Does Import Competition Induce R&D Reallocation? Evidence from the U.S.
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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. 2017/253
Subject:
Competition Economic sectors Expenditure Financial markets Imports International trade Manufacturing Services sector
English
Publication Date:
November 16, 2017
ISBN/ISSN:
9781484326008/1018-5941
Stock No:
WPIEA2017253
Pages:
44
Please address any questions about this title to publications@imf.org