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Do Imports Spur Incremental Innovation in the South?

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  • Lu, Yi
  • Ng, Travis

Abstract

We estimate that a one-standard-deviation increase in a firm's import penetration ratio raises its likelihood of having engaged in an incremental innovation by 4.48% using a random-sampled firm survey in China. The estimate is close to those in Gorodnichenko, Svejnar and Terrell (2010). A number of empirical strategies rule out alternative explanations as sufficient drivers of our result. Competitive pressure from imports is shown to be an underlying mechanism through which imports spur incremental innovation. We discuss how the link between imports and innovation in the South differ from that in the North.

Suggested Citation

  • Lu, Yi & Ng, Travis, 2012. "Do Imports Spur Incremental Innovation in the South?," China Economic Review, Elsevier, vol. 23(4), pages 819-832.
  • Handle: RePEc:eee:chieco:v:23:y:2012:i:4:p:819-832
    DOI: 10.1016/j.chieco.2012.04.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Imports; Import Competition; Trade; Innovation; Incremental Innovation;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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