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

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  • Ying Wu
  • Yi Zhang
  • Lihui Tian

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.

Suggested Citation

  • Ying Wu & Yi Zhang & Lihui Tian, 2023. "Do Government R&D Subsidies Stimulate Corporate R&D Investment? Evidence from a Quasi-natural Experiment," Applied Economics Letters, Taylor & Francis Journals, vol. 30(3), pages 280-284, February.
    • Handle: RePEc:taf:apeclt:v:30:y:2023:i:3:p:280-284
    DOI: 10.1080/13504851.2021.1983915
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