Have China's Pilot Free Trade Zones Improved Green Total Factor Productivity?

Qingshan Ma,Yuanmeng Zhang,Kexin Yang,Lingyun He

doi:10.3390/ijerph182111681

Abstract

Free trade zones (FTZ) are designated areas for promoting trade openness and investment facilitation. In China, FTZs are also regarded as “green areas” in which planning actions and institutional innovations are implemented, and there is a commitment to promoting urban green and healthy development. Given that green total factor productivity (GTFP) is an important measure of a city’s health and green performance, this study exploits the difference-in-differences method to explore the impact of pilot FTZs on urban GTFP in 280 cities in China for the period between 2005 and 2017. The results show that the green areas positively contributed to the growth of GTFP. Moreover, the outcome holds with robustness tests. Statistically, the positive effect emerged in cities during the first three years after introducing the initiative, with the effect disappearing afterward. It also had a strong positive impact in the central and western regions and in large and medium-sized cities, while the influence remained insignificant in the remaining areas in China. Furthermore, the paper also reveals that the promotion of foreign direct investment and industrial structure upgrading are the primary channels through which the positive relationship between pilot FTZs and GTFP is established.

Highlights

The Chinese economy has undergone spectacular growth in recent decades, while environmental degradation from traditional extensive economic development is becoming an extremely serious problem
To promote an all-dimensional, multilayered, and wide-ranging opening up to the outside world, China set up pilot free trade zone (FTZ) after the establishment of special economic zones (SEZ), export processing zones (EPZs), and bonded zone (BZ)
This research investigates the impact of FTZ policy on the green and healthy development of cities by using the DID and propensity score matching-DID (PSM-DID)

Summary

Introduction

The Chinese economy has undergone spectacular growth in recent decades, while environmental degradation from traditional extensive economic development is becoming an extremely serious problem. Environmental pollution brings challenges to the sustainable and healthy development of cities [1]. Severe environmental pollution endangers people’s health [2], which results in inequality [3], aggravates public finance burden [4], and hinders the process of urban renewal [5]. The need for urban green and sustainable transition has become inevitable. In this context, the Chinese government has released a series of institutional innovations and policy experiments to control environmental pollution and improve the urban population’s health. The Chinese government has released a series of institutional innovations and policy experiments to control environmental pollution and improve the urban population’s health One of these innovations is the free trade zone (FTZ) policy

Methods

Results

Conclusion