Impact of environmental regulation intensity on the efficiency of sustainable economic growth in the European Union

Abstract

Environmental pollution is an essential constraint to the sustainable growth of regional economy. This paper uses the super efficiency slacks-based measure data envelopment analysis (SBM-DEA) model to measure the efficiency of sustainable economic growth (ESEG) in the European Union (EU) and applies the spatial econometric model to explore the impact of environmental regulation intensity (ERI) on ESEG in the EU. The results show that the ESEG in the EU shows an N-shaped growth trend and the spatial pattern of “Western Europe > Eastern Europe > Central Europe > Northern Europe > Southern Europe” from 2001 to 2019. The impact of ERI on the ESEG in the EU presents a “U" shape, indicating that increasing ERI first reduces ESGE, and after reaching the turning point of ESGE, continuing to increase ERI will promote ESGE. Further analysis shows the ERI have spatial spillover effect on the ESEG, while the spatial spillover effect in the eastern and western regions of the EU is different. Improving the ERI in the western region is not only conducive to the ESEG of the country but also has a positive spillover effect on neighboring countries. However, the spatial agglomeration effect in the eastern region is not significant. In addition to environmental regulation, labor & capital structure, research and development (R&D) expenditure, GDP per capita and trade value have a significant impact on the ESGE of a country and neighboring countries.