R&D, FINANCIAL CONSTRAINTS AND PRODUCTIVITY: EVIDENCE FROM THE CHINESE INDUSTRIAL ENTERPRISES

Mingli Xu (), Wei Yang, Lirang Pang () and Dongmin Kong ()
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Mingli Xu: School of Public Administration, South China Normal University, Guangzhou 510006, China
Wei Yang: School of Business, East China University of Science and Technology, Shanghai 200237, China
Lirang Pang: School of Economics, Huazhong University of Science and Technology, Wuhan 430074, China
Dongmin Kong: School of Economics, Huazhong University of Science and Technology, Wuhan 430074, China

The Singapore Economic Review (SER), 2020, vol. 65, issue 04, 947-967

Abstract: Using a unique dataset from National Bureau of Statistics of China, we estimate the total factor productivity (TFP) of enterprise and explore the relationship among research and development expenditures (R&D), financial constraints and TFP. We find that: First, R&D has a significantly lagged effect on the improvement of TFP. Second, the R&D fails to improve the contemporaneous productivity and negatively impacts on contemporaneous TFP. Third, financial constraints significantly reduce the improvement effect of R&D on TFP, and this kind of marginal effect has significant difference between state-owned enterprises (SOEs) and private enterprises (Non-SOEs). This study offers important policy implications by showing that: First, firms can obtain long-term benefits from continuous R&D expenditures. Second, the government should release appropriate policies to ease financial constraints, especially for the Non-SOEs.

Keywords: Research and development (R&D); total factor productivity (TFP); financial constraint; China (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1142/S0217590817500126

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