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State-Society Synergy and Export Sophistication

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  • Andrew X. Li

Abstract

type="main" xml:id="ecpo12064-abs-0001"> This paper contributes to the recent research on “export sophistication,” or the composition of a country's export portfolio. The central question of the current study is what determines a country's level of export sophistication. I argue that a synergetic relationship between state and society positively contributes to the level of export sophistication. The logic behind the argument is that the socially optimal level of investment in new products can only be realized if both the firm and the government find it individually profitable to carry out the investment. In cases whereby either or both lacks private incentive to invest, higher synergy between public and private sectors makes such joint investments more likely to occur. This logic is formally illustrated using a simultaneous game with incomplete information. The central hypothesis is tested using time series cross-sectional data. The key empirical novelty of this paper is the construction of a “synergy index” based on Peter Evans' conceptualization of the term. Overall, the data give good support to the hypothesis. This relationship is particularly robust for the subsample of countries with intermediate levels of synergy. Furthermore, there is evidence suggesting that state-society synergy is subject to diminishing returns as its values get higher.

Suggested Citation

  • Andrew X. Li, 2015. "State-Society Synergy and Export Sophistication," Economics and Politics, Wiley Blackwell, vol. 27(3), pages 433-458, November.
  • Handle: RePEc:bla:ecopol:v:27:y:2015:i:3:p:433-458
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    File URL: http://hdl.handle.net/10.1111/ecpo.2015.27.issue-3
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    Cited by:

    1. Fan, Zhaobin & Anwar, Sajid & Huang, Shujuan, 2018. "Cultural diversity and export sophistication," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 508-522.
    2. Tantisattayakul, Thanapol & Kanchanapiya, Premrudee, 2017. "Financial measures for promoting residential rooftop photovoltaics under a feed-in tariff framework in Thailand," Energy Policy, Elsevier, vol. 109(C), pages 260-269.
    3. Haini, Hazwan & Wei Loon, Pang & Li Li, Pang, 2023. "Can export diversification promote export upgrading? Evidence from an oil-dependent economy," Resources Policy, Elsevier, vol. 80(C).
    4. Su, Xiaoyan & Anwar, Sajid & Zhou, Ying & Tang, Xuan, 2020. "Services trade restrictiveness and manufacturing export sophistication," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    5. Eduard BUDACU, 2017. "Development of Agile Practices in Romanian Software Community," Informatica Economica, Academy of Economic Studies - Bucharest, Romania, vol. 21(2), pages 92-102.
    6. Lechner, Alex Mark & Kassulke, Owen & Unger, Corinne, 2016. "Spatial assessment of open cut coal mining progressive rehabilitation to support the monitoring of rehabilitation liabilities," Resources Policy, Elsevier, vol. 50(C), pages 234-243.

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