Public Procurement of Innovation as a Innovation Policy Instrument in China New Energy Vehicle Industry

The automotive industry is an important pillar industry of national economy and social development as an integral part of modern society. With the improvement of people’s living standards, the purchasing number of automobiles has been continually increasing every year in China. Due to the conventional car’ dependence on fossil fuels, the rate of consumption of fossil fuels has been accelerating, which leads to increasingly serious urban pollution by a large number of emissions of harmful gases and pollutants. Energy and environmental issues in the automotive industry cannot shirk. New energy vehicle with the features of energy savings and environmental protection as a global concern issue is becoming the future direction of the automobile industry.

Public procurement as an important component of fiscal expenditure has been one of the critical carriers of fiscal policy. It is an important approach of macroeconomic regulation and control and an effective tool for promoting innovation.For a long time China’s rapid economic development was paid by the price of environmental pollution and resource consumption. Extensive economic growth and long-term economic structural imbalance in the pattern has not been fundamentally changed. Low technological content and weak capacity for independent innovation will be the bottleneck of China’s sustainable development. How to play the policy function of public procurement, effectively promote innovation, further the optimization and upgrading of industrial structure and transformation of economic development model has great practical significance to developing countries like China.

The before research papers focus more on incentives of financial subsidies, tax incentives and other fiscal policy on innovation and successful experience of developed countries. Innovation policy, public procurement, NEVs have been studied in the literature separately. But there is rare research to give quantitative analysis of the relationship between innovation and government procurement from an empirical perspective in one specific industry in a catching-up developing country. This thesis will study how does public procurement promote innovation, how effective is public procurement as an instrument provided by the government that can make Chinese NEVs competitive in the world.The intention of this paper is to raise the awareness of government to make better use of public procurement as a demand-side innovation policy to promote innovation and NEVs industry.

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