Cover IMF Working Papers
Does Import Competition Induce R&D Reallocation? Evidence from the U.S.
Author: Rui Xu and Kaiji Gong
Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 253
Language:
English
Publication Date:
16 Nov 2017
DOI:
https://doi.org/10.5089/9781484326008.001
ISBN:
9781484326008
ISSN:
1018-5941
Pages:
44
Keywords:
WP; import competition; R&D expenditure; reallocation effect; Chinese Import Competition; R&D Expenditures; Reallocation; R&D investment; firm TFP; TFP deviation; Competition; Imports; Services sector; Manufacturing; North America
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (1.3 MB) Download Epub
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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund