Trade-Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity
22 October 2012 4:00 pm
JOHN VAN REENEN, Director, Centre for Economic Performance, The London School of Economics and Political Science
Oesterreichische Nationalbank, Otto-Wagner-Platz 3, 1090 Vienna, OeNB auditorium
The lecture is organized in cooperation with the OeNB.
Please register by e-mail: Nicole.Fruhmann@oenb.at
n his presentation, Professor Van Reenen will emphasize some largely neglected aspects arising from China’s increasingly dominant position in world trade. It is well known that cheap imports from China pose a challenge to producers even in the most developed countries. In their research, Professor Van Reenen and his co-authors show, however, that the dramatic rise in Chinese imports into Europe and the U.S.A. not only drives out inefficient firms of the market but also encourages the most successful firms in the developed world to innovate. Overall, these dynamics increase the productivity level in the Western world. The findings from their detailed analysis of more than half a million manufacturing firms in 12 European countries over the past decade confirm the so-called “trapped factor” explanation of how trade from China drives innovation in firms exposed to Chinese competition. Moreover, their research finds evidence that about one-third of the overall effect of Chinese competition occurs in the form of “creative destruction” in the sense that inefficient firms are forced to exit the market. In his lecture, John van Reenen will discuss policy responses to the China-induced fall in demand for low-skill workers in highly developed countries. Since keeping China out of the world market is not a viable option, advanced economies will have to improve their human capital through education and training.