How Does Firm R&D Respond to Trade Shocks? Evidence From UK Manufacturers

Bibliographic Data

ID21512976
AuthorsChuan‐Han Cheng (Faculty of Economics University of Cambridge UK), Minkyu Son (0000-0001-8995-8597, Research Department Bank of Korea Republic of Korea, corresponding author)
Year2026
Publication date2026-02-16
Open AccessYes
TypeARTICLE
VenueOxford Bulletin of Economics and Statistics (JOURNAL)
Journal identifiersISSN: 0305-9049 • E-ISSN: 1468-0084
PublisherWiley (PUBLISHER • GB)
DOI10.1111/obes.70053
OpenAlexW7129441055
LanguageEN
References cited24

This article uses matched UK administrative data to examine the impact of trade shocks on R&D investments of UK manufacturing firms from 2002 to 2011. We pay particular attention to the controversial effect of Chinese import competition on firm innovation. Our analysis provides strong evidence that the rise in imports from China, following its accession to the World Trade Organization in 2001, led to a significant decrease in R&D spending among UK firms. Importantly, we find considerable heterogeneity in this effect based on firm size: Chinese competition was particularly detrimental to the R&D of small firms, while its impact on large firms was not statistically significant. We also document the positive role of export market size in stimulating firm R&D, indicating that booming export demand during this period helped to somewhat offset the adverse effects of Chinese competition

Accession · Manufacturing · Manufacturing sector · World trade · Firm Innovation and Growth · Global trade and economics · International Business and FDI

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