Government Expenditure,Tax And Independent Innovation

Such factors as information asymmetry, uncertainty, monopoly, externality and quasi-public goods property have led the self-adjusting strength of market to be unable to achieve optimum allocation of innovation resources. Herein, government-the visible hand-is urgently needed to intervene. Through the analysis on the input-and-output effect of government behaviors on firms'innovation and social innovation from different depths and points of view, this dissertation answers a series of questions such as in the process from constructing national innovation system to prompting independent innovation, whether and how government could intervene, the result of government intervention and issues of further follow up.To conbine the analysis of individual behavior with the macroeconomic phenomena, the dissertation proposes the assumption of innovation preference and the definition of innovation risk. Research methodology wise, this dissertation tries to adopt different methods including theoretical analysis, comparative analysis, statistic analysis, numerical analysis and econometric analysis, to analyze the effect of government behavior on independent innovation and construction of national innovation system in the frame of information asymmetry and uncertainty.Through deep research on a wide range of literature, this dissertation summarizes three basic features and four apparent features of innovation. Followed, the author points out independent innovation is innovation essentially. Independent innovation enjoys business and technology nature and high risks. Furthermore, this dissertation points out innovations of different kinds and in different phases have their own apparent features, so when constituting and exerting prompting policies government should pay more attention to its individuality and pertinence.In the theoretical analysis to answer whether government behavior could prompt independent innovation, this dissertation follows two steps. First, by analyzing every participant's status and effect in open innovation, it is found that the resource combination in industry–university- research, whose higher level is i-u-r union, which essentially connotes the union of government-industry-university-research-fund. Specifically, university and research institutions shall act as technical support, firms as the main body of independent innovation and social innovation, technical service system as the driving force, and government is the key in forming of open innovation.This dissertation adopts the method of empirical analysis to answer how government intervene independent innovation. It is analyzed that both social innovation input and fund support in science and technology are increasing, structure and localization features of government expenditure after the scientific development launched. There is a positive correlation among government expenditure to science and technology, independent innovation and difference in local economy. So government should widen investment channels, increase input in basic research and respect the difference of local innovation resource's endowment. Furthermore, the author establishes a panel data model using the data of 31 provinces in China from 1997 to 2006, to research the effect of government, firms, universities and research institutions on innovation input and output. The result shows that the structure of government expenditure is yet to be rationalized, firm's role as innovation's pivot must be strengthened, communication and cooperation among government-industry-university-research-fund face challenges, and last converse selection and moral risk is harm to the financing of innovation. Government should take into consideration the difference of local innovation endowment, and utilize comparative advantage to cultivate backward advantaged as well to prompt the lead-and-follow effect between independent innovation and economic growth.When answering what the effect of government's behavior is to independent innovation, this dissertation adopts a method of combing theoretical analysis and empirical analysis. First, it points out that government behavior will change the distribution between producer's welfare and consumer's welfare, which may lead to deadweight loss of social welfare. Then, it defines innovation risk, adopts some microeconomics methods such as information asymmetry and uncertainty to macroeconomic analysis. In balancing of firms'innovation policy and social innovation policy, goal of economic growth and social welfare, it explains why government intervenes even when it realizes its behavior will lead to deadweight loss. This research points out that problems caused by market inefficiency need government, whose behavior is effective and has theoretical basis, and moreover innovation's financing should have more channels and the best ratio of firms'input and government's input should be sought. Furthermore, based on China's economic reality, it is estimated the relative coefficients in the innovation risk model could tell us the relationship among innovation risk, returns to scale, economic growth and short-run fluctuation. At last, through further dividing the effect of central government, local government and tax policy on innovation's input and output, this dissertation points out not all the firms could become innovative firms, but each firm should keep a certain ratio of innovation input; the externality requests more support from government. Also, government's behavior should fully respect the difference of innovation resource endowment, and take into account the relation between government expenditure policy and attached policy, relation between behavior of central government and local government, relation between long-term policy and short-term policy, and relation between government's behavior and market strength.In the end, on the basis of the above-mentioned theoretical and empirical analysis, this dissertation puts forward some suggestions in policies with reference to science-technology, patent, finance, and insurance pertaining to constructing national innovation system. This dissertation also puts emphasis not only on the effect of single innovation-prompt policy but also on the comprehensive effect in the system of innovation-prompt policy.