The Study Of Direct Government Funding For Corporate R&D Activities

In the background of the current science and technology economy,science and technology has become an important way to enhance thecountry’s competitiveness. As the main part of technologicalinnovation, the technological level of enterprises greatly affects thatof the entire country. However, due to the "market failure"phenomenon in technological innovation, the enthusiasm of R&Dactivities in enterprises will be inhibited to some extent, therefore, itis necessary for the government to take measures to encourage theseactivities. Currently, one of the most common measures taken bygovernments is to give direct financial subsidies to corporate R&Dactivities.In this paper, the author did a theoretical and empirical analysis tothe effect of government direct funding to corporate R&D inputs andoutputs in a macro perspective. Firstly, the author analyzed thenecessity of direct government funding of the enterprise theoreticallyand introduced our current R&D activities in the status quo and thecurrent policy of direct funding and its status in details and then theauthor summed up the problems of the lack of investment in R&D andthe basic research and the weakness of financing for SMEs when thegovernment subsidizes R&D activities directly. Secondly, by referring to some scholars’ research findings in related fields, the authoranalyzed and summarized some other factors besides governmentdirect subsidies that may have an impact on corporate R&D activities.Considering the availability of data in empirical part, the author onlyselected some factors which are easier to get the data, such as thefirm size, human capital, assets, debt levels and the amount ofearnings of innovative products. The results show that directgovernment financial subsidies will promote the R&D inputs andoutputs. As control variables, firm size, human capital, the level ofassets and liabilities and the amount of earnings of innovativeproducts also have some impact on corporate R&D activities. Finally,based on the findings of situation analysis and empirical analysis, theauthor advocates that in order to enhance our ability to innovatetechnology, attention should be paid to increase the funding size onbasic research, to establish a diversified funding system, to expandfinancing channels, and to protect corporate enthusiasm forinnovation and improve innovation efficiency by improving theintellectual property system.