Better, Faster, Stronger: Global Innovation and Trade Liberalization∗

This paper investigates the effect of improved market access on worldwide innovation. Using exogenous changes in tariffs in firms’ export markets during the 1990s, we find a large effect of tariff cuts on innovation as measured by patent data. These effects are not driven by the deterioration of innovation quality, and the results are robust to controlling for changes in the patent system and to industry-wide trends in innovation. ∗We would like to thank Swati Dhingra and Rachel Griffith as well as numerous seminar and conference participants for helpful clarifications and valuable discussion. We also thank Bjarne J. Kvam from the Norwegian Patent Offce (Patentstyret) for guidance related to the patent data. †University of Oslo, [email protected] ‡University of Oslo & CEPR, [email protected] §University of Oslo & CEPR, [email protected] 1