RESEARCH-AND-DEVELOPMENT REACTIONS TO HIGH-TECHNOLOGY IMPORT COMPETITION

For a 17-year panel covering 308 U.S. manufacturers, we analyze companies' R&D spending reactions to changes in high-technology imports. On average, R&D/sales ratios were reduced in the short run as imports rose. Reactions tended to be more aggressive, the more concentrated the markets were in which the firms operated, when company R&D operations were multinational, and with greater company size and diversification. Reactions were less aggressive when special trade barriers had been erected. Reactions became more aggressive over the longer run.