 How does China’s industrial policy affect firms’ R&D investment? Evidence from ‘Made in China 2025’Huwei Wen and Zhao Zhao Applied Economics, 2021, vol. 53, issue 55, 6333-6347 Abstract: Aimed at improving innovation capacity and upgrading technology of manufacturing industry, ‘Made in China 2025’ (CM2025), which relies on selective industrial policies, has attracted great attention. This paper investigates the effects of CM2025 on firms’ R&D investment using CEM-DID, a combination method based on the coarsened exact matching and the difference-in-difference. The method can effectively identify causal relationships without suffering from selection bias. Employing a panel data of 1,440 Chinese A-share listed firms from 2012 to 2018, we find firms with core business covered by the areas of CM2025 increase their R&D investment significantly after the policy intervention. Moreover, CM2025 significantly increases government subsidies and financial loans for treated firms, and both effects are larger for SOEs. This finding supports the critique that CM2025 goes against the competitive neutrality principle. No increase in innovation output and total factor productivity is found in the short-term. Our findings are enlightening for enacting better industrial policies. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:53:y:2021:i:55:p:6333-6347 Ordering information: This journal article can be ordered from DOI: 10.1080/00036846.2020.1717429 Access Statistics for this article Applied Economics is currently edited by Anita Phillips More articles in Applied Economics from Taylor & Francis Journals |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.