Do supply chain shocks affect technological sophistication of exporting? Evidence from China’s anti-dumping measures on intermediate products

Abstract

With the increasing instability of the global economy, supply chain shocks have become a significant concern for policymakers. Studies have demonstrated that supply chain shocks adversely influence firms’ imports; however, the technological sophistication of exporting, an essential factor affecting countries’ status in terms of international division of labor, has not been given sufficient attention. Using a dataset of Chinese firms over the period 2002–2013, we examine the impact of supply chain shocks caused by anti-dumping measures on the technological sophistication of exporting. We show that firms affected by such supply chain shocks experience a decline in the technological sophistication of exporting. We further demonstrate that the impact is channeled through squeezing firms’ profits and impeding firms’ access to technology spillovers. Moreover, we find that the negative effects are more prominent for firms in high-tech industries, firms without subsidies and those with greater financial constraints. Our conclusion deepens the understanding of supply chain shocks with policy implications.