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Funding forms, market conditions, and dynamic effects of government R&D subsidies: evidence from China

Guo, Di; Guo, Yan; Jiang, Kun

Authors

Di Guo

Yan Guo

KUN JIANG Kun.Jiang@nottingham.ac.uk
Associate Professor



Abstract

© 2016 Western Economic Association International We examine various factors that influence the effects of government-subsidized research and development (R&D) programs on firm productivity. Based on a panel dataset of Chinese firms, we find the effects of the Innovation Fund for Small and Medium Technology Based Firms (Innofund) are dynamic over time and are heterogeneous depending on funding forms and the level of marketization and economic development across regions. In general, Innfound has significant and positive effects on firm productivity in both the short and long run. However, the short-term effects of Innofund are stronger than the long-term ones. Additionally, the positive effects of Innofund are stronger for firms backed by interest-free bank loans than those supported by appropriation. Meanwhile, Innofund has stronger positive effects in provinces that are less market-oriented or less developed economically. Finally, the short-term effects of Innofund stay stronger than the long-term ones even after we control the funding forms and the market conditions across regions. Identification and selection concerns are addressed through the propensity score matching approach and two-stage estimation. (JEL G28 O38 H76).

Journal Article Type Article
Publication Date 2017-04
Journal Economic Inquiry
Print ISSN 0095-2583
Electronic ISSN 1465-7295
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 55
Issue 2
Pages 825-842
APA6 Citation Guo, D., Guo, Y., & Jiang, K. (2017). Funding forms, market conditions, and dynamic effects of government R&D subsidies: evidence from China. Economic Inquiry, 55(2), 825-842. https://doi.org/10.1111/ecin.12395
DOI https://doi.org/10.1111/ecin.12395
Publisher URL http://onlinelibrary.wiley.com/doi/10.1111/ecin.12395/abstract
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is the peer reviewed version of the following article: Guo, D., Guo, Y. and Jiang, K. (2017), FUNDING FORMS, MARKET CONDITIONS, AND DYNAMIC EFFECTS OF GOVERNMENT R&D SUBSIDIES: EVIDENCE FROM CHINA. Economic Inquiry, 55: 825–842. doi: 10.1111/ecin.12395, which has been published in final form at http://doi.org/10.1111/ecin.12395. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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