Essays in Empirical International Trade and Innovation

Download or read book Essays in Empirical International Trade and Innovation written by Ishan Deep Ghosh and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis is divided in two parts: the first part investigates the role of firms in international trade and productivity growth; the second explores the changing geographical landscape of innovation and high-tech jobs in the U.S. In the first essay, I use confidential firm level data from the U.S. Census Bureau to study the causal impact of offshoring on R&D expenditures and quantify their joint impact on firm performance. I highlight two main contributions: First, by constructing a shift-share design instrument to identify exogenous variation in offshoring, I show that offshoring has a significant positive impact on domestic R&D expenditures. Second, I build and estimate a structural dynamic model of R&D investment, in which a decline in the relative cost of imported intermediates increases the firm's incentive to invest in R&D, thus endogenously leading to an increase in firm productivity. I then use the estimated model to quantify the effects of a (not so) counterfactual tariff on firm value and long-run returns to R&D. In response to a proposed 20% unilateral tariff on intermediate imports, firm value declines by 0.6% in the subsequent period, while average long-run gains from R&D decline significantly by 2.94 percentage points, owing to a decline in R&D participation by 7.1 percentage points. In light of the current political discourse on protectionist trade policies, this paper shows that identification of the offshoring driven R&D channel is fundamental to quantify the consequences of trade policies on firm performance. In the second essay, I provide external validation to the results highlighted