Import Competition and Firm Innovation: Evidence from China

17 Pages Posted: 23 Mar 2021 Last revised: 27 Mar 2021

See all articles by Qing Liu

Qing Liu

Renmin University of China

Ruosi Lu

University of International Business and Economics (UIBE)

Yi Lu

School of Business, University of Hong Kong

Tuan Anh Luong

De Montfort University - Faculty of Business and Law

Date Written: March 22, 2021

Abstract

This paper investigates whether and how import competition affects firm innovation. Using China’s World Trade Organization (WTO) accession as a quasi-natural experiment, we find that import competition reduces firm innovation, which is consistent with the Schumpeterian effect. We also find heterogeneous treatment effects across firm productivity and patent types in a way consistent with preference and knowledge spillover effects, but not with escape-competition and trapped-factor effects.

Keywords: Import competition, Firm innovation, Schumpeterian effect, Spillover effect, Preference effect, Escape-competition effect, Trapped-factor effect

JEL Classification: F12, F13, F14, F15, L11, L13, O31

Suggested Citation

Liu, Qing and Lu, Ruosi and Lu, Yi and Luong, Tuan Anh, Import Competition and Firm Innovation: Evidence from China (March 22, 2021). Journal of Development Economics, Vol. 151, 2021, Available at SSRN: https://ssrn.com/abstract=3810022

Qing Liu

Renmin University of China ( email )

Ruosi Lu

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Yi Lu

School of Business, University of Hong Kong ( email )

Rm 730, Meng Wah Complex
Pokfulam Road
Hong Kong
Hong Kong
(852) 2241-5245 (Phone)
(852) 2858-5614 (Fax)

HOME PAGE: http://www.fbe.hku.hk/~luyi

Tuan Anh Luong (Contact Author)

De Montfort University - Faculty of Business and Law ( email )

United Kingdom

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