Do Government R&D Subsidies Stimulate Corporate R&D Investment? Evidence from a Quasi-natural Experiment

Ying Wu, Yi Zhang and Lihui Tian

Applied Economics Letters, 2023, vol. 30, issue 3, 280-284

Abstract: This paper examines the impact of Guangdong provincial R&D subsidies policy on corporate R&D investment.11Guangdong has ranked first in terms of GDP in all Chinese provinces for many years. There are 643 Chinese A-share stock market listed firms in Guangdong in 2019. Using a large sample of Chinese firms for the 2011–2017 period and DID methodology, we find that government R&D subsidies have a negative and significant effect on corporate R&D investment. Our findings are robust to a battery of sensitivity tests. Our study supports the ‘crowd out effect’ of government R&D subsidies.

Date: 2023
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DOI: 10.1080/13504851.2021.1983915

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