2015
DOI: 10.1111/obes.12110
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The Effect of Import Competition on Firm Productivity and Innovation: Does the Distance to Technology Frontier Matter?

Abstract: How does foreign competition affect growth and innovation in China? Using our unique measures of proximity of Chinese firms and industries to the world technology frontier, we find that despite vast sectoral heterogeneity, Chinese manufacturing industries have undergone rapid technological upgrading over the period of 2000-06. The distance to the world production frontier of firms and industries also play a significant role in shaping the nexus between the competition pressure from foreign imports and domestic… Show more

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Cited by 29 publications
(19 citation statements)
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References 74 publications
(138 reference statements)
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“…Bloom et al (2016) find that competition due to Chinese imports increased technical change (around 14% of European technology upgrading 2000-7). Ding et al (2016) present a similar result for Chinese manufacturing industries, where competition pressure from imports led to rapid technological upgrading that accelerated in firms and industries close to the world frontier.…”
Section: Literature Reviewsupporting
confidence: 57%
“…Bloom et al (2016) find that competition due to Chinese imports increased technical change (around 14% of European technology upgrading 2000-7). Ding et al (2016) present a similar result for Chinese manufacturing industries, where competition pressure from imports led to rapid technological upgrading that accelerated in firms and industries close to the world frontier.…”
Section: Literature Reviewsupporting
confidence: 57%
“…These firms operate in the manufacturing sectors and are located in all 30 Chinese provinces or province‐equivalent municipal cities. Following the standard clean‐up procedures described in the literature (Brandt et al ., ; Yu, ; Ding et al ., ), our final sample includes 485,672 firms and 1,824,089 firm‐year observations.…”
Section: Data and Empirical Methodologymentioning
confidence: 99%
“…Taking Column 6 as an example, for firms in industries that are far away from the frontier, the average net elasticity with respect to the upstream foreign entry barrier is −0.037. 8 That is, a 10 percent fall in the upstream foreign entry barrier is associated with a 0.37 percent increase in the productivity of downstream 7 See the cross-country evidence on economic growth (Acemoglu et al, 2006), the microeconomic evidence on industrial organization and international trade (Aghion et al, 2009;Amiti and Khandelwal, 2013;Ding et al, 2016), and the literature on the effects of anti-competitive upstream regulations on the downstream performance (Bas and Causa, 2013;Bourlès et al, 2013;Cette et al, 2017). 8 The formula is −0.043 + 0.002 × 2.8, where 2.8 is the mean value of ln(Dist ance).…”
Section: Industry's Distance To the World Technology Frontiermentioning
confidence: 99%
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“…Indeed studies for the UK (Aghion et al 2005), the Netherlands (Polder and Veldhuizen 2012) and the US (Levin et al 1985) have confirmed an inverted U-shaped relationship between product market competition and innovation at the industry level. Moreover, there is evidence that neck-and-neck firms respond with increased and laggard firms with decreased innovation activities to heightened competition (Aghion et al 2009, Ding et al 2016. However, a growing number of studies also show that the inverted U-shaped relationship is not simply a composition effect at the industry level (resulting within industries from heterogeneous responses of firms to competition), but rather even holds at the individual firm level.…”
Section: A Nonlinear Relationship Between Product Market Competition mentioning
confidence: 99%