The Effect of Local Governments' Behavior on Corporate R&D Investment——Empirical Analysis Based on China's Provincial Panel Data

From the perspective of official encourage,this paper studies how the competition for promotion and fiscal decentralization affect government RD subsidy under governance structure.We put government RD subsidy and governance environment into enterprise decision model to seek the reason of inadequate corporate RD investment.We find that competition for promotion reduces the quantity of government RD subsidy significantly and remarkably,and non-matching between financial powers and range of expenditures will also reduce RD subsidy,thereby affecting the corporate RD investment.Governance environment has a positive effect on corporate RD activities.Companies tend to carry out RD activities if government interference and the space of rent-seeking reduced.The conclusion has important policy implication for accelerating the transformation of local government and promoting fundamental change in the mode of economic development.