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The impact of government subsidies and enterprises' R&D investment: A panel data study from renewable energy in China

Research output: Contribution to journalArticlepeer-review

Feifei Yu, Yue Guo, Khuong Le-Nguyen, Stuart J. Barnes, Weiting Zhang

Original languageEnglish
Pages (from-to)106-113
Number of pages8
Early online date28 Nov 2015
Accepted/In press5 Nov 2015
E-pub ahead of print28 Nov 2015
Published1 Feb 2016


  • energypolicy

    energypolicy.pdf, 292 KB, application/pdf

    Uploaded date:15 Mar 2016

    Version:Accepted author manuscript

    Licence:CC BY-NC-ND

King's Authors


In this research, we aim to understand the influence of government subsidies on enterprises' research and development (R&D) investment behavior, particularly in China's renewable energy sector. We are also interested in examining how the attributes of enterprise ownership act as a moderating variable for the relationship between government subsidies and R&D investment behavior. Three classical panel data analysis models including the pooled ordinary least squares (OLS) model, the fixed effect model and the random effect model are employed. We find that government subsidies have a significant crowding out influence on enterprises' R&D investment behavior and that the influence is further moderated by the attributes of enterprise ownership. Moreover, a panel threshold regression model is used to demonstrate how the influence of government subsidies on enterprises' R&D investment behavior will change when government subsidies increase. Two thresholds, 0.6% and 10.1%, are identified. We recommend that relevant government departments should motivate enterprise R&D investment behavioral intention by increasing subsidies within a certain range. Different attributes of enterprise ownership should also be considered as part of policy reform and re-structuring relating to government subsidies.

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