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The impact of trade on R&D: Evidence from UK firms

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  • S, Minkyu.

Abstract

Using matched UK administrative data, this paper examines how global trade expansion during 2002-2011 affected R&D investment of British firms. We find that Chinese import competition significantly discouraged firm R&D. Booming export demand, by contrast, stimulated their innovation efforts, mitigating the adverse competition effect. Our findings further reveal heterogeneity. More productive firms increased R&D spending by more in response to foreign demand. Exporting firms were less hurt by Chinese penetration than non-exporters. These together indicate the uneven consequences of globalization over the past decades for firm innovation, more detrimental to domestic and less profitable firms.

Suggested Citation

  • S, Minkyu., 2021. "The impact of trade on R&D: Evidence from UK firms," Cambridge Working Papers in Economics 2151, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2151
    Note: ms2375
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    References listed on IDEAS

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    More about this item

    Keywords

    R&D; Chinese competition; Export demand; Firm-level trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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