Technological Intensity and the Export Effects of Investment Policy

Abstract

Technological upgrading has become a central instrument for promoting export-oriented transformation in manufacturing; yet, the moderating role of industry technology intensity and the structural volatility that may arise during transition remain underexplored. Using an industry-level panel dataset for Taiwan’s manufacturing sector (2016–2023), this study estimates fixed-effects and interaction-term models to evaluate heterogeneous policy effects across three export dimensions: export growth rate, export ratio, and export stability (operationalized as short-horizon volatility risk). The results indicate that, in high-tech industries, policy-induced investment is associated with stronger export ratio but also higher export volatility, pointing to a trade-off between structural upgrading and short-run stability. In contrast, traditional manufacturing exhibits relatively limited outward responses, consistent with an adjustment pattern in which technology investment is prioritized for internal reallocation and efficiency improvement rather than immediate export expansion. These findings highlight distinct operating logics determined by technology intensity: high-tech industries facing greater structural instability during upgrading, while traditional industries tend to internalize resources through capability strengthening. Consequently, policy design should be differentiated complementary measures are needed to manage volatility risks in high-tech sectors, while evaluations for traditional manufacturing should recognize longer adjustment horizons and avoid inferring effectiveness from a single export indicator.