How Do Local Environmental Regulations Affect the Export Technological Complexity of Enterprises?

Abstract

This paper investigates the impact of environmental regulations in the cities where enterprises are located on the technological complexity of exports from Chinese manufacturing companies. Currently, China is promoting high-quality development in foreign trade, which encompasses various aspects, including the enhancement of the technological content of export products. This study begins by examining the environmental regulations in the cities of enterprises and their effects on the technological content of exported products. It utilizes government work reports from various cities in China to evaluate the strength of environmental regulations in each city, subsequently analyzing their impact on the export technological complexity of Chinese manufacturing enterprises. Empirical results indicate that environmental regulations drive an increase in the technological complexity of exports from these enterprises, and this conclusion is validated through several robustness tests, including substitution variables and instrumental variable regression. Heterogeneity tests reveal that the effect of environmental regulations on export technological complexity is not significant for enterprises located in central cities compared to those in eastern and western cities. Furthermore, the export technological complexity of processing-trade enterprises and capital-intensive industries is not significantly influenced by environmental regulations. Additionally, the analysis of the moderating effect finds that a city’s innovation capacity plays a reinforcing role in the relationship between environmental regulations and the export technological complexity of enterprises. Based on these research findings, this paper offers corresponding recommendations from the perspective of environmental regulations to promote the high-quality development of China’s foreign trade.