Proximity to the Frontier, Markups, and the Response of Innovation to Foreign Competition: Evidence from Matched Production-Innovation Surveys in Chile

Ana Paula Cusolito, Alvaro Felipe Garcia Marin and William Maloney
Authors registered in the RePEc Author Service: Alvaro F. Garcia-Marin

No 9757, Policy Research Working Paper Series from The World Bank

Abstract: This paper employs a matched firm production/innovation panel data set from Chile to explore the response of firm innovation to the increased competition arising from the China shock. In addition to covering a wider range of innovation inputs and outputs than previously possible, the data allow generating measures of markups and efficiency (physical total factor productivity) that correspond more closely to the concepts of rents and technological leadership envisaged in the Schumpeterian literature. Except for the 10 percent most productive plants, increased competition depresses most measures of innovation. Falling rents exacerbate declines among laggards, while rising rents further increase innovation among leaders.

Keywords: International Trade and Trade Rules; Food & Beverage Industry; Business Cycles and Stabilization Policies; Pulp & Paper Industry; General Manufacturing; Construction Industry; Plastics & Rubber Industry; Textiles; Apparel & Leather Industry; Common Carriers Industry; Real & Intellectual Property Law; Social Policy; Regulatory Regimes; Legal Products; Common Property Resource Development; Intellectual Property Rights; Legal Reform; Legislation; Judicial System Reform; Trade and Services; Financial Sector Policy (search for similar items in EconPapers)
Date: 2021-08-23
New Economics Papers: this item is included in nep-eff
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Journal Article: Proximity to the Frontier, Markups, and the Response of Innovation to Foreign Competition: Evidence from Matched Production-Innovation Surveys in Chile (2023)
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