Do Innovation Subsidies Make Chinese Firms More Innovative? Evidence from the China Employer Employee Survey / Hong Cheng, Hanbing Fan, Takeo Hoshi, Dezhuang Hu.

Format:

Book

Author/Creator:

Cheng, Hong.

Contributor:

National Bureau of Economic Research.

Fan, Hanbing.

Hoshi, Takeo.

Hu, Dezhuang.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25432.

NBER working paper series no. w25432

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

The Chinese government has been using various subsidies to encourage innovations by Chinese firms. This paper examines the allocation and impacts of innovation subsidies, using the data from the China Employer Employee Survey (CEES). We find that the innovation subsidies are preferentially allocated to state owned firms and politically connected firms. Of these two (state ownership and political connection), political connection is more important in determining the allocation. We also find that the firms that receive innovation subsidies file and receive more patents, are more likely to introduce new products, but do not necessarily file and receive more patents abroad. Finally, the firms that receive innovation subsidies do not have higher productivity, more profits, or larger market shares. Overall, the results point to inefficiency of allocation of innovation subsidies and show that the subsidies encourage only incremental innovations and not radical ones.

Notes:

Print version record

January 2019.