Regional competition of local government R&D subsidies

By building a regional competition model for R&D subsidies from local governments under the intervention of central government, this paper analyzes the regional competition mode for the R&D subsidies from local governments to the enterprise based on the data of Chinese 31 provincial regions during 2009-2015, by using spatial panel model. This study finds that the spatial effect of R&D subsidies from local government to state-owned enterprises is negative, local governments adopt mutually substitution competitive strategy, the significant negative coefficient of fiscal decentralization shows the great externality of the basic and global R&D activity in SOE, the R&D subsidies from local government to SOE mainly rely on the guidance and support from central government, the regional competition for R&D subsidies from local governments to SOE is a competition for the transfer payment of central government in essence. The spatial effect of R&D subsidies from local government to non-SOE is positive, in order to attract and retain the non-state-owned innovative enterprises who are market-oriented and full of strong mobility. The result shows that the local government competition guided by central government, which will be selfadjustment due to the transfer of economic development pattern as the competing object is changing to innovative factors, highly demonstrates China's institutional advantages and the decisive role of market in the allocation of innovative resources. © 2019, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.