Open Access Journal Article

Industrial Promotion and Corporate Innovation: A Study Based on China’s Five-Year Plans

by Bo Li a  and  Qianling Xie a,*
a
School of Economics, Yunnan University, Kunming, China
*
Author to whom correspondence should be addressed.
REA  2024 3(2):31; https://doi.org/10.58567/rea03020003
Received: 29 March 2024 / Accepted: 14 July 2024 / Published Online: 9 January 2025
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Abstract

Industrial policy is the government’s guidance and intervention in industrial development to achieve economic and social goals, and it seeks to steer the direction of industrial development, facilitate industrial structure upgrades, and improve social welfare. Based on panel data on 31 provinces in China from 2011 to 2022, this study examines the effects of industrial promotion from China’s Five-Year Plans on corporate innovation performance using a difference-in-differences (DID) model. The study findings indicate that industrial promotion from China’s Five-Year Plans promotes corporate innovation performance, and the basic conclusion remains robust when changing how firms’ innovation is measured, removing provincial policy interference, excluding the four municipalities in China, and utilizing the PSM-DID model. Moreover, this paper explores how industrial promotion influences firms’ innovation performance. The mechanism analysis reveals that industrial promotion from China’s Five-Year Plans encourages firms’ innovation through tax incentives, government subsidies, and credit support. In addition, heterogeneity tests find that industrial promotion has a more significant effect on corporate innovation among small-scale firms and firms operating in highly competitive industries and regions characterized by high marketization. The empirical findings presented provide evidence for enhancing corporate innovation performance through industry promotion in China’s Five-Year Plans and offer insights that can refine the formulation of Five-Year Plans.

Keywords: Industrial Policy; Industrial Promotion; Five-Year Plan; Corporate Innovation Performance; Difference-in-Differences Model;
Copyright: © 2025 by Li and Xie. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Funding

National Natural Science Foundation of China (72203198) , Key Program of Graduate Research Innovation Fund of China (KC-23233796)

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ACS Style
Li, B.; Xie, Q. Industrial Promotion and Corporate Innovation: A Study Based on China’s Five-Year Plans. Review of Economic Assessment, 2024, 3, 31. https://doi.org/10.58567/rea03020003
AMA Style
Li B, Xie Q. Industrial Promotion and Corporate Innovation: A Study Based on China’s Five-Year Plans. Review of Economic Assessment; 2024, 3(2):31. https://doi.org/10.58567/rea03020003
Chicago/Turabian Style
Li, Bo; Xie, Qianling 2024. "Industrial Promotion and Corporate Innovation: A Study Based on China’s Five-Year Plans" Review of Economic Assessment 3, no.2:31. https://doi.org/10.58567/rea03020003
APA style
Li, B., & Xie, Q. (2024). Industrial Promotion and Corporate Innovation: A Study Based on China’s Five-Year Plans. Review of Economic Assessment, 3(2), 31. https://doi.org/10.58567/rea03020003

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