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

_IMF Working Papers, November 16, 2017_

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## Bibliographic details
- Authors: Rui Xu, Kaiji Gong
- Published: November 16, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484326008.001

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### Key findings
- 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 and scope
- Data source: Compustat data.
- Sectoral coverage: Manufacturing and services (explicitly includes business and repairs, personal services, and financial services).

### Implications and interpretation
- 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.

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## Content in this bundle

- **Does Import Competition Induce R&D Reallocation? Evidence from the U.S., WP/17/253, November 2017**
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_Source: https://www.imf.org/en/publications/wp/issues/2017/11/16/does-import-competition-induce-r-d-reallocation-evidence-from-the-u-s-45377_