Does environmental regulation narrow the north-south economic gap ? - Empirical evidence based on panel data of 285 prefecture-level cities

Abstract

The economic differentiation between the north and the south of China, as a long-standing phenomenon of unbalanced regional economic development, is aggravating, and has gradually become a resistance to the construction of a new development pattern and regional coordinated development. Most of the existing studies focus on the comparison of differences between the Eastern, Central and Western regions of China, but there is little discussion on the economic gap between China's North-South economy. In addition, through the literature review, no attention has been paid to the environmental regulation factor that leads to the economic gap between the North and the South. In view of this, the study constructs a benchmark regression model and a non-linear regression model based on the balanced panel data of 285 cities in China from 2004 to 2019, explores the role that environmental regulation plays in the widening of China's North-South economy gap. The results show that, firstly, environmental regulation is significantly conducive to narrowing the economic gap between the North and the South; In addition, with the greater intensity of environmental regulation, the economic gap shows a trend of “narrowing first, expanding then”, that is, There exists positive U-shaped nonlinear relationship between them. Finally, the heterogeneity of urban scale leads to significant differences in the position and shape of the positive U-shaped curve, which exists between environmental regulation and China's North-South economy gap. The test results shows that the inflection point level of the U-shaped curve in the North is higher than that in the South. Based on this, the study proposes to adjust environmental policies accordingly under regional differentiated conditions, increase financial investment in improving environmental regulation tools and promote coordinated environmental governance in the North and South regions, to promote regional coordinated and sustainable development, provide empirical evidence and theoretical reference to improve people's livelihood and well-being and ultimately achieve the goal of common prosperity.