Abstract
In Bloom et al. (2016, Bloom, Draca and Van Reenen (BDVR)), we have a set of nine results on the impact of Chinese trade. The first three showed that Chinese trade increased technical change in European firms measured by patents, productivity, and the adoption of Information Technology (IT). The last six showed that Chinese trade led to reallocation towards more technologically advanced firms: those with more patents, higher productivity and IT adoption had faster growth and lower exit rates. Campbell and Mau (2020, “CM”) argue that one of these results, the effect of Chinese imports on patenting, is sensitive to specification changes. This article focuses on CM’s critique of our count data models—we discuss other aspects of CM in a longer response.1
Highlights
In Bloom, Draca and Van Reenen (2016, “BDVR”) we have a set of nine results on the impact of Chinese trade
A second issue with the column (2) specification in our Table 1 is that it does not control for the initial conditions for Chinese imports
Note that the initial imports variable is not statistically significant. This is likely because the initial condition is no longer “initial” for firms who enter after 1996
Summary
In Bloom, Draca and Van Reenen (2016, “BDVR”) we have a set of nine results on the impact of Chinese trade. A second issue with the column (2) specification in our Table 1 is that it does not control for the initial conditions for Chinese imports To see why this is potentially important, consider the model: PATijkt = exp(αIMPjCkHt + fkt + ηi)Vijkt (1). We label this “FIXED” as opposed to the baseline “COHORT” We implement these two changes in column (4) of Table 1 that reproduces column (3) but uses a single-industry per firm and define Chinese import initial condition fixed solely in 1990-1996. Note that the initial imports variable is not statistically significant This is likely because the initial condition is no longer “initial” for firms who enter after 1996. Since equation (3) should hold if we estimate a Poisson model instead of Negative Binomial model, we repeat the new specifications of Table 1 for the Poisson model, which shows similar qualitative results.
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