Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312195 
Year of Publication: 
2024
Series/Report no.: 
ZEW Discussion Papers No. 24-077
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
We investigate the misuse of R&D subsidies and evaluate its consequences for policy effectiveness. Developing a theoretical framework and using Chinese firm-level data for 2001-2011, we identify that 42% of grantees misappropriated R&D subsidies for non-R&D purposes, accounting for 53% of total R&D subsidies. Misuse leads to a substantial loss in the causal impact of R&D subsidies, as measured by the difference between the intention-to-treat and complier average causal effect. R&D expenditures could have been stimulated beyond the subsidy amount (additionality), but misuse (noncompliance) resulted in medium-level partial crowding out, reducing the effectiveness of China’s R&D policy by more than half.
Subjects: 
R&D subsidies
policy evaluation
misuse
China
JEL: 
O31
O38
C21
H21
Document Type: 
Working Paper

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