Exploring the impact of industrial environment uncertainty on export sophistication

Abstract

A favorable industrial environment is important for increasing the sophistication and competitiveness of a country’s exports. However, a country’s industrial environment is bound to change dynamically. Therefore, this study explores the impact of industrial environment uncertainty on export complexity. Through an empirical analysis of panel data from 76 countries from 2010 to 2020, we find that political and social uncertainty significantly inhibits exports, while an uncertain economic environment significantly complicates exports. Moreover, uncertainty in the industrial environment affects high- and middle-income countries more than low-income countries. Furthermore, the analysis of regulatory effects shows that political uncertainty and social uncertainty have a substitution relationship in inhibiting export complexity. This study affirms the impact of industrial environment uncertainty on a country’s export capabilities and provides a reference for countries with different incomes to formulate and modify their industrial environment policies.