Work

Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity

Year: 2011

Type: report

Abstract: We examine the impact of Chinese import competition on patenting, IT, R&D and TFP using a panel of up to half a million firms over 1996-2007 across twelve European countries.We correct for endogeneity using the removal of product-specific quotas following China's entry into the World Trade Organization.Chinese import competition had two effects: first, it led to increases in R&D, patenting, IT and TFP within firms; and second it reallocated employment between firms towards more innovative and technologically advanced firms.These within and between effects were about equal in magnitude, and appear to account for around 15% of European technology upgrading between 2000-2007.Rising Chinese import competition also led to falls in employment, profits, prices and the skill share.By contrast, import competition from developed countries had no effect on innovation.We develop a simple "trapped factor" model of innovation that is consistent with these empirical findings.

Source: National Bureau of Economic Research

DOI: 10.3386/w16717

Authors: Nicholas Bloom, Mirko Draca, John Van Reenen

Institutions: National Bureau of Economic Research, Stanford University, University of Warwick, London School of Economics and Political Science

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: green

Funders: National Science Foundation, Alfred P. Sloan Foundation, European Commission, Economic and Social Research Council

OpenAlex ID: W2889640263

Cites: 71

Cited by: 257

Related to: 10