Driving Export Sophistication Through Industry Integration: Evidence from Chinese Manufacturing Firms

Against the backdrop of increasingly deep global industrial division of labor, improving the technological complexity of export products has become crucial for the high-quality development of China's manufacturing industry. With the rise of the modern service industry, the integration of manufacturing and services has increasingly emerged as an important pathway for enterprise transformation and upgrading. Based on data from A-share listed manufacturing companies in China from 2007 to 2019, this paper investigates the impact and mechanisms of industry integration on the technological complexity of firms' exports. The study finds that industry integration significantly enhances the technological complexity of firms’ export products. This effect remains robust after a series of tests, including excluding municipalities from the sample, propensity score matching, adjusting the sample period, and using instrumental variable methods. Further heterogeneity analysis shows that firms in the eastern region and non-state-owned enterprises benefit more significantly from industry integration, particularly in terms of improving technological innovation and resource allocation efficiency. Mechanism analysis indicates that industry integration improves export technological complexity through three main channels: technological innovation capability, the proportion of foreign direct investment (FDI), and resource allocation efficiency. Based on these findings, this paper suggests that policies should strengthen support for the central and western regions, optimize foreign investment attraction strategies, and promote enterprise service-oriented transformation to enhance technological innovation capabilities and resource allocation efficiency.