Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China?

@article{Hombert2014CanIH,
  title={Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China?},
  author={J. Hombert and Adrien Matray},
  journal={CEPR Discussion Paper Series},
  year={2014}
}
  • J. Hombert, Adrien Matray
  • Published 2014
  • Economics
  • CEPR Discussion Paper Series
  • 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 the cost of R&D. On average across US manufacturing firms, rising imports from China lead to slower sales growth and lower profitability. These effects are, however, significantly smaller for firms with a larger stock of R&D -- by about half when moving from the 25th percentile to the 75th percentile of the R&D stock distribution. As a result, while the… CONTINUE READING
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