The discussion of the decline in US manufacturing during the 2016 presidential election campaign largely focused on job losses. This column examines the effects of Chinese import competition on another metric for the health of the US manufacturing sector – innovation. Firms whose industries were exposed to a greater surge of Chinese import competition from 1991 to 2007 experienced a significant decline in their patent output as well as their R&D expenditures. While politicians’ ‘obsession’ with manufacturing is primarily due to job losses, an accompanying reduction in innovation may well affect economic growth in the longer term.
David Autor, David Dorn, Gordon Hanson, Gary P. Pisano, Pian Shu, 20 March 2017
Miaojie Yu, 18 May 2016
When China opened up, Chinese income increased and China went from a poor to a middle-income country. In this video, Miajie Yu discusses the impact of trade liberalisation on firm productivity in China. Openness to trade had a big impact on processing trade – such as putting together iPhones – and now accounts for half of Chinese trade. This video was recorded in March 2016 during the Royal Economic Society’s Annual Conference held at the University of Sussex.
Italo Colantone, Rosario Crinò, Laura Ogliari, 04 December 2015
Influential studies have shown that trade liberalisation is associated with substantial adjustment costs for workers in import-competing jobs. This column uses UK data to shed light on one such cost that has not been considered to date – subjective well-being. Import competition is found to substantially raise mental distress, through worsened labour market conditions and increased stress on the job. These findings provide evidence of an important hidden cost of globalisation.
Raphael Auer, Andreas Fischer, 13 June 2008
Research using a novel empirical technique suggests that import competition from low-wage countries dampens US producer price inflation for manufactured goods by more than 2 percentage points annually.