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Exchange rate appreciation, R&D, and export sophistication: Evidence from China

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  • Sumei Gan
  • Dingping Cheng

Abstract

Based on panel data of 26 manufacturing industries in China from 2000 to 2010, this paper investigates the impact of exchange rate changes on export sophistication. Utilizing a fixed-effects model, we found that prior to the RMB exchange rate reform in 2005, the RMB exchange rate was significantly negatively correlated with export complexity, while it was significantly positively correlated with export complexity after the exchange rate reform. The appreciation of the RMB brought about by the implementation of the reform policy has significantly improved the sophistication of China’s exports. It was also determined that the appreciation of the RMB significantly augmented the sophistication of China’s exports by promoting R&D investment.

Suggested Citation

  • Sumei Gan & Dingping Cheng, 2020. "Exchange rate appreciation, R&D, and export sophistication: Evidence from China," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(2), pages 237-246, February.
    • Handle: RePEc:taf:jitecd:v:29:y:2020:i:2:p:237-246
    DOI: 10.1080/09638199.2019.1657171
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    Cited by:

    1. Dang Luu Hai, 2021. "Aid for trade and export sophistication in recipient countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(4), pages 530-548, May.

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