The impact of technology export regulations on corporate R&D investments

Haoyang Li; Di Wu; Jingwei Chen; Kam C. Chan

Borsa Istanbul Review (Mar 2023)

The impact of technology export regulations on corporate R&D investments

Haoyang Li,
Di Wu,
Jingwei Chen,
Kam C. Chan

Affiliations

Haoyang Li: School of Economics and Management, University of Science and Technology Beijing, Beijing, China
Di Wu: School of Economics and Management, Beijing Jiaotong University, Beijing, China
Jingwei Chen: Institute of Finance, Chinese Academy of Social Sciences, Beijing, China; Corresponding author.
Kam C. Chan: Research Center of Finance, Shanghai Business School, Shanghai, China

Journal volume & issue: Vol. 23, no. 2
pp. 322 – 333

Abstract

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We use a difference-in-difference research design to examine the effect of an exogenous shock to a firm's R&D investment from Chinese regulations regarding technology exports revised in 2008. We document that these technology export restrictions (TERs) decrease a firm's R&D investment. Specifically, the TERs reduce corporate R&D investment by 114 percent compared with that by an average firm in the sample. Additional analysis suggests that the TERs also reduce outbound direct investment and the number of firms' patent applications. Overall, TERs prevent firms from investing in innovation projects. Hence, relaxing TERs would enhance corporate R&D investment and promote general economic development.

G0

Published in Borsa Istanbul Review

ISSN: 2214-8450 (Print); 2214-8469 (Online)
Publisher: Elsevier
Country of publisher: Netherlands
LCC subjects: Social Sciences: Finance
Website: http://www.journals.elsevier.com/borsa-istanbul-review/

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