Political Favoritism Towards Resource Allocation

Abstract

We study how political power affects resource allocation for knowledge production dictated by central planning in a non-market system in China. Our empirical results suggest that scholar with political privilege is associated with 15.7% 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. Further analysis suggests that access to NSFC fund not only benefits scholars themselves, but also more high-impact publications for the institute, indicating that political favoritism produces positive spillover effect.