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China's Technology Subsidies - Much ado about nothing?

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  • Böing, Philipp

Abstract

This study investigates the allocation and effect of technology subsidies on R&D activities and technology acquisitions of Chinese domestic firms. We exploit novel firm data which includes information on subsidies, R&D, patents, trade, and balance sheet indicators. Conditional difference-in-difference estimation confirms that the innovation policy of China s government follows a picking-the-winner strategy. Technology subsidies are allocated to minority state-owned and privately owned firms which have high-tech inventions, high profitability, and compete with foreign firms in domestic industries. However, we find almost no evidence which confirms that technology subsidies incentivize an increase in R&D intensity or technology acquisition. There is weak evidence for a positive effect of consecutive treatments.

Suggested Citation

  • Böing, Philipp, 2014. "China's Technology Subsidies - Much ado about nothing?," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100536, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc14:100536
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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