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Regional R&D Resource Misallocation and Its Determinants in China

【Authors】
WANG Wen, SUN Zao
【WorkUnit】
Xi'an Jiaotong University, 710061.
【Abstract】

As China ranks at the first tier in the world in terms of total R&D investment, the status of R&D resource allocation among different units becomes one of the key factors of R&D output efficiency. This paper gauges R&D resource misallocation across different provinces in China based on a multi-sector competition equilibrium model with sector-specific frictions in forms of taxes on sector factor inputs, using a dataset of industrial enterprises above the designated size at the provincial level from 2001 to 2016. The result shows: (1) R&D personnel misallocation across provinces is higher than R&D capital misallocation, most provinces tend to over-allocate R&D resources, the allocation efficiency of R&D resources across provinces improves gradually over time, and when R&D capital and personnel are hypothetically reallocated to correct distortion across provinces, R&D output increases by approximately 14% in China. (2) R&D capital and personnel are allocated relatively efficiently in eastern provinces, but R&D personnel are slightly under-allocated. R&D capital and personnel are over-allocated in central, western and northeastern provinces to different extents, especially so in Northeast China's R&D resource allocation efficiency has been improving in eastern and western provinces but shows no continuous improvement trends in the northeast and central provinces. (3) Market maturity, preferential policy, regional innovation environment are main factors influencing China's R&D resource misallocation, and play a more significant role in areas where R&D resources are over-allocated, This paper concludes that, in the context of pursuing innovation-driven development, the allocation of R&D resources across different regions should be further optimized in a market-oriented way, to improve the efficiency of R&D and achieve high-quality economic development,


JEL: O18, O32, O47

【KeyWords】
R&D Capital Misallocation, R&D Personnel Misallocation, Relative Distortion Coefficient, Determinants of R&D Resource Misallocation