Date/Time Date(s) - 22/10/202511:30 am - 12:30 pm
Manolis Chatzikonstantinou is Assistant Professor of International Economics at Georgetown University in Qatar. His research interests lie in the fields of labor economics, innovation, and international finance. He is currently studying the impact of artificial intelligence on labor markets and the role of information technology on multinational firms’ expansion, foreign competition, and asset prices. He received his Ph.D. in economics from the University of California, Los Angeles.
He will present, “Did Information Technology Increase Foreign Competition Risk?“.
Abstract
This paper investigates whether the adoption of Information Technology (IT) amplified the risk of foreign competition for domestic U.S. firms. The declining cost of global communication has increased the market share of multinational firms, suggesting that IT may serve as a conduit for foreign economic shocks. Using microdata on U.S. firms, I show that the revenues of firms exposed to IT-intensive industries exhibit a differential sensitivity to foreign economic shocks based on their size and multinational status. Investors and owners of smaller, domestic firms may then view IT exposure as a foreign competition (displacement) risk. Building on this insight, an index of industry-level IT intensity confirms three main findings:
1. Portfolios with high exposure to IT-intensive industries generate an average of 8-9% higher annual stock returns, suggesting industry-level IT intensity systematically affects industry risk.
2. This IT risk premium is primarily driven by industries with a large presence of multinational firms.
3. Consistent with a displacement risk model, the IT risk premium is significantly higher for smaller, domestic firms. This size-related risk is further amplified in industries with a larger share of foreign multinationals.
These results are rationalized within an asset pricing framework where IT adoption increases the productivity of foreign-owned establishments and strengthens the transmission of foreign shocks to the U.S. domestic economy.
Learn more about Manolis’ work and connect with him through his professional website.