Anti-corruption and Innovation: The Impact of 2012-2015 Central Inspection Team's Anti-Corruption Inspections on Enterprise Innovation in China

Abstract

By exploiting the anti-corruption inspections conducted by the central inspection team (CIT) on various provinces and cities during 2012 to 2015, this paper provides evidence of the impact of anti-corruption on innovation with a Staggered Difference in Difference (Staggered DiD) approach. This paper demonstrates that anti-corruption significantly improves the patents of enterprises by 9.2 percentage points, and found heterogeneous effects across different regions with different central-local dynamics. Moreover, this paper validates the following mechanisms by which anti-corruption affects innovation: anti-corruption promotes enterprise innovation of enterprises by reducing government intervention and improving the efficiency of governmental subsidy allocation.

Keywords: Corruption, Innovation, Economic Development

JEL Classification: O1,O2,H7,K4