Does government R&D stimulate or crowd out firm R&D spending? Evidence from Chinese manufacturing industries

Abstract

We examine whether receiving a government R&D grant stimulates or crowds out a firm’s own R&D spending in Chinese manufacturing industries. Using a database that spans the population of large and medium size privately owned Chinese manufacturing firms for the period from 2007 to 2011, a matching estimator and a matching and difference in‐differences estimator, we find a large firm R&D promoting effect of government R&D: receiving a government R&D grant led to a 4 to 9‐million‐yuan increase in a firm’s own R&D expenditures. This is a significant effect since the average R&D expenditures ranged from 5 to 9 million yuan in the year before receiving the grant. To understand the mechanisms behind this effect, we compare the before‐ and after‐treatment performance and behaviour of the treated and the control firms. We find that the government R&D receiving firms became more profitable following their receipt of the grant. We also find that receiving a government R&D grant increases the likelihood of a firm continuing its R&D performance after receiving the initial grant.

Effective Financing of Environmentally Adjusted Multifactor Productivity Growth in Sustainable Development Framework – An International Comparative Study

“…Based on the previous mentioned studies, as output variable, the environmentally adjusted multifactor productivity growth measured (in %) is used. As inputs, to analyse countries efficiently in using human sources in R&D and public/private R&D spending, following variables were used:  R&D personnel -RDPER (per thousand labour force) that are commonly expected as a key to higher productivity (Zhang et al, 2003);  Business enterprise expenditure on R&D -BERD (in % of GDP) because private sector innovation and R&D activities and expenditures substantially contribute to sustainable productivity and growth (Hud & Hussinger, 2015);  Government expenditure on R&D -GOVERD (in % of GDP) that support firms' innovation and cooperation that could lead to other positive effects influencing countries productivity (Hu & Yongxu, 2019). In research, also the control variable was engaged.…”

Do government subsidies crowd out technological capabilities?

“…Based on RBV, subsidies are the resources allocated to firms by the government to reduce innovation risk and overcome other innovation barriers (Einiö, 2014; Howell, 2017). Prior research studies have mainly focused on how the subsidies directly affect firms innovation and also found that the subsidies indeed trigger R&D investment (Hottenrott and Lopes-Bento, 2014; Hu and Deng, 2019), stimulate innovation cooperation or activity (Beck et al , 2016; Szücs, 2018) and foster innovation performance (Bronzini and Piselli, 2016; Deng et al , 2019; Jia and Ma, 2017; Sung, 2019).…”

“…Particularly, governments often offer the subsidies for firm innovation to aim at incentivizing innovation and pushing an optimal allocation of innovation resources (Beck et al , 2016). Despite the prevalence and importance of the subsidies to firm innovation (Hu and Deng, 2019; Jia and Ma, 2017; Sung, 2019; Szücs, 2018), some studies have paid increasing attention to their crowding-out effects. The crowding-out effects are usually referred to the following two phenomena: The use of one decreases the use or participation of the other (Bahal et al , 2018; Chakraborty et al , 2018; Huffman and Bognanno, 2017; Weche, 2018); and The use of one eliminates the benefits or positive roles of using the other (Cao and Lumineau, 2015; Fong et al , 2019; Gubler et al , 2016; Hunt and Fund, 2016).…”

A digitális nagy ugrás. Lassulás és modernizációs stratégiaváltás Kínában

“…a szakirodalom és a statisztikák elemzése alapján megállapítható, hogy Kína látványos eredményeket ért el a "digitális nagy ugrásra" és a mesterséges intelligenciára alapozott gazdaságfejlesztési stratégiájával. a gazdaság fejlettségét tükröző elsődleges ("felszíni") mutatók történelmileg páratlanul rövid idő alatt kiemelkedő mértékben javultak, ami még annak ellenére is lenyűgöző teljesítmény, hogy az elemzők többsége joggal hívta fel a figyelmet arra, hogy ezt az eredményt talán lassabban, de mindenképpen jóval kevesebb erőforrással, hatékonyabban is el lehetett volna érni (Hong és szerzőtársai [2016], Howell [2017], Wei és szerzőtársai [2017]ellentétes véleményt képvisel Hu-Yongxu [2019]). nem csupán a "felszíni" mutatók tükrözik, hogy a kínai gazdaság a fejlett tudásgazdaságokhoz közelít: az utóbbi fél évtizedben egyre inkább láthatóvá vált, hogy kezdenek beérni az intenzív fejlődés érdekében tett extenzív erőfeszítések 22 gyümölcsei.…”