The Study On Government Subsidies And Enterprise Technological Innovation

Since the reform and opening up,China has made great achievements in the economic development.Chinese GDP increased from 364.52 billion yuan in 1978 to 56884.52 billion yuan in 2013,has increased by 156.05 times with the average annual growth rate of 15.52%over the past 30 years,and China has been the second largest economy after the United states in the world now.However,Chinese economy still remains "high input,high consumption,high pollution and low efficiency",in recent years the production cost,resource and environmental constraints and international market competition improve continuously,which urges our enterprises to strengthen their technological innovation to enhance market competitiveness and improve macroeconomic growth quality.Traditional economics thinks that the market economy can make all kinds of social resources obtain full and reasonable use only by its regulatory mechanism in the spontaneous operation process,but it cannot always effectively allocate social resources because of externalities,incomplete competition and other reasons,which will produce the "market failure" problem.Enterprise technological innovation also has the characteristics of public goods,externality,uncertainty and incomplete information,which indicates that it can also have the "market failure" problem.The"market failure" problem will make the investors not obtain all the economic benefits,if the innovation activities are fully allocated by the market mechanism,and enterprises invest them independently,then the innovation investment will not reach the best level of the whole society in the economic development.In this case,government subsidies can effectively reduce the innovation cost and risk,and reduce the gap between social benefits and private benefits,thereby correct the "market failure" problem in the enterprise technological innovation.Although the intellectual property protection and enterprise cooperation R&D can also promote enterprise technological innovation by internalizing innovation benefits,the enterprise innovation investment still cannot reach the best level of the whole society,so this needs government to subsidize enterprise technological innovation.At the same time,the enterprises commonly need a lot of money to invest innovation,but they always face severe financing constraints because of information asymmetry problem,government subsidies can not only relieve the financing constraints problem directly,but also make the enterprises receive more external capital by its signal transmission role,thereby effectively promote enterprise technological innovationIn order to promote our enterprise technological innovation,Chinese government continuously proposes some development strategies of revitalizing the country through science and education since 1990s.With the implementation of these strategies,Chinese science and technology financial expenditure keeps a steady and upward trend,the expenditure increased from 13.91 billion yuan in 1990 to 560.01 billion yuan in 2012,has increased by 40.26 times with the average annual growth rate of 18.29%over the past 20 years.However,the technological innovation of Chinese enterprises is not optimistic,the report entitled "China:Promote the innovation of enterprises as the main body" by the World Bank shows that 53%of the large enterprises,86%of the medium-sized enterprises and 96%of the small enterprises in nearly 300 thousand Chinese industrial enterprises had not conducted R&D activities continuously between 2004 and 2006.The enterprise micro data used in this paper also shows that only about 10%of the Chinese industrial enterprises had invested in R&D between 2005 and 2007,and their R&D intensity were only 1.2%,which was far lower than the level of 4%in the developed countries.In view of this phenomenon,the urgent problem is that the sustained and massive government subsidies can or not promote enterprise technological innovation?At the same time,there are distinct differences in the science and technology policies and economic development level in various regions of China,thereby how these macro factors will affect the government subsidy effect.If government subsidies can really promote enterprise technological innovation,then what are the differences of the promotion effect in different types of enterprises?The study on the above problems has important theoretical and policy significance to promote the enterprise technological innovation and improve the quality of macro economic growth.Under this background,this paper analyzes the impact of government subsidies on the enterprise technological innovation under the condition of oligopoly and monopolistic competition,and the conclusions show that the government subsidies can promote the enterprise technological innovation,which provides theoretical guidance for the empirical test.Based on the detailed description of the government subsidies and the enterprise technical innovation,this paper empirically tests the impact of government subsidies on the enterprise technological innovation with Chinese provincial panel data,and the result shows that the government subsidies can effectively promote enterprise technological innovation by correcting the "market failure" problem.Because the government subsidy effect is distinctly different in different regions,this paper also uses threshold regression model to study the threshold characteristics of this effect.The result shows that the relations between the government subsidy effect and the levels of the government subsidy intensity and financial market efficiency are all inverted U-shaped.This indicates that there is a best level of government subsidy intensity,and too much or too little government subsidies are all disadvantageous for enterprise technological innovation;financial development can effectively improve government subsidy effect,the developed financial markets have some substitution to the government subsidies,and can reduce the dependence on government subsidies of enterprise innovation.The result also shows that the relations between the government subsidy effect and the levels of human capital and intellectual property protection are all positive.This indicates that the government subsidy effect is smaller when the levels of human capital and intellectual property protection are relatively low,but this promotion effect will rise substantially when the levels of human capital and intellectual property protection are higher than their threshold values,thereby the human capital and intellectual property protection can effectively promote the government subsidy effect.Statistical analyses show that the levels of government subsidy intensity,financial market efficiency,human capital and intellectual property protection are all still low,which requires the government to take some measures to improve themThe enterprise micro data show that our government subsidies and enterprise technological innovation activities are distinctly unbalanced in different types of enterprises,thus this paper further uses the enterprise micro data to empirically test the impact of government subsidies on the enterprise technological innovation.The result confirms the effectiveness of the government subsidies,and this effect is distinctly different in different types of enterprises.It can be seen that the promotion effect in the domestic enterprises especially in the private enterprises is distinctly greater than that in the foreign enterprises;the promotion effect in the medium and small-sized enterprises is distinctly greater than that in the large enterprises;the promotion effect in the capital intensive and technology intensive enterprises is distinctly greater than that in the labor intensive enterprises;the promotion effect in the trade enterprises especially in the general trade enterprises is distinctly greater than that in the non trade enterprises,which indicates that the government must scientifically and reasonably choose the subsidy object to improve the government subsidy effect.