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

Journal Issue

Volume/Issue:: 2017/253
Series:: IMF Working Papers
Author(s):: Rui Xu, and Kaiji Gong
Publisher:: INTERNATIONAL MONETARY FUND
Published Date:: November 2017
DOI:: http://dx.doi.org/10.5089/9781484326008.001
ISBN:: 9781484326008
ISSN:: 1018-5941
Page:: 44

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.

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

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

Article

Does Import Competition Induce R&D Reallocation? Evidence from the U.S.1

Author(s):: Rui Xu, and Kaiji Gong
Published Date:: November 2017

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

Does Import Competition Induce R&D Reallocation? Evidence from the U.S.1

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