Can A Technology Center Improve The Firm-level TFP?

Improving the firm-level total factor productivity(TFP)has significant policy implications for a sustainable economy.Using national firm technology center list and China's industrial enterprise database,and using entropy matching method to resolve the self-selection issue,we study the effect of the establishment of a national technology center to firm-level TFP.Results show that the establishment of a national technology center improves the firm-level TFP by 2.73%,compared with firms without a national technology center,which proves the importance of the establishment of national technology centers.Robustness checks include changing dependent variables to the productivity of new products,changing econometric methods to Markov's matching,changing fixed effects and results prove to be consistent and robust.For heterogeneity,results show that the effects are larger in firms in eastern areas,firms in the field of exporting,firms with low-technology demand,and firms with a larger scale.We also study three following questions: whether the effect lasts,whether the ownership difference exists,and the influence of enterprise life cycle to the effect.Results show that,first,the marginal effect decreases along the time.Second,the ownership curve does exist,since the effect on state-owned firms is smaller than the effect on other types.One potential underlying mechanism is the cost-plus rate.The markup has a positive effect on the effect we studied in this paper,while the markup of state-owned firms is significantly lower than others;with the increasing of the firm's age,the effect is larger and the positive effect decreases when the firm reaches a mature stage,which exhibits a reversed "U" shape.Based on the abovementioned evidence,we come up with four policy suggestions.First,the government should continue the technology center policy and enlarge the scope,to provide more firms with the corresponding benefits and to further improve the firm-level TFP.Second,to fully make use of this policy,the government should seize the firm characteristics accurately and target the firms which could take the most advantage of the policy.Third,the government should pay attention to the sustainability of the policy to help firms lay a solid foundation for technology accumulation and realize the scale economy.Fourth,the government should optimize the distribution of the source,and increase the percentage of private firms and foreign firms.