The Impact of Factor Price Distortions on Export Technology Complexity: Evidence from China

Increasing export technology complexity could effectively enhance export competitiveness. High-tech exports generally show lower resource consumption and environmental pollution, thus promoting sustainable economic development. However, immature factor markets could lead to factor price distortions. In fact, factor price distortions hinder improvements in export technology complexity. Thus, this study measures the degree of factor price distortions in various regions of China. Empirical methods such as regression model analysis and heterogeneity analysis are used. We reveal the mechanism of how factor price distortions affect export technology complexity. The conclusions are as follows: (1) Factor price distortions suppress the enhancement of export technology complexity. As the degree of factor price distortions increases, export technology complexity decreases. (2) Factor price distortions show significant regional heterogeneity in the suppression of export technology complexity. The impact gradually decreases from west to east. (3) Factor price distortions could hinder improvements in export technology complexity by weakening the positive effects of the FDI and trade openness. However, with the continuous advancements in market-oriented reforms, this inhibitory effect will gradually diminish. Studying the impact of factor price distortions on the sophistication of export technology significantly enhances economic competitiveness. It also improves resource allocation and further promotes the sustainability of economic development and green development. Furthermore, the logic and principles behind the impact of factor price distortions on export technology complexity can provide valuable insights for our consideration of sustainability in the workplace.