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Abstract The Sixth Plenary Session of the 19th CPC Central Committee pointed out that China should adhere to the innovation-driven development strategy and accelerate building an innovation-driven country. China’s previous selective industrial policy has played an irreplaceable role in technology catch-up, but it has also led to technological innovation dilemmas such as “utility model patent trap” and “patent bubble”. Moreover, the effect of the selective industrial policy is greatly reduced when China’s technological innovation is getting closer to the international frontier. Different from traditional selective industrial policy, the enabling industrial policy uses inclusive and non-biased policy tools to provide competition-neutral support to enterprises, so as to enhance market efficiency, reduce costs and stimulate innovation. However, due to the difficulty in accurately quantifying the enabling industrial policy, the academia still lacks the attention to the innovation effect of the enabling industrial policy. Therefore, it is essential to reveal the impact of the enabling industrial policy on technological innovation and its mechanism, so as to provide scientific guidance for China’s innovation-driven development strategy.
The Comprehensive Plan for Reducing Social Insurance Premiums issued by the State Council in 2019 has attracted wide attention from the society and academia, which also provides a rare quasi-natural experiment for the research of the enabling industrial policy. However, existing literature mostly focuses on “reducing the burden of enterprises” and its relevant fields, and lacks attention to technological innovation and the new research perspective of the enabling industrial policy. In addition, due to the short implementation time of this reform and its unified implementation in all provinces and cities across the country, it is difficult to provide sufficient data and corresponding control groups for research. Therefore, this paper takes the unified reduction of social security contribution rate in Zhejiang Province in 2012 as a quasi-natural experiment to study the impact of the enabling industrial policy on technology innovation strategy of enterprises and its mechanism, which not only provides China’s empirical evidence for the innovation incentive effect of the enabling industrial policy, but also provides new policy enlightenment for the solution of China’s technological innovation dilemma.Therefore, China should accelerate the transformation from selective industrial policy to enabling industrial policy in the future, and promote the in-depth implementation of China’s innovation-driven development strategy by encouraging enterprises to implement high-quality technological innovation.
The main conclusions are as follows while the enabling industrial policy significantly promotes the substantial innovation growth of enterprises measured by invention patents, it does not lead to strategic innovation problems measured by design patents and utility model patents. Meanwhile, it enhances the value and influence of technological innovation, which helps to solve China’s technological innovation dilemma. The above conclusions are still valid in a variety of robustness tests, which provides China’s empirical evidence for the innovation incentive effect of the enabling industrial policy. Heterogeneity analyses show that the substantial innovation incentive effect of the enabling industrial policy is particularly significant in high labor cost enterprises, manufacturing enterprises, state-owned enterprises and large-scale enterprises. The heterogeneity analyses based on ownership and enterprise scale also reveal that the more standardized the enterprise’s social security payment, the stronger the substantial innovation promotion effect. Mechanism analyses manifest that the enabling industrial policy mainly promotes the substantial innovation through competition enhancement effect, factor-substitution effect and factor structure optimization effect. As the causes of Chinese enterprises’ financing constraints are complex, and there is no linkage mechanism between social security policies and financial policies, the mitigation effect of financing constraints is not significant.
Therefore, China should accelerate the transformation from selective industrial policy to enabling industrial policy in the future, and promote the in-depth implementation of China’s innovation-driven development strategy by encouraging enterprises to implement high-quality technological innovation.
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Published: 02 December 2022
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