--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-37/the-china-shock-and-innovation-and-productivity-in-canadian-manufacturing/" title: "The China Shock and Innovation and Productivity in Canadian Manufacturing" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T07:53:07+00:00" date_modified: "2026-07-13T07:53:07+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2019" ipm_keyword: - "2005-2010" - "Canada" - "China shock" - "firm-level" - "import competition" - "manufacturing" - "productivity" - "R&D" - "reallocation" - "TFP" ipm_research_theme: - "Sectoral and firm-level dynamics" - "Trade" ipm_country_focus: - "Canada" - "China" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # The China Shock and Innovation and Productivity in Canadian Manufacturing Canonical URL: https://csls.ca/ipm-archive/ipm-issue-37/the-china-shock-and-innovation-and-productivity-in-canadian-manufacturing/ # The China Shock and Innovation and Productivity in Canadian Manufacturing [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-37-3-Kim.pdf) Cite this article × Cite this article as: Kim, Myeongwan. 2019. “The China Shock and Innovation and Productivity in Canadian Manufacturing.” International Productivity Monitor, No. 37 (Fall 2019): 72–95. https://www.csls.ca/ipm-archive/ipm-issue-37/the-china-shock-and-innovation-and-productivity-in-canadian-manufacturing/ ## Author: - Myeongwan Kim Centre for the Study of Living Standards (CSLS) ## IPM Issue 37 Fall 2019 pp. 72–95 ## Related IPM articles [Efficiency Adjustment of Hours Worked: Two Possible Modifications of a Jorgensen Production Model Barbara Fraumeni Fall 2025 | IPM Issue 49 | pp. 103–115](https://csls.ca/ipm-archive/ipm-issue-49/efficiency-adjustment-of-hours-worked-two-possible-modifications-of-a-jorgensen-production-model/) [The Relationship between Efficiencies Defenses for Mergers and TFP Growth Robin Shaban Fall 2025 | IPM Issue 49 | pp. 82–102](https://csls.ca/ipm-archive/ipm-issue-49/the-relationship-between-efficiencies-defenses-for-mergers-and-tfp-growth/) [Labour Productivity as a Measure of Technological Change Ulrich Kohli Fall 2025 | IPM Issue 49 | pp. 64–81](https://csls.ca/ipm-archive/ipm-issue-49/labour-productivity-as-a-measure-of-technological-change/) [Appendix: Variable Definitions and Country/Sector Coverage for Regulatory Reform Analysis Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 1–18](https://csls.ca/ipm-archive/ipm-issue-49/appendix-variable-definitions-and-country-sector-coverage-for-regulatory-reform-analysis/) [Adult Skills and Productivity: New Evidence from PIAAC 2023 Dan Andrews, Balázs Égert, Christine de La Maisonneuve Fall 2025 | IPM Issue 49 | pp. 41–63](https://csls.ca/ipm-archive/ipm-issue-49/adult-skills-and-productivity-new-evidence-from-piaac-2023/) [The Potential Impact of Pro-competitive Regulatory Reforms on Productivity and Growth in Canada Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 3–40](https://csls.ca/ipm-archive/ipm-issue-49/the-potential-impact-of-pro-competitive-regulatory-reforms-on-productivity-and-growth-in-canada/) [IPM Issue 49 Editors’ Overview Andrew Sharpe, Bart van Ark, Paul Schreyer Fall 2025 | IPM Issue 49 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-49/) [De-industrialization and the Great Productivity Slowdown: What Comes Next? Paul Fisher Spring 2025 | IPM Issue 48 | pp. 115–138](https://csls.ca/ipm-archive/ipm-issue-48/de-industrialization-and-the-great-productivity-slowdown-what-comes-next/) [The UK Productivity Slowdown: A Review of Timing, Magnitude, and Drivers Josh Martin Spring 2025 | IPM Issue 48 | pp. 1–34](https://csls.ca/ipm-archive/ipm-issue-48/the-uk-productivity-slowdown-a-review-of-timing-magnitude-and-drivers/) [Appendix: UK Productivity Growth Rates Across Data Vintages and Studies Josh Martin Spring 2025 | IPM Issue 48 | pp. 65–73](https://csls.ca/ipm-archive/ipm-issue-48/appendix-uk-productivity-growth-rates-across-data-vintages-and-studies/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn Using firm-level data for Canadian manufacturing, this article examines the impact of increased Chinese import competition on R&D and TFP. It finds that greater import penetration reduced firm profitability (especially for smaller firms), which decreased R&D expenditure and within-firm TFP growth. However, the exit of smaller, less productive firms had a positive reallocation effect on TFP that more than offset the negative direct effect. The counterfactual estimate suggests that without the increase in Chinese import penetration, TFP growth in Canadian manufacturing would have been 0.2 percentage points per year lower in 2005-2010. À l’aide de données au niveau des entreprises pour le secteur manufacturier canadien, cet article examine l’impact d’une concurrence accrue des importations chinoises sur la R-D et la PMF. Il constate qu’une plus forte pénétration des importations a réduit la rentabilité des entreprises (en particulier pour les plus petites), ce qui a diminué les dépenses en R-D et la croissance de la PMF intra-entreprise. Cependant, la sortie des entreprises plus petites et moins productives a eu un effet positif de réaffectation sur la PMF qui a plus que compensé l’effet direct négatif. L’estimation contrefactuelle suggère que sans la hausse de la pénétration des importations chinoises, la croissance de la PMF dans le secteur manufacturier canadien aurait été inférieure de 0,2 point de pourcentage par année en 2005-2010. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-37-3-Kim.pdf)