Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207256 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7865
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Manufacturing accounts for more than three-quarters of U.S. corporate patents. The competitive shock to this sector emanating from China’s economic ascent could in theory either augment or stifle U.S. innovation. Using three decades of U.S. patents matched to corporate owners, we quantify how foreign competition affects domestic innovation. Rising import exposure intensifies competitive pressure, reducing sales, profitability, and R&D expenditure at U.S. firms. Accounting for confounding sectoral patenting trends, we find that U.S. patent production declines in sectors facing greater import competition. This adverse effect is larger among initially less profitable and less capital-intensive firms.
Subjects: 
innovation
patents
trade
JEL: 
F10
O31
Document Type: 
Working Paper
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