The Effect of Digital Transformation on Export Upgrading: Firm-Level Evidence from China

This paper constructs the export product upgrading indicator based on export product quality and export technological sophistication, and examines the impact of digital transformation on export product upgrading of Chinese industrial enterprises from 2001 to 2013 using the multidimensional fixed effects model. The results show that digital transformation promotes firm export upgrading. We also find that the positive effects of digital transformation on export upgrading are more pronounced among domestic-funded firms and firms in regions with stronger development capabilities and more favorable social environments. Mechanism tests suggest that digital transformation exerts a positive effect on export product upgrading through innovation incentives, cost regulation and labor efficiency improvement. In addition, we find that domestic digital factor inputs are more conducive to export upgrading than foreign digital factor inputs. Finally, we find that digital transformation facilitates export product upgrading more by increasing the export technological sophistication.