Do government fiscal expenditure and financial institutions promote high-tech industry development? Evidence from China

With economic globalization and the rapid progress of economic transformation, developing high-tech industries has become an important way for many emerging countries to achieve sustainable and environmentally friendly economic development category. This research uses the vector error correction model (VECM) to study the effect of fiscal expenditures and financial support on China's high-tech industry development during 2001–2022. The results show that government fiscal expenditure has a long-term and stable positive relationship with the output of high-tech industries and the number of new high-tech enterprises, while current loans from financial institutions have a negative relationship with such development. Moreover, fiscal expenditure has a greater and deeper impact on high-tech industries than does the loans of financial institutions. In terms of policy insights, our results imply that the government should continue to improve fiscal expenditure and promote financial innovation to help achieve sustainable and balanced development of high-tech industries.