Political Favoritism Towards Resource Allocation, Evidence of Grants by Natural Science Foundation of China
42 Pages Posted: 16 Feb 2019
Date Written: February 15, 2019
We study political favoritism in resource allocation for knowledge production dictated by central planning in a non-market system. Political privilege of researchers is associated with 2.5% more allocation granted by the National Natural Science Foundation of China (NSFC), especially towards applicants with high political hierarchy. Weaker institutional environment, less reputable universities and hard-to-value project determine variations in grant allocation related to political privilege. Access to more NSFC fund not only benefits individual official scholar in research quality, but also produce spillover effect on official scholar’s institution (more high-impact publications for the institution), although we find evidence that more fund granted to official scholar will crowed out general scholar NSFC fund in the same institution. On the whole, political favoritism has potential wealth effect on resource allocation and knowledge production.
Keywords: Political Favoritism, Resource Allocation, Knowledge Production, R&D, Distortion
JEL Classification: O15, O34, P48
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