The Effect Of Tariff Concession On R&D Intensity And Technology Progress

In this paper, we firstly match the large-scale enterprise database, Chinese customs database and Chinese tariff database to calculate the industrial final and intermediate effective tax rate, and then use them as proxies of trade liberalization to measure the difference of the R&D expenditure and technology progress between large tariff concession and small tariff concession. The tests are based upon propensity score method whose key concept is natural experiment and counterfactual framework of causality. In investigation of the mediation effect, we use the Bootstrap method to discuss the mechanisms of industry tariff concession on R&D expenditure.The test results show that:Industrial final tariff and intermediate tariff concession both could inspire the enterprises to improve the R&D expenditure but in different degrees, and the positive effect of intermediate tariff concession is larger. The final tariff concession intensifies the market competition and expands the export scale. The intermediate tariff concession sharply lower intermediate input cost and export cost. In consequence, the industrial TFP has been improved significantly, and the dispersion of TFP has been reduced at the same time after tariff concession. Finally, we put forward specific proposals of’openness and reform route’.