Abstract
As the answer to sustainability concerns, green economic growth has gradually attracted considerable attention. Notably, the optimization of the institutional environment contributes to green economic growth from the perspective of new institutional economics. However, few studies have systematically explained the connection between the institutional environment and green growth. In this study, the institutional environment was divided into three dimensions: governmental, legal, and cultural subenvironments. We adopted econometric models with the effect of every dimension on green growth and empirically analyzed with the generalized method of moments, based on Chinese provincial panel data from the years 2000–2016. The results indicated that there was an inverted U-shaped relationship between China’s institutional environment and its green growth. That is, the institutional environment can initially promote China’s green growth but, if it is not changed, will eventually inhibit it. In addition, the analysis on the three dimensions of the institutional environment highlighted that the role of the cultural subenvironment in green growth is greater than those of the governmental and legal subenvironments.
Highlights
Under the pressure of environmental pollution and the energy crisis, as well as through the pursuit of a highquality life for citizens, China has modified its environmental policies to allow for a transition from a brown economy of high consumption and emission to a green economy that is environmentally friendly
By comprehensively reviewing previous literature, we discovered that empirical research on institutional quality has mainly concentrated on international comparisons and analyzed the effects of the institutional quality of a country on international capital and factor mobility, among others, on the economic growth of that country
According to the results of the Sargan and AR tests, it was suitable to apply the generalized method of moments (GMM) to estimate the relationship between institutional environment and economic growth. e following sections (i.e., Sections 4.1–4.3) explain and analyze the five models from the perspectives of both the total effects and effects of multidimensional institutions, based on Table 3
Summary
Under the pressure of environmental pollution and the energy crisis, as well as through the pursuit of a highquality life for citizens, China has modified its environmental policies to allow for a transition from a brown economy of high consumption and emission to a green economy that is environmentally friendly. China has suggested developing a green economy to release both energy and environmental pressures and has presented a series of policies to promote green economy transformation. From the perspective of this new institutional economy, the promotion of institutional quality can be beneficial for economic growth. Over the last decade, researchers rarely have considered the factors that affect the institutional environment, such as capital flows, financial development, green innovation, and energy efficiency [12,13,14]. E present study examined the relationship between the multidimensional institutional environment and green economy. As the impact of the institutional environment on green growth is often ignored by developing countries, we utilized China as an example to conduct the investigation, which presents a new perspective for research that focuses on the institutional environment and green growth in developing countries. We present a literature review and hypotheses (Section 2), describe the modeling process and data selection (Section 3), present and discuss regression results (Section 4), and provide recommendations for policymaking and future research (Section 5)
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