THE IMPACT OF TRADE POLICY UNCERTAINTY ON THE DOMESTIC TECHNOLOGICAL CONTENT OF EXPORT PRODUCTS: EVIDENCE FROM CHINESE MANUFACTURING FIRMS

This study provides a novel evaluation of the domestic technological content of firms’ exports, with an emphasis on production processes. It uses China’s accession to WTO as a quasi-natural experiment to examine the effect of decreased trade policy uncertainty (TPU) on the domestic technological content of firms’ exports. There is a significant correlation between decreased TPU and an increase in the domestic technological content of firms’ exports, according to the findings. In particular, the reduction in TPU contributes to an increase in domestic technology content primarily by stimulating innovation, boosting productivity and provoking export reallocation. In addition, the impact of reduced TPU is more pronounced in improving the domestic technological content of exports for firms with lower initial productivity and capital intensity. This study offers policy implications for developing countries seeking to enhance export technology through trade policies.