Political favoritism towards resource allocation: Evidence of grants by natural science foundation in China.

We study the effect of political power on resource allocation for knowledge production dictated by central planning in a non-market system. Our empirical results suggest that, compared to non-connected scholars, political connected (PC) scholars have 15.7% more allocation granted by the national Natural Science Foundation of China (NSFC). Variations in grant allocation is related to weaker institutional environments, less reputable universities, and hard-to-value project. Additional analysis suggests that access to the NSFC fund not only benefits individual PC scholars in terms of their research quality, but also brings more high-impact publications for their affiliated institution. • Political connected (PC) scholars have 15.7% more allocation granted by NSFC. • Political favoritism is related to weaker institutional environment. • NSFC fund benefits political connected scholar's research quality. • NSFC fund brings high-impact publications for PC scholar's affiliated institution. [ABSTRACT FROM AUTHOR]