Does Import Competition Induce R and D Reallocation? : Evidence from the U.S. /

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 and D expenditures to be reallocated towards more productive and more profitable firms within each industry. Such reallocation effect has the p...

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Bibliographic Details
Main Author: Xu, Rui
Other Authors: Gong, Kaiji
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2017.
Series:IMF Working Papers; Working Paper ; No. 2017/253
Online Access:Full text available on IMF
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520 3 |a 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 and 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 and D identified in the previous literature. Indeed, our quantitative analysis shows no adverse impact of import competition on aggregate R and 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. 
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700 1 |a Gong, Kaiji. 
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