Abstract:

Against the background of increasing global trade protectionism, trade frictions have become an important tool for countries around the world to maintain domestic economic order and industrial safety. Innovation is the core of economic development. Whether trade frictions have harmed the technological innovation of the target country is worthy of in-depth discussion. Based on the cross-country panel data of 119 countries in the world from 2000 to 2015, we analyze the effect and mechanism of trade frictions on technological innovation of the target country. The result shows that trade frictions have significantly inhibited the improvement of the target country’s technological innovation level. This conclusion is still valid under a series of robustness tests such as the selection of different trade frictions measurement methods, the replacement of innovative measurement indicators, the introduction of instrument variables. Mechanism tests show that trade frictions mainly damage the target country’s technological innovation by reducing the degree of openness and hindering international personnel exchanges. Further research finds that optimizing the industrial structure, improving the level of financial development and enhancing government effectiveness can significantly resist the adverse impact of trade frictions on national technological innovation. Against the background of frequent trade frictions, emerging countries, including China, should further elevate the technology innovation capabilities by firmly implementing developing strategies such as promoting freedom, diversity and convenience of trading, improving the new pattern of opening up, expanding the external exchanges of top human capital, and promoting the rationalization of industrial organizations.

Key words: trade frictions, technological innovation, degree of openness, international personnel exchange