Does Import Competition Induce R&D Reallocation? Evidence from the U.S.

Author/Editor:

Rui Xu ; Kaiji Gong

Publication Date:

November 16, 2017

Electronic Access:

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Summary:

We analyze the impact of rising import competition from China on U.S. innovative activities. Using Compustat data, we find that import competition induces R&D expenditures to be reallocated towards more productive and more profitable firms within each industry. Such reallocation effect has the potential to offset the average drop in firm-level R&D identified in the previous literature. Indeed, our quantitative analysis shows no adverse impact of import competition on aggregate R&D expenditures. Taking the analysis beyond manufacturing, we find that import competition has led to reallocation of researchers towards booming service industries, including business and repairs, personal services, and financial services.

Series:

Working Paper No. 17/253

Subject:

English

Publication Date:

November 16, 2017

ISBN/ISSN:

9781484326008/1018-5941

Stock No:

WPIEA2017253

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

44

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