Do government grants promote innovation efficiency in China's high tech industries?
Despite extensive discussion about the important role of government in enterprise development, the function of government grants in the innovation activities of high technology (high tech) industries is still unclear. In this paper, the stochastic frontier model and a unique panel data set of 17 high tech industries in China spanning the 2001aEUR"2011 period are applied to explore how government grants affect the innovation performance of these industries. Results indicate that the innovation efficiency of high tech industries rapidly improved in the past decade. However, it is found that government grants exert a negative influence on innovation efficiency of high tech industries. However, the impact of private R&D funding is significant and positive. Furthermore, when the high tech industries are grouped into five sub industries, the results show that government grants had different effects on the innovation in each sub industry.