The Heterogeneous Effects of Central and Local Subsidies on Firms’ Innovation

Four decades of rapid economic growth have enabled the Chinese government to dedicate more resources research and development. China is world’s second largest spender on food agricultural in terms absolute expenditures investor a purchasing power parity basis. Using unique panel dataset collected 2019 China’s seed company fixed effect models, this study analyzes heterogeneous effects central subsidies local subsidies. Specifically, first tests whether positive impact firms’ innovation. Then, answers differs from that The estimation results show positively contribute firm’s innovation, while innovation has not been confirmed. Further analysis shows affect performance. That is, rather than focusing capacity, governments are concerned about current performance due performance-based promotion scheme China. Based study, should implement similar methods those project funding criteria for selecting projects promote