Resources Science ›› 2020, Vol. 42 ›› Issue (8): 1551-1565.doi: 10.18402/resci.2020.08.10

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Effect of government financial support on the development of China’s rare earth industry and influencing factors

DONG Juan1(), ZHENG Minggui1,2(), ZHONG Changbiao3   

  1. 1. School of Economics and Management, Jiangxi University of Science and Technology, Ganzhou 341000, China
    2. School of Management, University of Science and Technology of China, Hefei 230026, China
    3. School of Business, Yunnan University of Finance and Economics, Kunming 650221, China
  • Received:2020-02-19 Revised:2020-06-12 Online:2020-08-25 Published:2020-10-25
  • Contact: ZHENG Minggui E-mail:idongjuan@163.com;mgz268@sina.com

Abstract:

Research on the effect of government financial support on the development of the rare earth industry in China is of great value for improving the theories of policy study of the rare earth industry, optimizing the policy system of government financial support, and realizing the sustainable development of the industry. Taking listed rare earth companies in China as examples, this study constructed an efficiency evaluation model of government financial support based on slacks-based measure data envelopment analysis (SBM-DEA) and an influencing factor model based on panel feasible generalized least squares (FGLS) estimation method, calculated and analyzed the efficiency and influencing factors of government financial support for China’s rare earth industry from 2010 to 2019, and distinguished between the front-end and the back-end of the rare earth industrial chain to compare and analyze the difference of government financial support effects. The results show that: The annual average value of government financial support efficiency of China’s rare earth industry is 1.313. Government financial support has an “incentive effect” on 65% of the listed rare earth companies, which has achieved the overall goal of government financial support policy. But it still has an “exclusion effect” on 35% of the listed rare earth companies. The annual average values of government financial support efficiency of the front-end and the back-end of the rare earth industrial chain are 1.145 and 1.377, respectively, which means that the “incentive effect” of government financial support on the back-end of the inductrial chain is significantly greater than that on the front-end. Government financial support is conducive to promoting the extension of the rare earth industrial chain to the back end. With the passage of time, the government financial support efficiency of the rare earth industry as a whole shows a downward trend, and the “incentive effect” gradually turns into the “exclusion effect”. The introduction of special policies can improve the efficiency of government financial support in the short term, but the long-term effect is limited. There is an inverted U-shaped relationship between government financial support intensity and government financial support efficiency of the rare earth industry, and at the enterprise scale, a significant positive effect on the government financial support efficiency of the rare earth industry can be observed. This study may deepen the understanding of the effect of government financial support on the development of China’s rare earth industry and provide a reference for the formulation of differentiated government financial support policies for China’s rare earth industry.

Key words: government financial support, rare earth, industrial chain, efficiency evaluation, incentive effect, exclusion effect, SBM-DEA four-stage model, China