The Impact of Government R&D Subsidy on the Performance of National and Regional Independent Innovations

Our paper examines the impact of government RD subsidy on innovation performance,and investigates the input-output performance of independent innovation in China.Development levels in China are not fairly distributed across regions.The input-out performance varies with regions.In order to know the performance difference in regions,the goal of the study is to provide insights on the regional differences in performance from both national and regional perspectives.We collect data from 28 different provinces in China.We propose an input-output model for innovation performance based on Griliehes' RD and productivity model.We use invention patent and the added value of high-tech industry as measures of innovation output.These measures allow us to estimate the relationships between RD input and output. Our empirical results suggest that government RD input and output are positively correlated.Hence,increasing government RD input can lead to increased innovation output.Coefficients used to measure the impact of government RD input on the independent innovation are significant at national and regional levels.We also compare the output elasticity of patent innovation with that of added value in the high-tech industry.The comparison indicates that the patent output of RD input has a decreasing return of scale,whereas the added value of high-tech industry has an increasing return of scale. We also find that the elasticity coefficient of government RD input on innovation in relatively developed regions or areas(e.g.Hubei) are significantly greatly than that in less developed regions.Universities and research institutions are often available in the developed regions in China.This finding indicates that relatively developed regions have better innovation performance than poorly developed regions in China.For instance,Shanghai,Beijing,Jiangsu,Zhejiang,Guangdong,Shandong and Hubei are located in developed regions and have higher innovation performance than Shanxi,Xinjiang,Gansu,Qinghai,Sichuan,Guangxi that are located in less developed regions.