The Government Subsidies And The Change Of R & D Investment In The Strategic And Emerging Industries

To master the core technologies plays a key role in developing the strategic and emerging industries. Whether the enterprises as the basic units of industry have the enthusiasm to engage in R&D activities decides the technologic level of the industry. and also relate to the dynamic of future industry development. However, the inherent characters of the strategic and emerging industries cause the R&D activities have the features of high investment, high advance and high externality, which could further result in the short of fund in R&D activities since the enterprises do not want to spend money on it and the potential investors do not know which R&D projects are profitable. In order to solve this problem, the government should take some measures to deal with it. The government R&D subsidies on the one hand could make up for the lack of R&D activities, on the other hand could bring some additive effects such as leading the direction of technological breakthrough and incentive potential investors invest enterprises' R&D projects. In this paper, from a new perspective, we analyze the relationship between government subsidies and the capital investment in enterprises' R&D activities. We believe that the government subsidies have the "signal effect" which conveys the strategic direction of industry development valued by government and the trend of future change of policies. This signal effect could lead to change in R&D expenditure strategic of enterprises and investment decision of potential investors, and further lead more enterprises' fund and social capital invest into R&D activities. While, here arise some questions: whether the government subsidies could effectively transfer signal to promote R&D internment? How the market participants react to this signal?This paper sets the following indicators:government R&D subsidies, enterprise R&D expenditure, long-term and short-term loan, investment from potential investors, investment from institutional investors, enterprise scale, enterprise ability to pay debt etc. And then, we collect data from 88 listed companies to build a panel data model in order to test the signal which is generated by government subsidies effecting on enterprises' R&D expenditure and the investment decision made by potential investors. In the model of signal effecting on enterprises' R&D expenditure, we use dynamic panel data model to better describe the decision character of enterprises. The analysis result shows that the signal sent by government subsidies doesn't dramatic effect on enterprises' R&D expenditure. The decision about R&D expenditure made by enterprises takes on a remarkable continuity character and current expenditure only decided by last expenditure and enterprises scale. While for potential investors, through building a panel data model, we find that banks and social investors react positively to signal sent by government R&D subsidies and increase the investment on enterprises' R&D projects. While the institutional investors are not react positively to this signal as was expected. The analysis results indicate that currently the government R&D subsidies are not taking fully on signal effect to lead more R&D investment in the strategic and emerging industries and some measures should be taken to improve the way, the direction and the section of government R&D subsidies. We put forward the following advices:firstly, through build up the regulatory mechanism to improve the way of giving R&D subsidies. Secondly, reform the using direction of government R&D subsidies and adjust the giving standards of these subsidies. Last, encourage more banks and social investors to increase investment on enterprises' R&D activities and lead institutional investors positively participate in R&D investment.The innovations in the paper including:first, on the basis of review and summarize former literatures, we deeply analyze the issue of lack for fund in R&D activities of the strategic and emerging industries. We find that in these industries except for the lack of R&D fund caused by technical spillover effects and information asymmetry, the R&D investment compared with emerging industries developing in foreign countries and general industries in domestic does not have any advantage. Second, we clearly define the meaning of signal effect of government R&D subsidies. Except for solving the problem of lack for the R&D fund directly, the government R&D subsidies can lever a small investment into a large one. The market participants could see the government R&D subsidies as a signal which conveys the strategic direction of industry development valued by government and the trend of future change of policies. This signal could affect the R&D investment decision made by enterprises and social investors. This is the basic idea of signal effect. Last, we use penal data models to analyze the effect of government R&D subsidies on enterprises' R&D expenditure decision and social R&D investment.There are also some weak points in this paper. For example. we cannot do some in-depth study of this signal effect for we could not further subdivide the indicators about enterprises'R&D expenditure, social investment etc. In addition. it is difficult to collecting the data about enterprises'R&D expenditure. So we can only choose substitute indicators to calculate this data indirectly. Therefore, the issue of data makes some impact on our conclusion.All in all. although there are some shortages about this paper, we provide a new perspective to analyze the behavior of government R&D subsidies in the strategic and emerging industries and give some advices to establish and improve the policies of R&D subsidies in these industries.