Proximity to the Frontier, Markups, and the Response of Innovation to Foreign Competition: Evidence from Matched Production-Innovation Surveys in Chile

Cusolito, Ana Paula; García-Marín, Álvaro; Maloney, William F.

doi:10.1257/aeri.20210466

Cited by 4 publications

(2 citation statements)

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“…Evidence from Chile suggests that the ''escape-entry'' effect occurs only in about 10% of the most productive firms, while import competition has a depressing effect on innovation in most other firms (Cusolito, Marin, and Maloney 2023). This, in turn, has a negative impact on productivity growth.…”

Section: A Brief Overview Of the Literaturementioning

confidence: 99%

The impact of import competition from China on firm‐level productivity growth in the European Union*

Friesenbichler,

Kügler,

Reinstaller

2023

Oxf Bull Econ Stat

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We re‐examined the impact of rising imports from China on intra‐firm productivity growth in the European Union during the period 2005–16. In contrast to previous studies, we found that an increasing share of Chinese imports in total imports has slowed productivity growth over the observation period. This unfolded especially after the 2008/09 financial crisis and was more pronounced for firms with lower productivity growth. On average, the net effect of China's increasing import intensity on productivity growth has been negative for firms in the European Union since 2010. At the beginning of the sample, firms growing at the median rate experienced a modest growth‐enhancing effect of 0.02 percentage points, which turned slightly negative at −0.06 percentage points in the last observation year. The effect was muted for high‐growth multinational firms, which experienced a productivity growth premium from Chinese import competition at higher growth rates. Compared with the United States, the negative impact of Chinese import competition on the performance of EU firms is visible with a time lag.

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Section: A Brief Overview Of the Literaturementioning

confidence: 99%

The impact of import competition from China on firm‐level productivity growth in the European Union*

Friesenbichler,

Kügler,

Reinstaller

2023

Oxf Bull Econ Stat

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“…Bargaining power and its influence on firms' response to foreign competition is a significant aspect; Cusolito et al in [14], conducted a study and revealed that firms with higher markups demonstrate a lesser response in terms of innovation when faced with foreign competition. On the other hand, firms operating closer to the technological frontier tend to respond more actively.…”

Section: Literature Reviewmentioning

confidence: 99%

The Nexus between Foreign Competition and Buying Innovation: Evidence from China’s High-Technology Industry

Yi,

Rabnawaz,

Jalal

et al. 2023

Sustainability

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This study aims to investigate how international competition impacts innovation activities in the high-technology industry in China. A panel data analysis was conducted using a representative sample of high-tech industries in China from 2010 to 2017. Econometric methods were used to identify patterns and trends in the data, and quantile regression was utilized to explore the delicate connection between international competition and innovation efforts. The statistical analysis indicates that the effect of international competition on innovation activities differs through dependent quantiles of the innovation range; this effect was neglected by a standard linear regression model. The study found a U-shaped connection between foreign competition and innovation, except for at the quantile (Q = 0.01), which was negative. Foreign competition was found to be a critical factor influencing the strength of innovation activities in the high-tech industry in China. This research suggests that the extent of foreign competition has a bearing on the industry’s capacity to lead in innovation. This study is unique in that it addresses the influence of international competition on industry-level innovation accomplishments in a big rising country, such as China. The study also highlights the importance of evaluating the quantile effect of the variable on innovative activities, which was more informative than estimating the mean effect. The study’s limitation lies in the reliance on secondary data sources, which may not be as comprehensive as primary data. The research’s implications suggest that policymakers should pay attention to the impact of foreign competition on innovation activities and implement policies that foster innovation in the high-tech industry in China.

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Firm-Level Upgrading in Developing Countries

Verhoogen

2023

Journal of Economic Literature

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In principle, firms in developing countries benefit from the fact that advanced technologies and products have already been developed in industrialized countries and can simply be adopted, a process often referred to as industrial upgrading. But for many firms this advantage remains elusive. What is getting in the way? This paper reviews recent firm-level empirical research on the determinants of upgrading in developing countries. The first part focuses on how to define and measure various dimensions of upgrading—learning, quality upgrading, technology adoption, and product innovation. The second part takes stock of recent evidence on the drivers of upgrading, classifying them as output-side drivers, input-side drivers, or drivers of know-how. I conclude with some thoughts about promising directions for research in the area. (JEL D21, D24, D83, F14, L26, O14, O31)

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Proximity to the Frontier, Markups, and the Response of Innovation to Foreign Competition: Evidence from Matched Production-Innovation Surveys in Chile

Cited by 4 publications

References 85 publications

The impact of import competition from China on firm‐level productivity growth in the European Union*

The impact of import competition from China on firm‐level productivity growth in the European Union*

The Nexus between Foreign Competition and Buying Innovation: Evidence from China’s High-Technology Industry

Firm-Level Upgrading in Developing Countries

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