The Impact of Environmental Regulation on Export Sophistication: A Global Perspective

Achieving the simultaneous improvement of environmental quality and export quality represents a critical breakthrough for countries pursuing high-quality economic development. Based on panel data for 67 countries over the period 1995–2020, this study investigates the impact of environmental regulation on export sophistication within the context of globalized production. First, this paper constructs an index of export sophistication from a global perspective and employs a Panel Smooth Transition Regression model to preliminarily identify a single-threshold effect of environmental regulation on export sophistication. On this basis, a baseline regression model incorporating the quadratic term of environmental regulation is established, and a series of robustness checks and heterogeneity analyses are conducted. The results indicate that, in both developed and developing countries, environmental regulation exhibits a significant “U-shaped” effect on export sophistication, although notable country heterogeneity exists. Compared with developed countries, developing countries display a higher turning point and stronger policy effects, suggesting that their micro-level agents possess greater tolerance for environmental regulation and that marginal changes in regulatory intensity exert a more pronounced influence on export sophistication. Furthermore, inspired by the theory of ecological fallacy, this study does not confine itself to the conventional dichotomy between developed and developing countries. Instead, it classifies countries according to their levels of export sophistication and conducts quantile regression analysis accordingly. The findings reveal that the impact of environmental regulation becomes increasingly significant and stable as the level of export sophistication rises. Only when technological capability reaches a certain threshold can environmental regulation exert a positive incentive effect; when technological levels are too low, they are insufficient to support the upward trend of the “U-shaped” relationship.