Political Favoritism Towards Resource Allocation, Evidence of Grants by Natural Science Foundation of China

42 Pages Posted: 16 Feb 2019

See all articles by Xiaping Cao

Xiaping Cao

SUN YAT-SEN UNIVERSITY

Wenlian Lin

Sun Yat-Sen University (SYSU) - Lingnan (University) College

Zihua Liu

Hong Kong Polytechnic University - School of Accounting and Finance

Sili Zhou

Fanhai International School of Finance and School of Economics, Fudan University

Date Written: February 15, 2019

Abstract

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

Suggested Citation

Cao, Xiaping and Lin, Wenlian and Liu, Zihua and Zhou, Sili, Political Favoritism Towards Resource Allocation, Evidence of Grants by Natural Science Foundation of China (February 15, 2019). Available at SSRN: https://ssrn.com/abstract=3334825 or http://dx.doi.org/10.2139/ssrn.3334825

Xiaping Cao

SUN YAT-SEN UNIVERSITY ( email )

135 Xingang Xi Road
Guangzhou, 510275
China
+862084111154 (Phone)

Wenlian Lin

Sun Yat-Sen University (SYSU) - Lingnan (University) College ( email )

135 Xingang Xi Road
Tuen Mun
Guangzhou, Guangzhou 510275
China

Zihua Liu

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Hung Hom
Hong Kong
China

Sili Zhou (Contact Author)

Fanhai International School of Finance and School of Economics, Fudan University ( email )

Room 520, Building 5, 220 Handan Road
Shanghai
China

HOME PAGE: http://siliz.weebly.com/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
20
Abstract Views
235
PlumX Metrics