Corruption, Government Subsidies, and Innovation: Evidence from China / Lily Fang, Josh Lerner, Chaopeng Wu, Qi Zhang.

Format:

Book

Author/Creator:

Fang, Lily.

Contributor:

National Bureau of Economic Research.

Lerner, Josh.

Wu, Chaopeng.

Zhang, Qi.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25098.

NBER working paper series no. w25098

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Corruption, Government Subsidies, and Innovation

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

Governments are important financiers of private sector innovation. While these public funds can ease capital constraints and information asymmetries, they can also introduce political distortions. We empirically explore these issues for China, where a quarter of firms' R&D expenditures come from government subsidies. Using a difference-in-differences approach, we find that the anticorruption campaign that began in 2012 and the departures of local government officials responsible for innovation programs strengthened the relationship between firms' historical innovative efficiency and subsequent subsidy awards and depressed the influence of their corruption-related expenditures. We also examine the impact of these changes: subsidies became significantly positively associated with future innovation after the anti-corruption campaign and the departure of government innovation officials.

Notes:

Print version record

September 2018.