The determinants of export sophistication: Does digitalization matter?

Atasoy B. S.

INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, vol.26, no.4, pp.5135-5159, 2021 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 26 Issue: 4
  • Publication Date: 2021
  • Doi Number: 10.1002/ijfe.2058
  • Journal Name: INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, ABI/INFORM, Aerospace Database, Business Source Elite, Business Source Premier, Communication Abstracts, EconLit, Geobase, Metadex, Civil Engineering Abstracts
  • Page Numbers: pp.5135-5159
  • Keywords: development, export sophistication, growth, institutions, internet, R&D, HIGH-TECH EXPORTS, FOREIGN DIRECT-INVESTMENT, PANEL-DATA, DEVELOPING-COUNTRIES, GENERALIZED-METHOD, TECHNOLOGY, INNOVATION, DYNAMICS, GROWTH, TRADE
  • Hacettepe University Affiliated: No

Abstract

Due to innovation, productivity surged and the structure of exports shifted towards sophisticated products in recent decades. In this study, I analyse the determinants of export sophistication with a special focus on the effects of digitalization for 61 countries by employing three measures of export sophistication. To my knowledge, this is the first study that investigates the nexus between digitalization and sophistication. It is found that exports get more sophisticated as digitalization promotes. In line with the literature, institutional quality, access to credit, and R&D are concluded to be other drivers of export sophistication. However, the evidence on tertiary enrolment and FDIs is mixed. Finally, the level of democracy seems to have a limited effect on sophistication indicating countries that have an autocratic rule also have a chance to sophisticate their exports. In the light of these findings, governments are advised to improve property rights, rule of law, the ease of doing business, access to credit, tertiary enrolment, and R&D expenditures to sophisticate their export baskets.