How economic policy uncertainty processes impact on inclusive green growth in emerging industrialized countries: A case study of China

Abstract

Emerging industrialized countries are confronted with the fundamental reality of an increasingly uncertain and unstable economic policy environment. In case of China this paper examined how the transformation of inclusive green growth, from a “beggar-thy-neighbor” approach to a “neighbor-friendly” approach, can be realized. From the perspective of a “pollution paradise”, this study regarded haze pollution as a mediator to examine the driving mechanism underlying the influence of economic policy uncertainty on inclusive green growth. Moreover, media attention was introduced as a moderator to explore the institutional scenario that drives inclusive green growth in China. This study used panel data from 30 provinces for the period 2006–2016, and employed the Spatial Durbin model for empirical testing. The findings showed that the influence of EPU on inclusive green growth was multi-dimensional, and this included the direct “policy-economic” effect, the partial intermediary effect of a beggar-thy-neighbor model which was reflected by haze pollution, and the moderating effect of a neighbor-friendly approach via media attention. Furthermore, the results revealed an inverted-U-shaped relationship between haze pollution and inclusive green growth. Finally, media attention can effectively regulate the negative impact of economic policy uncertainty and haze pollution on inclusive green growth, and realize the transformation of inclusive green growth from a beggar-thy-neighbor policy to a neighbor-friendly policy. This study presents a new perspective for understanding the economic consequences of economic policy uncertainty and provides an empirical framework that guide local governments about climate governance.