This study investigates the allocation of China's R&D subsidies and its effectiveness in stimulating firms' own R&D investments for the population of Chinese listed firms throughout the time period 2001 to 2006. For allocation, we find that firm participation is determined by prior grants, high quality inventions, and minority state-ownership. Provincial variation in China's transition towards a market-driven economy reveals that R&D subsidies are less often distributed by more market-oriented provincial governments and that China's innovation policy is more supportive of firms located in developed provinces. Considering effectiveness, we find that grants instantaneously crowd-out firms' own R&D investments but are neutral in later periods. In 2006, one public RMB reduces own R&D investments made by firms by half a RMB. For repeated recipients, high-tech firms, and minority state-owned firms grants have an insignificant effect.

China's R&D subsidies: Allocation and effectiveness

In order to develop the biomedical industry, government subsidy of biosimilars is an incentive policy which has been used by the government. Different government subsidy strategies have an impact on drug price, consumer surplus, social welfare, the income of biosimilars enterprises and the demand of biosimilars, which have been deeply analyzed through backward induction of the dynamic game theory. The analysis shows that the price coefficient and the influence of the subsidy on demand will affect the choice of government subsidy strategies. It is concluded that under different subsidy strategies, consumer surplus, social welfare and the income of biosimilars enterprises are positively correlated with the amount of subsidy per unit product. This paper provides a decision-making basis for developing government subsidy strategies scientifically.

/pdf/government-subsidy-strategies-for-biosimilars-r-d-based-on-36mxw8jobo.pdf

Government Subsidy Strategies for Biosimilars R&D Based on Dynamic Game Theory

Figuring out how government innovation incentive policies affect the GVC (global value chain) position at a micro level is essential for choosing anaccurate policy to encourage self-dependent innovation. We examined whether and how China’s preferential tax policies enhance the GVC position of firms via firm-level data using the method of difference in differences (DID), taking the tax reduction and exemption policy of high-technology enterprises as an example. In addition, the firm heterogeneity of different factor intensities and regions was also examined. The empirical results show that, firstly, the tax reduction and exemption policy of high-technology enterprises has a significant positive impact on the firm GVC position. Secondly, this positive effect is more prominent in labor-intensive firms, capital-intensity firms and eastern enterprises. Thirdly, analysis of the mechanism indicated that the tax reduction and exemption policy of high-technology enterprises improves the firm GVC position by stimulating growth in production efficiency.

/pdf/will-the-tax-reduction-and-exemption-policy-for-high-2t9qg67s.pdf

Will the Tax Reduction and Exemption Policy for High Technology Enterprises Improve the GVC Position of Chinese Firms?

This study presents a proposal to improve public policies for supporting innovation in Brazil’s automotive industry by using a conceptual model with incremental benefits based on nudge concepts. Th...

An Exploratory Analysis of Possible Effects of “Nudge” On Public Policies to Support Innovation in Brazil: The Case of Inovar-Auto Program

Does credit market impede innovation? Based on the banking structure analysis

This paper aims to fill the gap in the extensive literature on the results of interaction between public and private R&D expenditures. Two types of public R&D subsidies, the appropriations and loan interest, are investigated in the effect of public subsidies by applying for a unique micro data set of Chinese manufacturing firms combined with the Innovation Fund for Small and Medium Technology-based Firms (Innofund). The results are consistent with the prediction that loan interest subsidies based on more competitive selective system are more effective for the public R&D subsidies than the appropriations. Firms’ heterogeneity, measured by state-owned enterprises (SOEs) and private-owned enterprises (POEs), is tested for the different impact of public subsidies on corporate R&D investment. The results show that the crowding-in effect is mainly driven by POEs, not by SOEs, which confirms the theoretical assumption by Aghion and Tirole that the agency problem play a dominant role in corporate R&D activities. ...

Do the types of subsidies and firms’ heterogeneity affect the effectiveness of public R&D subsidies? Evidence from China’s Innofund programme

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Do the types of subsidies and firms’ heterogeneity affect the effectiveness of public R&D subsidies? Evidence from China’s Innofund programme