Sunny Liang Tan

I am a Ph.D. candidate from UCLA in macroeconomics and development.

I am on the 2026–2027 economics job market.

Job Market Paper

Government Venture Capital, Production Networks, and Aggregate Productivity in China (Expected October 2026)

Industrial policy can affect firms that receive no direct support through their trade with policy recipients. How do these spillovers shape its aggregate productivity effects? We study government venture capital in China using linked investment, administrative, patent, and supplier–buyer data. We combine matched staggered difference-in-differences estimates of recipient and trading-partner responses with production-network sufficient statistics that distinguish technological gains from resource reallocation. Government investment concentrates in strategic sectors and reaches innovative firms. Recipients and suppliers have higher pre-investment marginal products of capital and labor than the same-industry firms supplying the offsetting resources, whereas buyers have lower marginal products. Capital and employment expand at recipients and their pre-existing suppliers and buyers, while firm-level physical productivity shows no detectable short-run increase. Valuing these responses at baseline marginal-product gaps yields a manufacturing TFP-equivalent gain of approximately 0.07% under fixed industry factor supplies. Recipients drive the gain, with positive supplier contributions partly offset by negative buyer contributions. At the scale of 2016 manufacturing, the gain is equivalent to approximately RMB 14.51 billion in additional output, before incremental policy implementation costs. These findings show that public financing can improve aggregate efficiency through resource reallocation, with firm-to-firm trade extending its effects beyond the directly supported firms.