Government Subsidies, Industrial Competition and Enterprises’ Export Technology Complexity

Abstract

Since the twenty-first century, China’s export trade has become significant changes in the export technology structure while realizing the scale growth. Scholars mostly explain this phenomenon from the perspectives of internal factors such as human capital, factor endowments, and technology development, but few explanations are made from the perspectives of the two external factors of ‘government’s hands’ and ‘market hands’. Therefore, this paper examines the impact of Chinese ‘government subsidies’ and ‘market competition’ on enterprises’ export technology complexity and its internal mechanism from the micro perspective, so as to provide theoretical reference for current market reform and the upgrading of trade structure. This paper has research ideas and methods as follows: firstly, it constructs the theoretical model of enterprises’ export technology complexity based on the Hausman（2005）, and puts forward related theoretical hypotheses; secondly, it examines the effect of China’s government subsidies and industry competition on enterprises’ export technology complexity by propensity score matching（PSM）and difference-in-difference method; finally, it further examines the internal mechanism about how government subsidies and industry competition affect enterprises’ export technology complexity from the perspectives of RD secondly, the negative effect of government subsidies on enterprises’ export technology complexity is more significant in the middle-and-high-degree competition industries than that in the low-degree competition industries, and the increase in industrial competition is beneficial to the correction of negative effect of government subsidies on enterprises’ export technology complexity; thirdly, further observation of affecting mechanism shows that RD secondly, this paper uses enterprises’ micro data, and most literature estimates the export technology complexity at industrial and regional levels, which ignores enterprise heterogeneity; thirdly, this paper uses propensity score matching（PSM）and difference-in-difference method to make an empirical analysis; as a policy variable, government subsidies may not be a random event; if we continue to adopt OLS, our conclusions would have serious endogeneity; so our research method overcomes the endogenous problem to some extent. In general, the conclusions are good for us to understand the policy implications of current governmental cuts in export subsidies, and also provide theoretical reference for how to use the government’s hands and market hands to improve export technology structure.