Speaker：Prof. LIU Qing(University of International Business and Economics)

Time：10:00-11:30 April 6,2017(Thursday)

Site：B127

Abstract:Major trade liberalization episodes are often followed with a surge of innovations. This paper proposes a novel channel that trade may affect innovation: a major trade liberalization largely removes policy uncertainty in the destination market, and therefore encourages firms to invest in innovation. To verify this linkage, we adopt a difference-in-differences approach to examine the impact of a reduction in trade policy uncertainty (TPU), 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.