Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China?
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 costs. While rising imports from China lead to slower sales growth and lower profitability, these effects are significantly smaller for firms wi...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Blackwell Publishing Ltd
2018
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| Online Access: | View Fulltext in Publisher |
| LEADER | 01175nam a2200145Ia 4500 | ||
|---|---|---|---|
| 001 | 10.1111-jofi.12691 | ||
| 008 | 220706s2018 CNT 000 0 und d | ||
| 020 | |a 00221082 (ISSN) | ||
| 245 | 1 | 0 | |a Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China? |
| 260 | 0 | |b Blackwell Publishing Ltd |c 2018 | |
| 856 | |z View Fulltext in Publisher |u https://doi.org/10.1111/jofi.12691 | ||
| 520 | 3 | |a 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 costs. 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 (about half when moving from the bottom quartile to the top quartile of R&D). We provide evidence that this effect is explained by R&D allowing firms to increase product differentiation. As a result, while firms in import-competing industries cut capital expenditures and employment, R&D-intensive firms downsize considerably less. © 2018 the American Finance Association | |
| 700 | 1 | |a Hombert, J. |e author | |
| 700 | 1 | |a Matray, A. |e author | |
| 773 | |t Journal of Finance | ||