The Daily Bulletin Archive

Please join us for the Economics and Finance seminar "Trade Policy Uncertainty and Innovation: Firm-Level Evidence from China's WTO Accession?" presented by Hong Ma, associate professor of economics at Tsinghua University, on Friday, April 21, at 3:00 p.m. in Classroom Building A 400.

Dr. Ma has published extensively on trade and trade-related issues, including articles in the Journal of International Economics, the Economic Journal, Macroeconomic Dynamics, and the World Economy. He will discuss how the WTO reduces trade policy uncertainty and promotes innovation. Questions about U.S. trade policy and its implications are welcome.

Abstract
A surge of innovation often follows major episodes of trade liberalization. This paper proposes a novel channel that trade liberalization may encourage firm innovations by largely removing policy uncertainties in the destination market. To verify this linkage, we adopt a difference-in-differences approach to examine the impact of a reduction in trade policy uncertainty, due to China's WTO accession in 2001, on firm innovation activities. We find that uncertainty reduction significantly encourages firms' patent applications: sectors with larger reduction in uncertainty led more patent applications after WTO accession. They also invest more in capital assets and import more foreign intermediate inputs.