What Types of Science and Technology Policies Stimulate Innovation? Evidence from Chinese firm-level data

Author Name ITO Asei  (University of Tokyo) /Zhuoran LI  (University of Tokyo) /Min WANG  (University of Electronic Science and Technology of China)
Creation Date/NO. September 2014 14-E-056
Research Project Global Markets and Japan's Industrial Growth
Download / Links


Since the Chinese government's rapid increase in expenditure on science and technology (S&T) during the 2000s, numerous related policies have been implemented by national-, provincial-, city-, and prefecture-level governments in China. Each level of government aims to promote innovation activities; however, few empirical evaluations have been conducted on each policy level and category. This paper estimates the treatment effects of innovation policies at each government level and category by using firm-level survey data from the inland city of Chengdu. Results suggest that S&T policies stimulate effective firm-level innovation activities; in particular, city-level policies and various government services. On the other hand, some policy categories, including tax incentives, seem to be inefficient. Restructuring the current policy menu and establishing further feedback mechanisms for S&T policy will improve the efficacy of such spending.