Abstract
This paper examines whether the national green industrial policy (GIP) can effectively optimize the enterprises’ structural transformation and upgrading, and improve production efficiency of enterprises. Using China’s firm-level data from 1998 to 2007, we take the 2003 “Cleaner Production Promotion Law of PRC” as the turning point of GIP implementation, and employ the difference-in-differences (DID) method to explore the policy effect on total factor productivity (TFP) of enterprises. The analysis shows that GIP can enhance the enterprise’s resource allocation capability and TFP growth. The implementation path of policy mainly relies on the compensation mechanism to incentivize innovation and the elimination mechanism of market selection. Specifically, GIP enhances TFP growth by accelerating the dynamic replacement (enterprise entry and exit) and elimination mechanism of the market, and by promoting innovative production to enhance the enterprise’s production efficiency. Further heterogeneity analysis reveals that state-owned enterprises are more susceptible to the influence of GIP, and GIP exerts more restrictive impact on high-pollution industries. Also, GIP has more significant net spillover effect on technology-intensive enterprises. The study provides a reliable factual basis for the market effect of GIP and the direction for green industry development.
Highlights
The green economy emphasizes low carbon, environmental protection and coordination, sustainability and recycling in the process of economic development [1,2]
Another national consensus on pollution control is that the front-end pollution control should take precedence over terminal pollution control, as the former can transform the existing industrial form and process, engage in intensive resource and energy conservation, and low carbon environment in the production process
The interaction effect between the policy and exit is significantly (p < 0.01) positive and the net effect is 0.2151, which is an increase rate of 5.41%. These results indicate that green industrial policy (GIP) has a strong effect in promoting the withdrawal of low-efficiency enterprises from the market and enhancing the total factor productivity (TFP) of market enterprises
Summary
The green economy emphasizes low carbon, environmental protection and coordination, sustainability and recycling in the process of economic development [1,2]. It has been a national consensus that developing a green industrial economy is a powerful path for sustainable development, and is imperative for the construction of ecological civilization [4] Another national consensus on pollution control is that the front-end pollution control (cleaner and greener upstream production process) should take precedence over terminal pollution control (pollution first and control), as the former can transform the existing industrial form and process, engage in intensive resource and energy conservation, and low carbon environment in the production process. It requires that the backward production technology, process, equipment, and products of microenterprises should be eliminated within a time limit, and scientific research, technology development, and international cooperation on cleaner production should be encouraged This law stipulates explicit environmental protection requirements for the production process and business activities, and is marked as a “historical turning point” in the implementation of green industrial policy (GIP). The paper further analyzes possible different policy effects of GIP due to enterprise heterogeneity in ownership structure, innovation capability, market adaptability, and resource endowment
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