Abstract: The paper explored the impact of Chinese fiscal decentralization on the firms’ R&D input and the adjusting influence of political connection of firms itself from theoretical and empirical perspective. Due to the local government reliance on regional economical performance , the firms economical effect could proxy for political connection. Based on a sample of listed companies from 2008-2012, it shows that in the regions with higher political promotion pressure, adequate fiscal decentralization and unbalance of state revenue and expenditures, the firms R&D input more likely fewer. The economical effect positive impact the relationship between Chinese fiscal decentralization and R&D input. In addition, the positive influence of economical effect in private firm is strongest, followed by the state-owned firm controlled by local governments and the state-owned firm controlled by central government is weakest.

Key words: R&, D Input