Impact of technical barriers to trade measures on innovation–evidence from chinese manufacturing firms

This study continues the discussion of the relationship between globalization and innovation. Unlike existing studies, this paper shifts attention to the impact of changes in the trade environment caused by Technical Barriers to Trade (TBT) measures on innovation. With Chinese Manufacturing firms’ micro panel dataset and using the number of firm patent applications as a proxy variable to measure innovation, we empirically test the effect of TBT measures on this innovation. This study further distinguishes the heterogeneous effects of the total TBT measures and highly restrictive measures among them. The main estimation results indicate that the total amount of TBT measures imposed by trading partners does not significantly affect the number of patent applications by Chinese exporting firms. However, highly restrictive TBT measures demonstrate a significant negative effect. This once again proves that not all TBT measures are harmful. In addition, we obtained more interesting results through further heterogeneity analyses.