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Before the COVID-19 pandemic was prevailing in the U.S., many people had expected that Trump could easily start his second term in the White House. This was because the U.S. economy was in good shape in the sense that the unemployment rate (3.5%) was at a historic low for the last five decades. The broad spread of COVID-19 starting from the first quarter of 2020, however, brought about a huge number of layoffs in the U.S. labor market. The unemployment rate in April skyrocketed to 14.7%, the highest in U.S. history since 1948. Accordingly, the disposable income of U.S. workers significantly decreased, so that year-on-year growth rates in private consumption expenditure plummeted by more than 19% in April. From now on, Biden will make changes in policies implemented under the Trump administration. Among other things, we need to focus on international trade policy under the new Biden administration. Biden's trade policy will affect our trade relationship with the U.S. as well as other countries' strategies for the U.S. standpoint. First and foremost, the Biden administration will basically support free trade as he advocated it as Vice President of the Obama administration. For example, he put much effort into reaching an agreement for the TPP during the second term of Obama's presidency. As a result, a mega agreement of free trade in the Asia-Pacific region was signed by 12 countries in 2016, although the Trump administration withdrew from the agreement in 2017.

Innovation has attracted much attention among firms as well as researchers. First, firms allocate a huge amount of funds to R&D expenditure for their innovation in products and production processes because firms' long-run growth depends on innovation. Second, researchers have investigated diverse factors affecting firms' innovation in order to answer fundamental questions on sustainable innovation. As Schumpeter suggests in his seminal work, Capitalism, Socialism, and Democracy (1950), firm size plays an important role in firms' innovation. For example, large firms can easily realize innovation because they are more likely to possess many useful resources such as more skilled scientists and high-quality equipment than small firms. In this regard, mergers and acquisitions (M&As) have been used as one of the most preferable strategies for firm growth through innovation.