Synergistic Effect of Basic Research Investment and Government R & D Subsidies

Forging synergistic innovation policies and continuously enhancing their effectiveness are crucial to addressing the “chokepoint” issue in core technologies. This paper evaluates the synergistic effect of basic research investment and government R&D subsidies, based on the data of regional innovation practices and the manually-sorted data on R&D subsidies and new technology investments of Chinese listed companies from 2009 to 2020. The results show that combining basic research investment with government R&D subsidies generates a significant innovation effect. By building a high-quality public-knowledge pool, basic research provides enterprises' innovation with foundational inputs, while the R&D subsidies lower the risk and cost of transforming that knowledge into commercial products. Further empirical results show that only firms with strong technology-absorption capacity can effectively identify, assimilate and integrate knowledge spillovers from the public research system, thereby aligning basic research outputs with their own R&D activities and unlocking the synergistic gains of the two policy resources. The conclusions offer significant policy implications for optimizing the allocation of innovation resources, enhancing the efficiency of science-and-technology funding, invigorating innovation actors, and achieving high-level self-reliance and self-strengthening in science and technology.