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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Foreign competition and domestic innovation: evidence from U.S. patents
Organization Unit
  • David Autor
  • David Dorn
  • Gordon Hanson
  • Gary Pisano
  • Pian Shu
  • English
Institution National Bureau of Economic Research
Series Name NBER Working Papers
Number 22879
Number of Pages 43
Date 2017
Abstract Text 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.
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Digital Object Identifier 10.3386/w22879
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