Does the construction of Pilot Free Trade Zones promote the development of green economy? - A quasi-natural experiment evidence from China

Abstract

China has established Pilot Free Trade Zones (PFTZs) since 2013. However, there have been limited studies concerning the green economic effects of this policy. Given the uncertainties surrounding the relationship between this policy and regional green economic development, this paper employs a multi-period difference-in-differences (DID) method to evaluate the impact of the PFTZ policy on local green economy efficiency (GEE) by using provincial-level data in China from 2009 to 2019. We yield that the construction of PFTZs significantly contributes to the positive growth of regional GEE. Subsequently, we conduct a series of robustness tests to ensure the credibility of this finding. In addition, Further findings demonstrate that technological progress and industrial structure upgrading are two critical channels in achieving this positive effect. Notably, we also find that the construction of PFTZs stimulate the dynamics of market mechanisms to promote green economic development. Interestingly, heterogeneity analysis results suggest that the PFTZ policy seems to be more positively embedded in southern China and regions with higher degrees of openness. Conclusively, our findings demonstrate the establishment of PFTZs effectively promotes local green economic development and provide empirical evidence that a profound opening-up pilot policy is less likely to transform China into a Pollution Haven.