The Heterogeneous Effect of Industrial Policy on Technological Innovation : Evidence from China' S Metal New Material Industry and Micro-Data

This paper aims to explore the heterogeneous effect of industrial policy on the technological innovation of enterprises in China' s metal new material industry (CMNMI) based on system Generalized Method of Moment (GMM) model. This study analyzes the effects of single policy instruments, specifically government subsidies, tax credits, and loan support, and closely examines the combined effects of different types of industrial policies. We consider a panel data set that includes 93 listed enterprises from the 2008 to 2018 period. The findings lead to the following conclusions: First, single industrial policy instruments at the fiscal or monetary level help to promote technological innovation in CMNMI. Second, all three industrial policy instruments display an inverted U-shaped relationship with technological innovation, indicating that excessive policy support inhibits corporate innovation. Third, there is no “policy mess” problem and the policy mix of two different instruments can achieve an overall coherence. Based on these conclusions, relevant industrial policies should continue to be implemented in moderation and a long-term supervision system should be established. The government should conduct an in-depth exploration of the role of combinations of industrial policies in achieving resource integration