Peer effects in R&D investments: evidence from China’s science and technology parks programs

Chujiang Xue and Yi Zhao

Applied Economics Letters, 2023, vol. 30, issue 1, 43-50

Abstract: We investigate whether science and technology parks (STPs) can stimulate on-park firms’ R&D investments and subsequently spread out to off-park peer firms. We employ a novel setting derived from a place-based policy: level upgrading of STPs, which sharply increases the park scale and policy supports granted to STPs. We use a difference-in-differences approach and regard firms in the same city but outside the park as the control group. Empirical evidence shows that firms undergoing STPs’ promotion will significantly increase their R&D investments, which further leads to peer firms outside the parks to also increase their R&D input due to the competitive pressures. Furthermore, this causal effect is not driven by the demonstration effects of megacity and industrial leaders. Our findings enrich the literature on the effectiveness of STPs and their externalities.

Date: 2023
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DOI: 10.1080/13504851.2021.1971616

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