Abstract This paper makes an empirical analysis about the impact of government’s R&D subsidies on enterprise’ R&D investments. The empirical analysis is based on the panel data of industrial firms above scale in Zhejiang province. The results show that government’s R&D subsidies have a positive effect on enterprise’ R&D investments. This paper also finds that there has great difference between different industries. The best subsidization rate from governments for firms in light industries is higher than firms in heavy industries. And the leverage effect of R&D subsidization to firms in light industries is also higher than firms in heavy industries.
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Received: 09 September 2010
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