Investigating the effect of government subsidies on enterprise research and development

Governments design and implement policies to achieve various goals. Still, perhaps none are as pressing shifting national economies away from non-renewable fuels towards more sustainable, environmentally-friendly technologies. To incentivize such transitions, governments provide subsidies private public companies innovate, i.e., engage in research development (R&D). However, it can be asked if using government (GS) actually perform R&D, the answer will determine effectiveness of policies. This paper seeks this question by investigating Chinese lithium-ion battery (LiB) firms GS they receive. Hausman tests, fixed- random-effects models, Generalized Method Moments confirmed a positive but weak correlation between R&D determined patent output (PO). Interestingly, observations information flow suggested that also affected other variables net profit main business income. suggests awarded for higher PO, corresponding increase its expected growth company performance is not occurring. It indicators than PO used may use metric apply GS, rather performing leads technological breakthroughs.