Misappropriation of R&D Subsidies: Estimating Treatment Effects with One-sided Noncompliance
We investigate the misappropriation of R&D subsidies and evaluate its consequences for policy effectiveness. Using Chinese firm-level data for 2001-2011, we identify that 42% of grantees misused R&D subsidies, accounting for 53% of total R&D subsidies. Misappropriation leads to a substantial loss of the causal impact of R&D subsidies, as measured by the difference of the intention-to-treat effect and complier average causal effect. Results show that R&D expenditures could have been stimulated beyond the subsidy amount (additionality), but noncompliance has resulted in medium-level partial crowding out. Overall, misappropriation has reduced the effectiveness of China’s R&D policy by more than half.
About Philipp Boeing:
Philipp Boeing is a Senior Researcher at ZEW – Leibniz Centre for European Economic Research in Mannheim, Germany. In his research, he investigates the role of innovation incentives and the impact of innovation on firm performance and economic growth. His work is characterized by a combination of unique micro data, econometric analysis and methodological advances. He is particularly interested in policy evaluation, patent indicators, productivity, and import competition. With a strong empirical focus on China and its global rise, he maintains a critical understanding of the data generating process and institutions in China. He has advised the World Bank, the OECD, and the German Commission of Experts for Research and Innovation, among others. He was a Visiting Professor at Peking University for two years and he is a Research Affiliate of IZA – Institute of Labor Economics and Fellow of Tsinghua University. He is visiting Academia Sinica’s Institute of Economics in 2023.
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Joint work with Bettina Peters, ZEW, Mannheim, D and University of Luxembourg
Supported by the Luxembourg National Research Fund (FNR) 17931929