The pressure upon local governments to redeem their debt could affect government fiscal ability. It could consequently affect their fiscal policies on corporations, which might distort corporate innovation. Based on the data of Chinese Shanghai and Shenzhen A-share listed companies and the local government implicit short-term debt financed by local government financing vehicles (LGFVs) in 31 provinces, this paper shows that local government debt (LGD) negatively affects corporate R&D investment in China, thereby suggesting a strong crowding-out effect. The crowding-out effect is more pronounced when the firm is a non-state-owned enterprise (NSOE), the firm’s size is small, the firm’s age is young, or the firm is in the lower market competition. This paper provide evidence by interacting the terms that local government actions, such as consumption of fiscal resources, strengthening tax collection efforts, or consumption of credit resources, might partially account for the crowding-out effect. This study illustrates the innovation costs of local government debt.
The growing number of international students coming to China has injected new vitality into the development of an innovative economy in the mainland. In this paper, we employ a panel fixed‐effect model to examine how international students affect China's technological innovation. Our paper finds that international students in China have significantly promoted urban innovation in China, reflected not only in the expansion of urban innovation scale but also in the improvement of the urban patent structure and innovation quality. This highlights the need to increase the scale of international education and improve the quality of international education.
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