Foreign Competition and Domestic Innovation: Evidence from U.S. Patents

David Autor, David Dorn, Gary Pisano, Gordon Hanson and Pian Shu
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Pian Shu: Georgia Institute of Technology

No 239, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: The competitive shock to the U.S. manufacturing sector spurred by rising China import competition could either catalyze or stifle innovation. Using three distinct sources of variation to identify rising trade exposure, we provide a causal analysis of the effect of surging import competition on U.S. innovative activities. Applying a novel internet-based matching algorithm to map all U.S. utility patents granted by 2013 to firm-level data, and carefully accounting for the shifting concentration of patenting activity across sectors, we document a robust, negative impact of rising Chinese competition on firm-level and technology class-level patent production. Accompanying this fall in innovation, global employment, sales, profitability, and R&D expenditure all decline within trade-exposed firms. The trade-induced contraction along all margins of adjustment and for all measures of valuation suggest that the primary response of firms to greater import competition is to scale back their global operations.

Date: 2018
New Economics Papers: this item is included in nep-com, nep-cse, nep-ino, nep-int, nep-ipr, nep-sbm and nep-tid
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Foreign Competition and Domestic Innovation: Evidence from US Patents (2020)
Working Paper: Foreign Competition and Domestic Innovation: Evidence from U.S. Patents (2019)
Working Paper: Foreign Competition and Domestic Innovation: Evidence from U.S. Patents (2019)
Working Paper: Foreign Competition and Domestic Innovation: Evidence from U.S. Patents (2016)
Working Paper: Foreign Competition and Domestic Innovation: Evidence from U.S. Patents (2016)
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