A Study On Incentive Effects Of Government Funding To The Enterprise's Research And Development Expenditures

Since the rapid growth under the reform and opening policy in the past 30 more years,China has entered the new economy normal mode.Promoting the growth of economic become the main themes of the moment.It is well known that favorable institutional environment and technological progress are necessary to the development of economics.Normally,economic entities(countries or companies)can acquire technical progress in two ways,one is tech-innovatoin,the other is the introduction of technology.The tech-innovation is determined by their own R&D expenditure.Compared with government departments,colleges,universities and non-profit sector,companies occupy an absolutely dominant position in the R&D activities.R&D is an economic activity driven by enterprises' pursuit of profit maximization,but the risk and the benefits spillover would seriously affect the level of individual enterprises' R&D expenditures,although this spillover is benefit to the whole society.These two kinds of market failure make the private firms unable to fulfill the level of social optimal innovation activities.Thus,innovation activities should be supported by government subsidies,for example,fiscal policy instruments like cash subsidies and tax incentives,to reduce the R&D costs and benefits spillover,in order to promote the company's R&D expenditure.Regularly,the Chinese government implement three subsidies method--cash subsidy?tax incentives and financial discount to promote enterprise R&D spending.Compared with financial discount,the first two methods are more widely used in enterprise.In this paper,the tax preference are divided into income tax preference and circulation tax preference,using the ways of positive study to analysis the effect of financial subsidy,income tax benefit and circulation tax benefit on R&D expenditure,the result is that financial subsidy and income tax benefit have significant impacts in promoting enterprises' R&D expenditure,and income tax benefit is more than financial subsidy;circulation tax benefit also has significant impacts in enterprises' R&D expenditure,but it is less then income tax benefit;it will play an more important role in enterprises' R&D spending,while the financial subsidy blending with income tax benefit policy,it means that they have synergistic effect.The first chapter is the introduction that presents background,significance,methods and approach of research,defines R&D and government subsidies from the Accounting Standards for Enterprises and financial aspects,leads to the governmental subsidy what this paper talking about including the public subsidy(immediate subsidy)and tax preference(indirect subsidy),concludes three characters of R&D activities: publicity,positive externalities and uncertainty.The second chapter is the literature review,From the perspective that the enterprise R&D incentive effects of fiscal subsidies and income tax preferences,we make some conclusion according to the reasons of literature,then we put forward our own opinions and improvements,on the basis of that we raise the research emphasis.The third chapter is the theoretical analysis,which account for why the government should provide financial subsidies and the financial subsidies are how to stimulate enterprises' R&D spending.In the end,we build a theoretical model to connect the financial subsidies and the enterprises' R&D spending.The fourth chapter is present situation analysis of the government subsidies and the spending on the R&D in our country.It introduces the basic situation of fiscal expenditure 0f science and technology,makes an international comparison about the intensity of R&D expenditures,analyzes the R&D expenditures?the number of patent application and authorization of different departments.It founds that R&D spending and R&D strength presents the rising trend in our country,but compared with developed countries is still less,and the enterprise has become the main institution of R&D.Analysis of the area and the industry of R&D spending,generalize and summarize the current preferential tax policy from two aspects of income tax and turnover tax.The five chapter is the positive analysis.At the first,we put forward four hypothesis,then select the sample and variables based on theoretical model and research hypothesis,then collect the data what we need.At the second,set the regression model.In order to make the empirical results more reliable,we take the correlation test and do the collinearity inspection before the positive analysis.After that,we seek out the most appropriate estimation method.At last,we do the positive analysis,in addition,we still make detailed analysis and robustness testing for the empirical results.The six chapter are policy suggestions.It is provided from two aspects of fiscal subsidy and tax incentives on the basis of the research results what we achieve.