Trade War and Corporate R&D Investment
Exploiting the U.S.-China trade war in 2018 as an exogenous shock, we investigate how interstate frictions affect corporate research and development (R&D) investment based on the Difference-in-Differences (DID) method. We find that firms with higher exposures to the trade war significantly increase R&D investment.Specifically, the incentive effect of increasing market competition and the pressure effect of rising production costs are the main channels through which the trade war affects corporate R&D investment. Furthermore, we verify that such an effect is more pronounced among firms engaged in a greater proportion of ordinarytrade, with deeper embeddedness in global value chains, and without external investment. These results suggest that increasing the level of innovation is more likely a substantial measure by firms to interstate frictions
Year of publication: |
[2023]
|
---|---|
Authors: | Guo, Jialu ; Xie, Weimin ; Zhang, Hengxin |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Xie, Weimin, (2022)
-
Confucian culture and the external pay gap
Xie, Weimin, (2023)
-
Does knowledge management matter for information technology applications in China?
Lin, Danming, (2008)
- More ...