Mapping U.S.-China Technology Decoupling, Innovation, and Firm Performance
79 Pages Posted: 18 Feb 2021 Last revised: 7 Jan 2022
Date Written: December 2, 2020
We develop measures for technology decoupling and dependence between the U.S. and China based on combined patent data. The first two decades of the century witnessed a steady increase in technology integration (or less decoupling), but China’s dependence on the U.S. increased (decreased) during the first (second) decade. Decoupling in a technology field predicts China’s growing dependence on U.S. technology, which, in turn, predicts less decoupling further down the road. Decoupling is associated with more patent outputs in China, but lower firm productivity and valuation. China’s innovation-oriented industrial policies trade off the inherent conflict between indigenous innovation and firm competitiveness.
Keywords: Technology Decoupling, Innovation, R&D, Patent, Industrial Policy
JEL Classification: O31, O33, F02, O25
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