Analysis On The Influence Of R & D Investment Of High - Tech Industry On Economic Environment And Financing Limitation

The relationship between R&D expenditure and the business cycle is a significant academic topic, which can provide a theoretical basis for the government’s science and technology policies, and give the entrepreneurs some instrucions on the allocation of long-term and short-term capital. R&D investment is one of the important bridges between business cycle and long-term economic growth. According to Schumpeter, the opportunity cost hypothesis could explain R&D counter-cyclicality, which can increase the long-term labor productivity. On the other hand, cash flow hypothesis is reasonable for pro-cyclicality. But various recent empirical researches may not always support either theory, for there are different R&D cyclical characteristics among industries or before and after the economic crisis.After2008financial crisis, the economic transition in China is on the way, to change the structure of the industrial chain and to make China powerful in the international market. So the key point is to improve the R&D investment in high-tech industries. At present, the R&D expenditure in China’s high-tech industries is higher than that in traditional industries, but compared with foreign countries it is still not enough. So the policy-makers begin to concern about the effect of economic booms and recessions on R&D, and the inside mechanism of it.In this essay we use the empirical study and testify the effect of business cycle on R&D investment via high-tech industrial data and firm-level data, to explore the effect of high-tech R&D intensity affected by the volatility of economic environment and credit constraint. The result shows that in the high-tech firms of China, the R&D expenditure is pro-cyclical and it is constrained by the cash flow. The funding of high-tech R&D investment mainly comes from the enterprises rather than the government as it is more efficient for the return pressure. The result from micro data indicates that the internal profit accumulation is used to allocate the profit and invest in short term, while the external credit funding (including lending and stock) would increase R&D intensity, in order to enhance the enterprises’long-term labor productivity.