Public Research Policeis And Absorptive Capability And Firms' R&D Activities

The modern theories of economic growth effectively explaining for economic growth in real world indicates, if the level of social optimal innovation can be well realized by the market system, the people will realize the rapid economic growth, while a large of theoretical analysis and empirical research proves that market system is hard to lead the private firms fulfill the socially expecting innovation activities, the level of social optimal innovation activities can not be self-realized by the market system. To realize the social optimal innovation activities, we should design some policies to modify the stimulating failure of market system for research and development activities.On the condition of much theoretic and empirical analysis all demonstrate the market system can hardly lead the firms realize the socially expecting innovation level, the popular economists mainly analyze how to improve the firm's innovation from two ways: one the hand it is improving the absorptive capability to increase the firms innovation, another hand it is the effective public research policies to encourage the firm do much more innovation activities. This paper will review the old research paper about innovation on the two ways, and we construct an integrated model for absorptive capability and public research policies on the base of analyzing the positive and negative effect of absorptive capability and public research policies on maximizing the innovation activities, the traditional public research policies are to carry some subsidy or tax preference on the firms' innovation activities, this kind of encouraging way is the basic reason of resulting in crowding or displacing effect, the most effective public research policies should carry some subsidy or tax preference on the factors which have some effect on the absorptive capability, this measure can stimulate the firms to improve own absorptive capability, and the improved absorptive capability will not only result in more lower output cost, but also bring more lower the effective spillovers. In fact, on the reasons of the subsidy strengthen is not positive relationship with the effective spillovers, but positive relationship with absorptive capability, the policy to subside absorptive capability will more improve the encouraging effect of the subsidy measure than to subside the spillover for its damage, this measure can ease the crowding or displacing effect resulted by the public research policies, the main reason of the crowding or displacing effect is that the firm will do more R&D activities for tax preference, while large government expenditure increase the cost of R&D activities and decrease the return of it, which will restrain the firm from engaging in R&D activities. If subsiding or giving tax preference for the absorptive capability, the absorptive capability will be strengthened, then the strength of the absorptive capability will reduce the crowding or displacing effect resulted by public research policies.Revealing the complement between the absorptive capability and public research policies on the theory, this paper will demonstrate empirically this complement is existed, the specific thought is constructing econometric model for the absorptive capability and public research policies on the base of choosing some factors (such as patent level, R&D expenditure, human resources, economic openness, FDI inflow) to measure the absorptive capability, which not only exams the effect of the absorptive capability on promoting R&D activities, but also exams their whole effect on R&D activities, and end up empirically demonstrating there is complement between absorptive capability and public research policies on encouraging R&D activities, and be the common force on improving the firms' innovation. As a developing country, China cannot unlimitedly increase the strength of public research policies on R&D activities, meanwhile because of own return is limited, the R&D expenditure of the firm is also limited, which on some degree shows China will introduce foreign advanced technology during some period to enhance absorptive capability for strengthening the firms innovation, while will be dependent on foreign technology on some degree. On the base of synthesizing two kinds of idea, this paper search to strengthen the complement between absorptive capability and public research policies, maximally perform their effect on improving innovation, and then form a new innovating road: public research policies should change to subside the absorptive capability from the R&D activities, which is public research policies should be bias on the strong absorptive capability of industries, make the policies must be done and must not be done, best perform the encouraging effect of public research policies on R&D activities, so as to fast improve the firms innovation of China.