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Enterprise R&D, manufacturing innovation and macroeconomic impact: An evaluation of China’s Policy

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  • Zheng, Qinyue
  • Wang, Xingmin
  • Bao, Chunbing

Abstract

Amidst economic downturn pressures, major countries emphasized the manufacturing industry and increased research and development (R&D) investments to realize innovation in manufacturing. Manufacturing enterprises are the main performers of R&D investments, so it is imperative for policymakers to accurately evaluate the policy effect of different industrial tendency and policy intensity on growth. The impact of the overall R&D expenditure on macroeconomy or the effectiveness of enterprises’ R&D investment on business profit has been reported in a great deal of literature, but so far, the impacts of enterprises’ R&D have little been experimented at the macro level and industrial level. This paper improves the knowledge production function and structured a regional dynamic computable general equilibrium model to simulate the multi-dimensional macroeconomic impact of enterprises’ R&D investment. The results show that enterprises’ R&D investment has a significant role in promoting economic output, residents’ welfare, price control, and international trade, and its impact is declining over time. The impacts of enterprises’ R&D on different industries are heterogeneous; industries with lower knowledge capital are more sensitive to R&D investment. These findings contribute to the effectiveness of R&D policies.

Suggested Citation

  • Zheng, Qinyue & Wang, Xingmin & Bao, Chunbing, 2024. "Enterprise R&D, manufacturing innovation and macroeconomic impact: An evaluation of China’s Policy," Journal of Policy Modeling, Elsevier, vol. 46(2), pages 289-303.
    • Handle: RePEc:eee:jpolmo:v:46:y:2024:i:2:p:289-303
    DOI: 10.1016/j.jpolmod.2023.09.002
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