The impact of government funding on research innovation: An empirical analysis of Chinese universities

The university is one of the most important places for scientific research, and it is the cradle of knowledge output and technological invention. Using the granular data of more than 1,000 universities' funding from the government in China, we investigate the impact of government funding on research innovation at the university level. The results show that government funds promote the output of research innovation of universities. The effectiveness of government funding is greater when combined with greater human capital and more platforms for international cooperation. Interestingly, further studies have found that human capital and non-government funds have a moderating influence on the effect of government funds on university research output. Moreover, there are some differences between “211 Project” (high quality) universities and “non-211 Project” universities. Finally, given the relaxation of policy for government funding of university research in 2014, we investigate the relationship between human capital (especially specialists with senior titles) and government funds in the process of research innovation. The results show that, before 2014, human capital presents a substitution relationship with government funding while it presents a complementary relationship after 2014.