Multinational Enterprises RD in China, Government Subsidy Effect: An Empirical Research Based on Simultaneous Equations

Multinational enterprises are winding their path by R&D embedding into National Innovation Systems of China. Government subsidy has been proven an effective policy instrument to encourage location of foreign capital R&D. However, few literatures take into account how government subsidy impacts innovation outputs and performance of multinational enterprises R&D in China. By collecting series data and panel data, the paper constructs lag-distribute model and simultaneous-equation model to analyze effect of government subsidy on foreign capital R&D in China.