China's Technology Subsidies - Much ado about nothing?

Philipp Böing

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: This study investigates the allocation and effect of technology subsidies on R&D activities and technology acquisitions of Chinese domestic firms. We exploit novel firm data which includes information on subsidies, R&D, patents, trade, and balance sheet indicators. Conditional difference-in-difference estimation confirms that the innovation policy of China s government follows a picking-the-winner strategy. Technology subsidies are allocated to minority state-owned and privately owned firms which have high-tech inventions, high profitability, and compete with foreign firms in domestic industries. However, we find almost no evidence which confirms that technology subsidies incentivize an increase in R&D intensity or technology acquisition. There is weak evidence for a positive effect of consecutive treatments.

JEL-codes: O30 O32 O38 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-cna, nep-cse, nep-ino, nep-tid and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100536

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