What accounts for the export sophistication of China´s indigenous enterprises in the perspective of vertical specification

This paper analyses the determinants of the export sophistication of China´s indigenous enterprises under the vertical specialization from theoretical and empirical analysis. According to the China Customs General Administration´s electronic trade database, covering the period 2000-2006, we use the provincial panel data and find robust evidence that skilled labor, labor productivity, capital stock and infrastructure which may induce a higher export sophistication of China´s indigenous enterprises. Although the exports of processing trade seem to help indigenous enterprises to improve export sophistication, the imports of processing trade do not seem to upgrade the export sophistication. From the empirical results we can conclude that processing trade does not have a significant effect on the export sophistication. Therefore, in order to get a higher export sophistication of China´s indigenous enterprises, we should take some measures such as speeding up to cultivate the skilled labor, improving the technology of production and the management of enterprises, increasing the capital stock reasonably, strengthening infrastructure construction and controlling the proportion of imports and exports of processing trade and increasing the value-added of processing trade.