Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity

Bloom, Nick, Draca, Mirko and Van Reenen, John ORCID: 0000-0001-9153-2907 (2011) Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity. CEP Discussion Papers (CEPDP1000). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

We examine the impact of Chinese import competition on broad measures of technical change - patenting, IT, R&D, TFP and management practices – using new panel data across twelve European countries between 1996-2007. We correct for endogeneity using the removal of product-specific quotas following China’s entry into the World Trade Organization. Chinese import competition (1) led to increased technical change within firms; and (2) reallocated employment between firms towards more technologically advanced firms. These within and between effects were about equal in magnitude, and appear to account for 15% of European technology upgrading over 2000-2007 (and even higher when allowing for offshoring to China). Rising Chinese import competition also led to falls in employment, profits, prices and the share of unskilled workers. By contrast, import competition from developed countries had no effect on innovation. We develop a simple “trapped factor” model that is consistent with these empirical findings.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2011 The Author(s)
Divisions:	Centre for Economic Performance Economics
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor T Technology > T Technology (General) > T201 Patents. Trademarks
JEL classification:	O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification and Scope, Age, Profit, and Sales L - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General
Date Deposited:	29 Feb 2024 15:15
Last Modified:	29 Feb 2024 15:15
URI:	http://eprints.lse.ac.uk/id/eprint/121704

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