Institute of Quality Development Strategy
Institutional Affiliation: Wuhan University
NBER Working Papers and Publications
|January 2019||Do Innovation Subsidies Make Chinese Firms More Innovative? Evidence from the China Employer Employee Survey|
with Hong Cheng, Hanbing Fan, Takeo Hoshi: w25432
The Chinese government has been using various subsidies to encourage innovations by Chinese firms. This paper examines the allocation and impacts of innovation subsidies, using the data from the China Employer Employee Survey (CEES). We find that the innovation subsidies are preferentially allocated to state owned firms and politically connected firms. Of these two (state ownership and political connection), political connection is more important in determining the allocation. We also find that the firms that receive innovation subsidies file and receive more patents, are more likely to introduce new products, but do not necessarily file and receive more patents abroad. Finally, the firms that receive innovation subsidies do not have higher productivity, more profits, or larger market shar...