Innovating in Line with National Priorities:Evidence from Mission-Oriented Innovation Policy
Guiding the direction of technological innovation to focus on key areas with significant strategic value and promote future economic development is crucial to launch a new round of rapid growth for China.This paper builds a theoretical model illustrating the potential mechanism of innovation distortion under competitive equilibrium,and explores the role of mission-oriented innovation policy in correcting innovation inefficiency and guiding the direction of innovation.The results reveal that externalities in consumption,R&D time and patent competition can cause the direction of innovation under competitive equilibrium to deviate from the social optimum,while mission-oriented innovation policy can steer technological innovation towards the social optimum by promoting R&D cooperation and increasing the expected return of innovation.However,the effectiveness of the policy is constrained by the availability of knowledge and technology.This paper verifies these findings empirically by using a public health event shock as a natural experiment with the detailed technology categories data.Extended analysis shows that the policy has the greatest impact on research organisations,followed by firms,and the policy can play a role in changing the allocation of firm's R&D resources.This study provides useful insights for China to improve its innovation policy system and promote the development and breakthrough of core technologies in key areas.
direction of innovationinnovation policyexternalityR&D resource allocation