The Study On The Relationship Between Government Subsidies And The Entry Of Strategic Emerging Industry

In recent years, the development of strategic emerging industries has become the focus of China’s industrial policy. In order to achieve the rapid development of strategic emerging industries, Chinese government has implemented a series of industrial policies to support and foster strategic emerging industries. Among them, government subsidy is the most commonly used and the most direct way to support the emerging industries. For the development of emerging industries, the most important is that there is a large number of new companies entering into the industry, in addition to the improve of technical skills and production efficiency of the incumbent enterprises. Only the number of enterprises of strategic emerging industries is increasing, can we truly realize the development of emerging industries. Therefore, it is necessary to know the relationship between government subsidies and the entry of strategic emerging industry, to known whether the government subsidies really promote the entry of new enterprises, and to which industry, does government subsidies have larger effect. Only be fully understand the effect of government subsidies to entry, can we subsidize the industries with the largest effect and realize the best performance of subsidies.We use Chinese industrial enterprises database, then select the companies of strategic emerging industries by four-digit industry code. We take the entry of strategic emerging industry as the main object of the paper. We analyze the impact of government subsidies on the entry of strategic emerging industry by four-digit industry level. First, we use descriptive statistics and analysis methods to analyze current situation and entry of China’s strategic emerging industries and government subsidies from the perspective of industry and region. Then, in order to analyze the impact of government subsidies on the entry of strategic emerging industries, we give a theoretically analyzation of the mechanism of government subsidies and the factors may affect entry. Finally, we use empirical method to verify the impact of government subsidies to the entry of strategic emerging industry, from the whole sample and three subsamples of industries, regions and fixed-asset rate respectively.The main conclusions of this paper are as follows:Government subsidies has a significant positive role in promoting the entry of strategic emerging industries. It means we can use subsidy to promote new enterprises to enter strategic emerging industries. For other factors that affect entry, we find that the profit of industry is an important factor to attract enterprises to enter, however the average size of enterprise of an industry, concentration of an industry and the proportion of state-owned enterprises are the barriers to entry. A further analysis shows that the effects of government subsidies to different strategic emerging industries are different. To some industries, government subsidies plays a significant role in promoting the entry of new companies, however to other industries doesn’t. As to different regions, government subsidy has significant influence to the entry of strategic emerging industries in eastern, central and western regions, however the degree of impact is different. It has the largest impact on the eastern region and the weakest impact on the western region. In addition, the impact of government subsidies on industries with different fixed-asset rate is also different. To the industries with low fixed assets rate, government subsidies plays a significant role in the promotion of entry. However, with the increase of fixed-asset rate, the role of subsidies decline. When the fixed-asset rate of an industry reaches a certain level, government subsidies will no longer play a significant role in promoting the entry of new enterprises.Finally, according to the conclusion of the paper and the actual situation of our country, in order to realize the maximize the performance of government subsidies and better support the development of strategic emerging industries of China, we give some policy recommendations for subsidy of strategic emerging industries from the selection of subsidy object, the method of subsidy, the area of subsidy and the amount of subsidy.