Trading Access Policy and Firm Innovation:Evidence from Bunching Estimation
This paper employs a bunching estimation method to assess how the right to participate in international trade influences corporate innovation activities.Drawing on matched samples from the Annual Survey of Industrial Production,the China General Administration of Customs database and the Patent database,the study finds that firms significantly adjust their registered capital beyond the policy threshold to obtain trading rights and thus be able to participate in international trade,resulting in a 14.6%increase in the proportion of firms engaged in international trade.From the extensive margin perspective,there is a 14%increase in the number of firms involved in independent research and development among those engaged in the policy.From the intensive margin perspective,the number of patents for firms participating in the policy increased 2.65 times compared to the control group.The quality of patents for exporting firms also significantly improved due to the continuous accumulation of advanced knowledge from abroad.Learning-by-doing is identified as the primary mechanism through which trade promotes innovation.Finally,the paper concludes that the promotion effect presents a heterogeneous distribution across different types of firms and industries,analysing potential mismatching issues.By employing a novel estimation method,this work provides an in-depth overview of the impact of firm participation in international trade,enriching the existing literature and offering policy implications for China's path towards high-quality development.