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Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China?
- Publication Year :
- 2014
- Publisher :
- HAL CCSD, 2014.
-
Abstract
- We study whether R&D-intensive firms are more resilient to trade shocks. We correct for the endogeneity of R&D using tax-induced changes to R&D cost. While rising imports from China lead to slower sales growth and lower profitability, these effects are significantly smaller for firms with a larger stock of R&D (by about half when moving from the bottom quartile to the top quartile of R&D). As a result, while firms in import-competing industries cut capital expenditures and employment, R&D-intensive firms downsize considerably less. Finally, we provide evidence that these effects are explained by R&D allowing firms to increase product differentiation.
- Subjects :
- Product differentiation
International trade
Monetary economics
JEL: G - Financial Economics/G.G3 - Corporate Finance and Governance/G.G3.G31 - Capital Budgeting • Fixed Investment and Inventory Studies • Capacity
jel:L60
R&D; Innovation
Product Market Competition
Trade Shocks
JEL: O - Economic Development, Innovation, Technological Change, and Growth/O.O3 - Innovation • Research and Development • Technological Change • Intellectual Property Rights/O.O3.O33 - Technological Change: Choices and Consequences • Diffusion Processes
jel:L25
Endogeneity
China
Innovation
Stock (geology)
R&D
business.industry
JEL: F - International Economics/F.F1 - Trade/F.F1.F14 - Empirical Studies of Trade
jel:G31
jel:F14
import competition
innovation
R&D tax credit
Capital expenditure
Quartile
jel:O33
Manufacturing firms
[SHS.GESTION]Humanities and Social Sciences/Business administration
Profitability index
Business
[SHS.GESTION] Humanities and Social Sciences/Business administration
Subjects
Details
- Language :
- English
- Database :
- OpenAIRE
- Accession number :
- edsair.doi.dedup.....748a0ccd679af738f7e510e4e9624969