Does Industrial IT Adoption Affect Export Sophistication? Evidence from China's Pilot Zones Policy for Industrial Information Integration

Regarding China's Pilot Zones Policy for Industrial Information Integration as a quasi-natural experiment and utilizing city-level data from 2003 to 2016, this study exogenously examines the impact of industrial information technology adoption on city export sophistication. By employing a difference-in-differences estimation, the findings reveal that the adoption of industrial IT significantly enhances city export sophistication. Mechanism analysis demonstrates that technological innovation and industrial structural upgrading are key drivers of city export sophistication. Furthermore, heterogeneity analysis indicates that the positive effect of industrial IT adoption on export sophistication is more pronounced in processing trade, resource-based, and small-scale cities. These findings offer valuable insights into how other developing countries leverage the industrial IT revolution to enhance trade quality and economic development.