Reshad Ahsan: Import Competition, Knowledge Access, and Innovation

The Moynihan Institute’s Trade, Development, and Political Economy Program presents a talk by Reshad Ahsan. 

Successful innovation depends on the stock of knowledge that innovators have access to. Yet, empirical analysis of the impact of import competition on innovation abstracts from such knowledge access. We address this gap in the literature by drawing upon the universe of patent applications in India between 1995 and 2006, which we map to a spatially granular level. We use this original dataset to provide the first evidence of how knowledge access affects the import competition and innovation relationship.

We find that, on average, import competition from China lowers innovation. However, firms with sufficiently high knowledge access innovate more: a firm with the 80th percentile value of knowledge access increases its patents by 3.28 percent after experiencing a 10 percent increase in Chinese imports. These results suggest that the pre-existing spatial distribution of innovators is an important determinant of how import competition will affect innovation.

Reshad Ahsan is an associate professor of economics at the University of Melbourne. His research interests are at the intersection of international trade and development economics with a particular focus on studying the labor-market effects of trade in developing countries.