Économie et Statistique n° 363-364-365 - Firms on The Global Markets Labour Market - Attractiveness - Debt - Enlargement toward East en South
Innovation and international competition
The role of trade and technological progress in the rise in inequalities between skilled and unskilled workers in the industrialised countries has generated an intense debate over the last decade. We set out to contribute to this debate by shedding light on two overlooked fac-tors. First of all, globalisation has too often been viewed through the rose-coloured glasses of a perfectly com-petitive world. In such a world, international trade can only play a significant role between countries with suf-ficiently different factor endowments and only by means of large price variations and trade volumes. However, the observation of North-South trade contra-dicts this view. Secondly, globalisation and technologi-cal innovation have often been set apart as two inde-pendent processes with no interaction. When, however, the magnitude of the imperfect competition pheno-mena that can arise from the «non-price effects» of endogenous technological change is recognised, glo-balisation and technological progress become two complementary elements explaining the observed changes in the distribution of wealth. This paper presents a defensive innovation mechanism triggered by international trade openness. Taking the existence of monopolistic rents capable of being destroyed by imitation in low-wage countries and inno-vation in Northern countries, we show that international trade openness can prompt the adoption of innovations biased towards skilled labour to protect these rents. Two tests of the model based on French data confirm the implications of this mechanism.