A Blessing or a Curse? Exploring the Impact of Environmental Regulation on China's Regional Green Development from the Perspective of Governance Transformation.

Xianpu Xu,Lin Zheng,Xiawan Li

doi:10.3390/ijerph19031312

Abstract

China’s rapid economic growth has caused serious problems, such as environmental pollution and resource exhaustion. Only by improving the green total factor productivity (GTFP) can China’s economic development get out of the dual dilemmas of environmental degradation and resources exhaustion. Although environmental regulation helps to improve China’s productivity, its impact on GTFP is still controversial and deserves careful investigation. In this context, this study adopts the global Malmquist-Luenberger productivity index to measure the GTFP change of China’s 30 provinces over the period of 2003 to 2017 and then it uses the fixed-effect dynamic panel model to investigate the impact of environmental regulation on GTFP from the perspective of governance transformation. The results show that: (1) there is a nonlinear U-shaped relationship between environmental regulation and GTFP, indicating that the Porter hypothesis is verified in China. More notably, the values of environmental regulation are still located on the left side of the U-shaped curve at present, which means that the promotional effect of environmental regulation on GTFP has not been realized fully. (2) The U-shaped relationship shows significant regional heterogeneity. The western region demonstrates the highest level of significance, followed by the eastern region. However, the U-shaped relationship is insignificant in the central region. (3) Governance transformation can not only significantly improve GTFP but it can also accelerate the realization of the Porter hypothesis by inspiring the innovative enthusiasm of enterprises, which means that governance transformation can contribute to the achievement of the improved effects of environmental regulation on GTFP. (4) R&D investment can significantly improve GTFP, where the impacts of trade openness and factor endowment were significantly negative and the influence of foreign direct investment was not significant. These conclusions provide a good reference point for optimizing the relationship between the government and the market, as well as promoting regional green and high-quality development in China.

Highlights

Since the reform and expansion in 1978, China has achieved remarkable economic growth achievements which benefited greatly from the large scale of the government’s leading investment and factor input [1,2,3]
(3) Governance transformation can significantly improve green total factor productivity (GTFP) but it can accelerate the realization of the Porter hypothesis by inspiring the innovative enthusiasm of enterprises, which means that governance transformation can contribute to the achievement of the improved effects of environmental regulation on GTFP
The results of the variance inflation factor (VIF) test indicated that the VIF values were all less than 10 and ranged from 1.24 to 2.22, showing that there was no multicollinearity among the variables

Summary

Introduction

Since the reform and expansion in 1978, China has achieved remarkable economic growth achievements which benefited greatly from the large scale of the government’s leading investment and factor input [1,2,3]. As the world’s second-largest economy, China is facing the dual pressure of economic development and environmental protection. China’s economy has entered a “new normal”. Period, shifting from high-speed growth to high-quality development and total factor 4.0/).

Objectives

Methods

Results

Discussion

Conclusion