The Effect of Chinese Imports on European Innovation Activities in the Medium-Long Term Period

Abstract

Studies have been conducted about the role of foreign trade-driven technology transfer in the achievement of the Chinese miracle; however, when focusing on the opposite direction, the literature is not uniform: how are Western businesses affected by trade dealings which China? To what extent does this impact apply to the innovation cycle? In this research we focused on the linear correlation between innovation in European countries (proxied by patent applications) and imports from China, over the 15-year time period following China's accession to the World Trade Organization in 2001. Patent applications are used as a measure of innovation, integrated in an economic model inspired by the "Trapped Factors" model, that makes it possible to account for escape-competition effects. The model analyzes the 2002-2016 period across 22 European countries. Apart from evaluating the impact of Chinese imports on European innovation, our study provides a review of the major contributions that have characterized this research area in the most recent years, trying to categorize and to present them from a proactive and comprehensive point of view. Keywords: innovation, import, China, Europe, patent applications DOI: 10.7176/EJBM/12-12-03 Publication date: April 30 th 2020