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

David Autor (), David Dorn (), Gordon Hanson (), Gary Pisano and Pian Shu

No 22879, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F14 F6 O31 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cse, nep-ino, nep-int and nep-ipr
Date: 2016-12
Note: ITI PR
References: View references in EconPapers View complete reference list from CitEc
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Related works:
Working Paper: Foreign Competition and Domestic Innovation: Evidence from U.S. Patents (2018) Downloads
Working Paper: Foreign Competition and Domestic Innovation: Evidence from U.S. Patents (2016) Downloads
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