Did government R&D subsidies increase Chinese firms’ trade margins? Evidence from Innofund program

Chengfeng Chen and Peiyuan Xu

Applied Economics Letters, 2021, vol. 28, issue 5, 397-401

Abstract: This study investigates the effects of government R&D subsidies on firms’ trade margins using a panel dataset for Chinese manufacturing firms during the period between 2001 ndto 2014. This study finds that an R&D subsidy increases Chinese firms’ propensity to begin exporting and increases existing exporters’ sales from export (across-firm trade margins). After disentangling firms’ export value at the product-country transaction level, this study further finds that government R&D subsidy increases firms’ both intensive margin and extensive margin (within-firm trade margins).

Date: 2021
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DOI: 10.1080/13504851.2020.1757608

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