Better, Faster, Stronger: Global Innovation and Trade Liberalization

Federica Coelli, Andreas Moxnes and Karen Helene Ulltveit-Moe

No 22647, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper estimates the effect of trade policy during the Great Liberalization of the 1990s on innovation in over 60 countries using international firm-level patent data. The empirical strategy exploits ex-ante differences in firms' exposure to countries and industries, allowing us to construct firm-specific measures of tariffs. This provides a source of variation that enables us to establish the causal impact of trade policy on innovation. Our results suggest that trade liberalization has economically significant effects on innovation and, ultimately, on technical change and growth. According to our estimates, about 7 percent of the increase in knowledge creation during the 1990s can be explained by trade policy reforms. Furthermore, we find that the increase in patenting reflects innovation, rather than simply more protection of existing knowledge. Both improved market access and more import competition contribute to the positive innovation response to trade liberalization.

JEL-codes: F0 F1 F13 F6 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-cse
Note: ITI
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Citations: View citations in EconPapers (47)

Published as Federica Coelli & Andreas Moxnes & Karen Helene Ulltveit-Moe, 2022. "Better, Faster, Stronger: Global Innovation and Trade Liberalization," The Review of Economics and Statistics, vol 104(2), pages 205-216.

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Journal Article: Better, Faster, Stronger: Global Innovation and Trade Liberalization (2022)
Working Paper: Better, Faster, Stronger: Global Innovation and Trade Liberalization (2016)
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