The Review of Economic Studies· 2015Q1
Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity
- 1,507citations
- Q1SCImago
- 2015year
Short summary
Chinese import competition spurred innovation, IT adoption, and productivity growth within European firms by 14% between 2000-2007, reallocating employment towards more advanced firms.
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Key points
- Chinese import competition increased innovation, IT adoption, and TFP within European firms from 1996-2007.
- Endogeneity was addressed by using the removal of product-specific quotas after China's WTO entry in 2001.
- Technical change occurred both within firms (increased innovation) and between firms (employment reallocation to advanced firms).
- These effects accounted for 14% of European technology upgrading between 2000-2007.
- Rising import competition also led to job losses and a decrease in the share of unskilled workers.
AI-generated from the title and abstract; the full text is not read.
Abstract
We examine the impact of Chinese import competition on broad measures of technical change—patenting, IT, and TFP—using new panel data across twelve European countries from 1996 to 2007. In particular, we establish that the absolute volume of innovation increases within the firms most affected by Chinese imports in their output markets. We correct for endogeneity using the removal of product-specific quotas following China's entry into the World Trade Organization in 2001. Chinese import competition led to increased technical change within firms and reallocated employment between firms towards more technologically advanced firms. These within and between effects were about equal in magnitude, and account for 14% of European technology upgrading over 2000–7 (and even more when we allow for offshoring to China). Rising Chinese import competition also led to falls in employment and the share of unskilled workers. In contrast to low-wage nations like China, developed countries had no significant effect on innovation.
The authors' abstract, as published at the source. The Review of Economic Studies, 2015 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance