The Impact of Enterprise R&D Investment and Government Subsidies on Technological Progress: Evidence from China’s PV Industry

Xiang Cai, Jing Li, Jun Wu, Haijing Zhang, Ping Chen and Xin Huang
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Xiang Cai: School of Business, Guilin University of Electronic Technology, Guilin 541004, China
Jing Li: School of Business, Guilin University of Electronic Technology, Guilin 541004, China
Jun Wu: School of Business, Guilin University of Electronic Technology, Guilin 541004, China
Haijing Zhang: School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing 210044, China
Ping Chen: School of Business, Guilin University of Electronic Technology, Guilin 541004, China
Xin Huang: School of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China

Energies, 2022, vol. 15, issue 12, 1-26

Abstract: China has become the major stakeholder in global photovoltaic (PV) technology. However, the existing mechanistic interpretation of “what promotes the technological progress of the Chinese PV industry” is controversial. This paper takes China’s A-share listed PV enterprises from 1999 to 2019 as the research sample and uses a panel fixed-effect regression model to empirically test the impact of research and development (R&D) investment and government subsidies on the technological progress of PV enterprises. The results show that there is an “N”-shaped nexus between R&D investment and technological progress, and most PV enterprises are in the climbing stage of the N-shaped curve. With the development of the PV industry, the nexus will undergo a transformation from inverted U-shaped to N-shaped, indicating that R&D investment is a key driver of PV technological progress. Yet, government subsidies are a “double-edged sword”. They have a significant positive direct effect on PV technological progress but also a negative moderating effect. Tax returns play a positive incentivizing role, while financial subsidies play a negative moderating role. This study provides a policy basis for the timely reduction of financial subsidies and increased R&D investment to promote technological progress in China’s PV industry.

Keywords: government subsidies; R&D investment; technological progress; PV industry; driving mechanism (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
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