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Innovation, Trade Policy, and Globalization Accessible Data
Figure 1: Performance of the United States versus its peers, 1976–80
The figure shows the relationship between growth of average labor productivity in the manufacturing sector and growth in the number of patent applications for the United States and its major trading partners between 1976 and 1980. We obtain data on patent applications in the United States from the USPTO and on international productivity comparisons from Capdevielle and Alvarez (1981). The average growth in output-per-hours-worked in manufacturing was the lowest in the United States. Moreover, innovation by foreign competitors, proxied by new patent applications registered in the United States by the residents of these foreign countries, expanded substantially except for the United Kingdom. The figure also reveals that the largest growth rates in patent applications have been recorded by those countries whose labor productivity growth in manufacturing most outpaced the United States.
Note: Taken from Akcigit et al. (2018). The figure shows the relationship between growth of average labor productivity in the manufacturing sector and growth in the number of patent applications for the United States and its major trading partners between 1976 and 1980. Akcigit et al. obtain data on patent applications in the United States from the USPTO and on international productivity comparisons from Capdevielle and Alvarez (1981).
Figure 2: R&D and innovation intensity of U.S. firms, 1975–95
The figure shows the evolution of aggregate R&D intensity (defined as the ratio of total R&D spending to total sales) of the public U.S. firms listed in the Compustat database, and the share of patents registered by U.S. residents in total patents registered in the USPTO database from 1975 to 1995. The ratios are calculated annually. The bars show the total number of U.S. states providing R&D tax credits, along with their names, for every year since the first adoption of such a measure in 1982 in Minnesota. Data on the state-level provision of R&D subsidies are obtained from Wilson (2009). Upon these policy changes, aggregate R&D intensity of U.S. public firms showed a dramatic increase, indicated by the blue. With an expected delay, the annual share of patents registered by U.S. residents in total patent applications increased as well, as denoted by the orange line.
Note: Taken from Akcigit et al. (2018). The figure shows the evolution of aggregate R&D intensity (defined as the ratio of total R&D spending to total sales) of the public U.S. firms listed in the Compustat database, and the share of patents registered by U.S. residents in total patents registered in the USPTO database from 1975 to 1995. The ratios are calculated annually. The bars show the total number of U.S. states providing R&D tax credits, along with their names, for every year since the first adoption of such a measure in 1982 in Minnesota. Data on the state-level provision of R&D subsidies are obtained from Wilson (2009).
Figure 3: Welfare effects of protectionism: unilateral increase in tariffs
The figure illustrates the effects of a unilateral 50 percent increase in U.S. tariffs (protectionist U.S. policy without retaliatory response). Panel A shows the welfare change in consumption-equivalent terms on the vertical axis over different time horizons (in years) on the horizontal axis. The consumption-equivalent change measures the required percentage change in consumption at every point time that makes the representative consumer in the baseline economy (without policy change) indifferent consuming the alternative consumption path that would arise in the economy subject to policy change. Panel B shows of the optimal innovation intensity of U.S. incumbent firms as a function of technology gaps in two scenarios. In the model, technology gaps correspond to the relative quality difference between the leader and the follower in the same sector. In a sense, they measure the difference between the total numbers of technology rungs which determine the firms’ product qualities. The peaks in the innovation-effort profile reflect defensive and expansionary R&D efforts.
Note: The figure illustrates the effects of a unilateral 50 percent increase in U.S. tariffs (protectionist U.S. policy without retaliatory response). Panel A shows the welfare change in consumption-equivalent terms on the vertical axis over different time horizons (in years) on the horizontal axis. The consumption-equivalent change measures the required percentage change in consumption at every point time that makes the representative consumer in the baseline economy (without policy change) indifferent consuming the alternative consumption path that would arise in the economy subject to policy change. Panel B shows of the optimal innovation intensity of U.S. incumbent firms as a function of technology gaps in two scenarios. In the model, technology gaps correspond to the relative quality difference between the leader and the follower in the same sector. In a sense, they measure the difference between the total numbers of technology rungs which determine the firms’ product qualities. The peaks in the innovation-effort profile reflect defensive and expansionary R&D efforts.
Figure 4: Optimal joint policy with unilateral and bilateral tariff changes
The figure compares horizon-dependent optimal joint policy over different time horizons in the case of (trade-policy) retaliation to that in the baseline. Solid lines (left axis) show the level of R&D subsidies, while dashed lines (right axis) show the tariff level. If there is retaliation, the optimal tariff rate reduces to zero, and the need for R&D subsidies is less.
Note: The figure compares horizon-dependent optimal joint policy over different time horizons in the case of (trade-policy) retaliation to that in the baseline. Solid lines (left axis) show the level of R&D subsidies, while dashed lines (right axis) show the tariff level.