Does Import Competition Induce R&D Reallocation? Evidence from the U.S.
Author | : Rui Xu |
Publisher | : International Monetary Fund |
Total Pages | : 44 |
Release | : 2017-11-16 |
ISBN-10 | : 9781484329528 |
ISBN-13 | : 148432952X |
Rating | : 4/5 (52X Downloads) |
Download or read book Does Import Competition Induce R&D Reallocation? Evidence from the U.S. written by Rui Xu and published by International Monetary Fund. This book was released on 2017-11-16 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.