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Research and development fund allocation, high technology law, and firm investment choices

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  • Huynh, Anh Ngoc Quang

Abstract

The distance to the nearest innovation centers is used as an exogenous proxy to establish a causal relationship between research and development (R&D) fund allocation and firm investment choices. Analyzing listed firms in Vietnam (2006–2022), I found that as the distance from firms to these innovation centers increases, the effect of R&D on firm performance diminishes. Additionally, greater distances to innovation centers weaken the impact of R&D on firms' investment in intangible assets. My findings highlight significant geographical constraints on firms’ innovation efforts. They suggest that further proximity to innovation centers could affect firms’ R&D efficiency and widen their disparities in economic growth and innovation-driven productivity (Croce et al., 2012; Croce et al., 2019). Finally, the effect of Vietnam’s 2009 High Technology Law on firms’ investment choices was also examined.

Suggested Citation

  • Huynh, Anh Ngoc Quang, 2025. "Research and development fund allocation, high technology law, and firm investment choices," Economics Letters, Elsevier, vol. 253(C).
    • Handle: RePEc:eee:ecolet:v:253:y:2025:i:c:s0165176525002162
    DOI: 10.1016/j.econlet.2025.112379
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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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