Selecting a Technological Progress Path and Upgrading Export Product Quality: Evidence From China

Abstract

This study investigates the effects of different technological progress paths on firms’ export product quality in China based on Fixed Effect and System GMM models. Using matched data from 2000 to 2010 from the Chinese Industrial Enterprise Database, the Chinese Customs Database and the list of overseas investment enterprises, we find that the four paths (OFDI, FDI, import of intermediate goods, and R&D) can all significantly improve firms’ export product quality; Among them, OFDI has the most significant effect, followed by import of intermediate goods, FDI, and R&D, in that order. The results remain robust after considering selectivity bias and sample endogeneity. The heterogeneity test shows that the path of technological progress is more significant in improving the quality of export products of private, eastern, labor-intensive and processing trade enterprises. The article suggests that Chinese enterprises should further expand OFDI levels, fully stimulate the innovation energy of private enterprises, and emphasize the key role of independent innovation in promoting the upgrading of export product quality.