articleThe Review of Economic StudiesSep 17, 2015Closed access

Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity

NBNicholas BloomMDMirko DracaJVJohn Van Reenen

Stanford University · University of Warwick · +1 more institution

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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…

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Topics & keywords

Topics
Keywords
  • Endogeneity
  • Competition (biology)
  • Economics
  • Offshoring
  • China
  • Technical change
  • Productivity
  • International trade
UN Sustainable Development Goals
  • Decent work and economic growth
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