The Impacts Of Public S&T Expenditure On Business S&T Investment: Evidence From China

Public funding for Science and Technology (S&T) activities is importanceresources of innovation in our society. But whether public S&T expenditurecomplements or substitutes business S&T investment is still a dispute. There are lotsof empirical evidences about this topic in western countries that often contradict witheach other; however empirical evidences from china are still insufficient evidence. Sothe paper tries to provide evidence from china at macro-level.The paper first reviews literatures in western countries, then discuss theoreticalchannels by which the public S&T expenditures impacts on business own S&Tinvestment. Then the paper presents layout of S&T expenditures in recent China. Andthe paper set up an econometric model, and estimates aggregate effects on businessown S&T investment of such public funding instruments by panel dataset whose dataare collected from 31 provinces in china mainland except Tibet for the period1997-2004.Our empirical evidence shows most instruments, including governmental grantand S&T favorable S&T loan to business sector, R&D expenditure of basic andapplied research performed by higher education system, and public R&D expenditureof experimental development, have significantly positive effect on business own S&Tinvestment, except R&D expenditure of projects performed by national laboratorysystem. And our econometric results shows there are significant interaction betweenpolicy effects of such kinds of public S&T expenditures on business own S&Tinvestment. Finally, the paper find that the policy effects of one kind of public S&Texpenditure is concerned with its stability.