An Empirical Study On The Relationship Between Government Subsidies And R&D Intensity

The current international competition focuses on the competition of scientific and technological innovation ability.To improve the international competitiveness of the country and enterprises,it is necessary to raise the technical level.R&D is the source of new technology.However,due to the "market failure" phenomenon,many companies are not actively involved in the R&D innovation projects,which requires government intervention.In recent years,the effortsof relevant China’s government subsidies areincreasing,and lots of capital flowing into the enterprise each year.But are these funds as the government expected,reducing the risk of R&D,enhance the confidence of enterprise,or resulting in a crowding-out effect of R&D activitiesbecause of the government research grants? More importantly,due to China’s vast territory,there are huge differences between regions,are these subsidies of the government to different regions produce the same effect? Furthermore,resources are scarce and the government-controlled resources are limited,which requires the government to determine which companies to subsidize in advance before investing,only in this way can maximize the impact of government R&D subsidies.Based on the regional analysis,the paper conducts an empirical study on the relationship between government subsidies and firm R&D intensity.The paper draws following conclusions through empirical analysis;(1)There is a big difference in China’s R&D intensity and the level of government subsidies between regions.(2)There is a positive relationship between government subsidies and the intensity of R&D of high-tech enterprises.(3)From the regional point of view,consistent with the overall results,the government subsidies and R&D intensity showed a significant positive correlation between either the eastern region,the central region,or the western region.Compared to the central and western regions,government subsidies to the eastern region can have a greater leverage on R&D intensity.(4)After the subdivision of the eastern region,consistent with the overall results,this study found that government subsidies among the Beijing-Tianjin-Hebei region,the Yangtze River Delta region and the Pearl River Delta also has a leverage effect on the strength of corporate’s R&D input.Besides,Compare with the Yangtze River Delta region and the Pearl River Delta region,the government subsidies to the Beijing-Tianjin-Hebei region can have a greater leverage on R&D intensity.