Impact of environmental regulation on green growth in China's manufacturing industry-based on the Malmquist-Luenberger index and the system GMM model.

Abstract

Green growth in manufacturing is critical to the sustainable development of manufacturing, and environmental regulations can help ensure green growth. The impact of environmental regulations on China's manufacturing industry sectors is investigated to further green development in manufacturing. Using panel data for manufacturing industry sectors from 2008 to 2015, the Malmquist-Luenberger index model is employed to calculate green growth efficiency and an econometric model is constructed to measure the impact of environmental regulations on green growth. By using the system generalized method of moments (system GMM) model and other panel estimation models to generate regression results, it is found that environmental regulation exhibits a U-shaped nonlinear influence on green growth; as the intensity of environmental regulations increases, there is an initial inhibiting effect followed a positive impact on green growth in the manufacturing industry. Once environmental regulation intensity reaches a certain level, it mainly promotes green growth through technological progress. Further findings include the following: impacts of environmental regulation on green growth are heterogeneous across industries, and effects (e.g. U-shaped impacts) are most significant among high-energy industries, high-pollution industries, and medium-pollution industries.