and the productivity improvements of these firms are further magnified after they win government support. The ex-post effects of Innofund are stronger when the governance of the government program is more decentralized than before. Identification problems are addressed with various approaches.

Keywords: government R&D program, productivity, governance, decentralization

JEL Classification: O3, H71, G28

Suggested Citation

Guo, Di and Guo, Yan and Jiang, Kun, Governance and Effects of Public R&D Subsidies: An Evidence from China (December 12, 2016). Available at SSRN: https://ssrn.com/abstract=2459298 or http://dx.doi.org/10.2139/ssrn.2459298

Di Guo (Contact Author)

Brunel University London ( email )

Kingston Lane
Uxbridge
United Kingdom, London Ub8 3PH
United Kingdom

HOME PAGE: http://https://www.brunel.ac.uk/people/di-guo

Yan Guo

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Kun Jiang

University of Roehampton ( email )

Roehampton Lane
London, SW15 5PU
United Kingdom

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