Abstract
Under both Chinese-style fiscal decentralization (vertical competition) and promotion tournament systems (horizontal competition), the economic development system used by the government determines whether local government competition significantly influences green total factor productivity (GTFP). Moreover, market segmentation, an important strategic tool for local government competition, will significantly impact GTFP because of the implied changes in production efficiency and blocked factor flows. This study applies GMM and the mediation effect model to explore the relationship between local government competition and GTFP from the market segmentation perspective using statistical data from 30 provinces from 2006 to 2017 in China. Overall, our results demonstrate that local government competition significantly inhibits GTFP promotion. Local government competition also has a negative impact on GTFP by promoting market segmentation. As a mediating variable, the market segmentation coefficient was statistically significant. Considering regional heterogeneity, in the eastern region, local government competition has no significant inhibitory effect on GTFP. Moreover, market segmentation has no intermediary effect. In the central and western regions, GTFP remains significantly inhibited by local government competition, and the mediation effect of market segmentation is significant. Finally, our empirical results are robust.
Highlights
In the past 40 years of reform and opening-up, China’s economy has achieved a “growth miracle,” with gross domestic product surging from approximately 367.9 billion to 99 trillion yuan in 1978 and 2019, respectively1
The green total factor productivity (GTFP) of Hebei, Shanxi, Shaanxi, Gansu, Ningxia, and Xinjiang, and the other 10 regions are all less than 0.500, and DEA is in a situation of inefficiency, demonstrating that the provinces have some room to improve in pure technical efficiency (PTE) or scale efficiency (SE)
It was found that local government competition significantly inhibited GTFP at the 1% level6
Summary
In the past 40 years of reform and opening-up, China’s economy has achieved a “growth miracle,” with gross domestic product surging from approximately 367.9 billion to 99 trillion yuan in 1978 and 2019, respectively. China’s Green Total Factor Productivity continue to surge (Ahmed et al, 2020; Lin et al, 2021). Extensive growth modes such as high capital input, high consumption of resources, and high environmental pollution have created an economic “growth miracle,” the ecological and social benefits have been seriously undermined, causing China’s economy to suffer from the low output and low efficiency (Wu et al, 2020a; Wang J. et al, 2021). Improving green total factor productivity (GTFP) can become a win-win situation for both economic and environmental performance. For China to nurture high-quality economic development in the new era, the deeprooted motives damaging coordinated development of the economy and environment and further improving GTFP must be determined
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
