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Establishing science parks everywhere? Misallocation in R&D and its determinants of science parks in China

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  • Yang, Chih-Hai
  • Lee, Wen-Chieh

Abstract

The establishment of science parks is a vital strategy to develop high-tech industries and facilitate innovations in China. The success of a science park depends heavily on its supportive environment, suggesting that it is hard to replicate everywhere, while China has established many science parks across regions in the past decade. This study evaluates the degree of misallocation in research and development (R&D) and its determinants across science parks in China. Based on an unbalanced panel data of 145 science parks for the period 2007–2014, we find that the overall R&D efficiency has decreased sharply since 2011 when China began to initiate many new science parks. The newly constructed science parks exhibit a lower R&D efficiency than their incumbent parks, suggesting a considerable misallocation in R&D resource caused by expanding science parks everywhere. We further investigate the determinants of R&D misallocation and find that park characteristics and environmental characteristics matter. Parks which are larger, older, and having a higher human quality experience a lower R&D misallocation. Parks with closer R&D collaboration with universities or research institutes, particularly with universities, exhibit a lower R&D misallocation.

Suggested Citation

  • Yang, Chih-Hai & Lee, Wen-Chieh, 2021. "Establishing science parks everywhere? Misallocation in R&D and its determinants of science parks in China," China Economic Review, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:chieco:v:67:y:2021:i:c:s1043951x21000237
    DOI: 10.1016/j.chieco.2021.101605
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    Cited by:

    1. Alberto Albahari & Andrés Barge-Gil & Salvador Pérez-Canto & Paolo Landoni, 2023. "The effect of science and technology parks on tenant firms: a literature review," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1489-1531, August.
    2. Chen, Guowen & Herrera, Ana María & Lugauer, Steven, 2022. "Policy and misallocation: Evidence from Chinese firm-level data," European Economic Review, Elsevier, vol. 149(C).
    3. Yu, Chin-Hsien & Wu, Xiuqin & Zhang, Dayong & Chen, Shi & Zhao, Jinsong, 2021. "Demand for green finance: Resolving financing constraints on green innovation in China," Energy Policy, Elsevier, vol. 153(C).

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    More about this item

    Keywords

    Science Park; R&D; Misallocation;
    All these keywords.

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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