China Y Su Comercio

Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity
Nicholas Bloom1 , Mirko Draca2, John Van Reenen3
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Department of Economics, Stanford, Centre for Economic Performance and NBER

Centre for Economic Performance, London School of Economics, and University College London
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Centre for Economic Performance, London School of Economics, CEPRand NBER December 17th 2010

Abstract We examine the impact of Chinese import competition on patenting, IT, R&D and TFP using a panel of half a million firms 1996-2007. We correct for endogeneity using the removal of product-specific quotas following China’s entry into the World Trade Organization. Chinese import competition led to both within firm technology upgrading and between firmreallocation of employment towards more technologically advanced firms. These effects account for about 15% of European technology upgrading 2000- 2007. Rising Chinese import competition also led to falls in employment, profits, prices and the skill share. Import competition from developed countries had no significant effect on innovation. JEL No. O33, F14, L25, L60, Keywords: China, technical change, trade,firm survival, employment Acknowledgements: We would like to thank the Economic and Social Research Council, AngloGerman Foundation, the European Commission, the Alfred Sloan Foundation, and the National Science Foundation for their financial support. Helpful comments have been received from Steve Redding, Elhanan Helpman, our formal discussants (Oriana Bandiera, Allan Collard-Wexler, MarcMelitz, Peter Schott and Reinhilde Veugelers) and from seminar audiences in Aarhus, AEA, Brussels, Berkeley, Boston University, Brown, CEMFI, Colorado, Duke, Georgetown, Harvard, Houston, LSE, Mannheim, Maryland, Minnesota, MIT, NYU Stern, NBER, OECD, Penn State, Princeton, PSE, San Francisco Fed, Sciences Po, Stanford, SITE, Texas, Toronto, UC Davis, UCLA, Warwick, World Bank, Yale, ZEW and Zurich.Charles Wang has provided excellent research assistance.

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I. INTRODUCTION A vigorous political debate is in progress over the impact of globalization on the economies of the developed world. China looms large in these discussions, as her exports have grown by over 15% per year over the last two decades. One major benefit of Chinese trade had been lower prices for consumers in the developedworld. We argue in this paper that increased Chinese trade has also induced faster technical change from both innovation and the adoption of new technologies, contributing to productivity growth. Several detailed case studies such as Bartel, Ichinowski and Shaw (2007) on American valve-makers, Freeman and Kleiner (2005) on footwear or Bugamelli, Schivardi and Zizza (2008) on Italian manufacturersshow firms innovating in response to Chinese import competition. The contribution of our paper is to confirm the importance of low wage country trade for technical change using a large sample of over half a million firms. The rise of China and other emerging economies such as India, Mexico and Brazil has also coincided with an increase in wage inequality in the United States and other developed“Northern” nations. Many authors have drawn a link between the two trends, because basic trade theory predicts that the integration of a low skill abundant developing economy with a high skill abundant developed economy will lead to an increase in the relative price of skill in the developed economy. Although this logic is compelling, the consensus among most economists was that trade was much lessimportant than technology in causing the large increase in US wage inequality since the late 1970s.1 There are at least three major problems with this consensus that trade did not matter. First, most of this work used data only up to the mid 1990s, which largely predates the rise of China (see Figure 1). In the 1980s China only accounted for about 1% of total imports to the US and EU and by 1991...