{
  "title": "Does Import Competition Induce R&D Reallocation? Evidence from the U.S.",
  "publication": "IMF Working Papers, November 16, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/11/16/does-import-competition-induce-r-d-reallocation-evidence-from-the-u-s-45377",
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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.",
  "sections": [
    {
      "heading": "Key findings",
      "content": "- Import competition from China induces R&D expenditures to be reallocated towards more productive and more profitable firms within each industry.\n- The reallocation effect has the potential to offset the average drop in firm-level R&D identified in the previous literature.\n- Quantitative analysis in the paper shows no adverse impact of import competition on aggregate R&D expenditures.\n- Beyond manufacturing, import competition has led to reallocation of researchers towards booming service industries, including business and repairs, personal services, and financial services."
    },
    {
      "heading": "Data and scope",
      "content": "- Data source: Compustat data.\n- Sectoral coverage: Manufacturing and services (explicitly includes business and repairs, personal services, and financial services)."
    },
    {
      "heading": "Implications and interpretation",
      "content": "- Reallocation toward higher-productivity and higher-profit firms can neutralize negative firm-level R&D shocks, leaving aggregate R&D unchanged in the face of rising import competition.\n- Shifts in researcher employment patterns indicate cross-sectoral effects of import competition, with services benefiting from researcher reallocation.\n\n---\n\n Content in this bundle\n\n- Does Import Competition Induce R&D Reallocation? Evidence from the U.S., WP/17/253, November 2017\n  - Does Import Competition Induce R&D Reallocation? Evidence from the U.S., WP/17/253, November 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Does Import Competition Induce R&D Reallocation? Evidence from the U.S., WP/17/253, November 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/11/16/does-import-competition-induce-r-d-reallocation-evidence-from-the-u-s-45377"
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    "Authors: Rui Xu, Kaiji Gong",
    "Published: November 16, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484326008.001",
    "Import competition from China induces R&D expenditures to be reallocated towards more productive and more profitable firms within each industry.",
    "The reallocation effect has the potential to offset the average drop in firm-level R&D identified in the previous literature.",
    "Quantitative analysis in the paper shows no adverse impact of import competition on aggregate R&D expenditures.",
    "Beyond manufacturing, import competition has led to reallocation of researchers towards booming service industries, including business and repairs, personal services, and financial services.",
    "Data source: Compustat data.",
    "Sectoral coverage: Manufacturing and services (explicitly includes business and repairs, personal services, and financial services).",
    "Reallocation toward higher-productivity and higher-profit firms can neutralize negative firm-level R&D shocks, leaving aggregate R&D unchanged in the face of rising import competition.",
    "Shifts in researcher employment patterns indicate cross-sectoral effects of import competition, with services benefiting from researcher reallocation.",
    "**Does Import Competition Induce R&D Reallocation? Evidence from the U.S., WP/17/253, November 2017**"
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