IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/26461.html
   My bibliography  Save this paper

A Global View of Creative Destruction

Author

Listed:
  • Chang-Tai Hsieh
  • Peter J. Klenow
  • Ishan B. Nath

Abstract

In the wake of the U.S.-Canada Free Trade Agreement, both the U.S. and Canada experienced a sustained increase in job reallocation, including firms moving into exporting. The change involved big firms as much as small firms. To mimic these patterns,we formulate a model of innovation by both domestic and foreign firms. In the model, trade liberalization quickens the pace of creative destruction, thereby speeding the flow of technology across countries. The resulting dynamic gains from trade liberalization are an order of magnitude larger than the gains in a standard static model.

Suggested Citation

  • Chang-Tai Hsieh & Peter J. Klenow & Ishan B. Nath, 2019. "A Global View of Creative Destruction," NBER Working Papers 26461, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26461
    Note: EFG ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w26461.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Garcia‐Macia & Chang‐Tai Hsieh & Peter J. Klenow, 2019. "How Destructive Is Innovation?," Econometrica, Econometric Society, vol. 87(5), pages 1507-1541, September.
    2. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 87-117.
    3. Philippe Aghion, Antonin Bergeaud, Matthieu Lequien, Marc J. Melitz, 2018. "The Impact of Exports on Innovation: Theory and Evidence," Working papers 678, Banque de France.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter J. Klenow & Huiyu Li, 2020. "Innovative Growth Accounting," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, pages 245-295, National Bureau of Economic Research, Inc.
    2. Pierre Lortie, 2019. "Nurturing Global Growth Companies: Time For A New Policy Toolkit," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 12(27), September.
    3. Wan-Jung Cheng & Ping Wang, 2022. "Sectoral Impacts of Trade Wars," Review, Federal Reserve Bank of St. Louis, vol. 104(1), pages 17-40.
    4. Laurent Cavenaile & Pau Roldan-Blanco & Tom Schmitz, 2023. "International Trade and Innovation Dynamics with Endogenous Markups," The Economic Journal, Royal Economic Society, vol. 133(651), pages 971-1004.
    5. Jackson, Emerson Abraham, 2020. "Fostering Sustainable Innovation through Creative Destruction Theory," MPRA Paper 102174, University Library of Munich, Germany, revised 21 Mar 2020.
    6. Wen-Tai Hsu & Raymond G. Riezman & Ping Wang, 2019. "Innovation, Growth, and Dynamic Gains from Trade," NBER Working Papers 26470, National Bureau of Economic Research, Inc.
    7. Trouvain, Florian, 2024. "Technology Adoption, Innovation, and Inequality in a Global World," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302377, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laurent Cavenaile & Pau Roldan-Blanco & Tom Schmitz, 2023. "International Trade and Innovation Dynamics with Endogenous Markups," The Economic Journal, Royal Economic Society, vol. 133(651), pages 971-1004.
    2. Nicholas Bloom & John Van Reenen & Heidi Williams, 2019. "A toolkit of policies to promote innovation," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 10.
    3. Malgouyres, Clément & Mayer, Thierry & Mazet-Sonilhac, Clément, 2021. "Technology-induced trade shocks? Evidence from broadband expansion in France," Journal of International Economics, Elsevier, vol. 133(C).
    4. Ana Maria Santacreu & Liliana Varela, 2018. "Innovation and the Patterns of Trade: A Firm-Level Analysis," 2018 Meeting Papers 303, Society for Economic Dynamics.
    5. Impullitti, Giammario & Akcigit, Ufuk & Ates, Sina T., 2018. "Innovation and Trade Policy in a Globalized World," CEPR Discussion Papers 15804, C.E.P.R. Discussion Papers.
    6. repec:spo:wpmain:info:hdl:2441/4b7tooefh48jlq7oktt0tbn8om is not listed on IDEAS
    7. Maarten de Ridder, 2022. "Market power and innovation in the intangible economy," POID Working Papers 064, Centre for Economic Performance, LSE.
    8. Halmai, Péter, 2024. "Mélyintegráció-paradigma [Deep-integration Paradigm]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 514-558.
    9. Banh, Thi Hang & Caselli, Mauro, 2022. "Foreign Competition, Skill Premium, and Product Quality: Impact of Chinese Competition on Mexican Plants," GLO Discussion Paper Series 1162, Global Labor Organization (GLO).
    10. Panon, Ludovic, 2022. "Labor share, foreign demand and superstar exporters," Journal of International Economics, Elsevier, vol. 139(C).
    11. repec:spo:wpmain:info:hdl:2441/5j3i17uo7399t940lrt6h6n545 is not listed on IDEAS
    12. Li, Juncheng & Qin, Xiuting & Tang, Jian & Yang, Lu, 2022. "Foreign trade and innovation sustainability: Evidence from China," Journal of Asian Economics, Elsevier, vol. 81(C).
    13. Philippe Aghion & Antonin Bergeaud & Matthieu Lequien & Marc J. Melitz, 2024. "The Heterogeneous Impact of Market Size on Innovation: Evidence from French Firm-Level Exports," The Review of Economics and Statistics, MIT Press, vol. 106(3), pages 608-626, May.
    14. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    15. Xavier Jaravel & Erick Sager, 2018. "What are the Price Effects of Trade? Evidence from the U.S. and Implications for Quantitative Trade Models," Economic Working Papers 506, Bureau of Labor Statistics.
    16. repec:hal:spmain:info:hdl:2441/4b7tooefh48jlq7oktt0tbn8om is not listed on IDEAS
    17. David Autor & David Dorn & Gordon H. Hanson & Gary Pisano & Pian Shu, 2020. "Foreign Competition and Domestic Innovation: Evidence from US Patents," American Economic Review: Insights, American Economic Association, vol. 2(3), pages 357-374, September.
    18. Benjamin U. Friedrich & Michal Zator, 2018. "Adaptation to Shocks and The Role of Capital Structure: Danish Exporters During the Cartoon Crisis," Economics Working Papers 2018-12, Department of Economics and Business Economics, Aarhus University.
    19. Du, Pengcheng & Wang, Shuxun, 2020. "The effect of minimum wage on firm markup: Evidence from China," Economic Modelling, Elsevier, vol. 86(C), pages 241-250.
    20. Cristiano Antonelli & Christophe Feder, 2021. "Schumpeterian loops in international trade: the evidence of the oecd countries," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 799-820, July.
    21. Ito, Keiko & Ikeuchi, Kenta & Criscuolo, Chiara & Timmis, Jonathan & Bergeaud, Antonin, 2023. "Global value chains and domestic innovation," Research Policy, Elsevier, vol. 52(3).
    22. repec:hal:wpspec:info:hdl:2441/4b7tooefh48jlq7oktt0tbn8om is not listed on IDEAS
    23. Florin G Maican & Matilda Orth & Mark J Roberts & Van Anh Vuong, 2023. "The Dynamic Impact of Exporting on Firm R&D Investment," Journal of the European Economic Association, European Economic Association, vol. 21(4), pages 1318-1362.
    24. Ruiyang Hu & Chen Yin & Zhijie Zheng & Sili Zhou, 2024. "Unlocking Innovation: The Impact of Free Trade Zones on Corporate Innovation in China," Working Papers 202414, University of Macau, Faculty of Business Administration.

    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:26461. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.