The extension of the Porter hypothesis: Can the role of environmental regulation on economic development be affected by other dimensional regulations?

Abstract

China's ecological civilization construction is committed to promoting ecological construction and regional development from multiple dimensions, and some scholars have proposed that the role of environmental regulation in the Porter hypothesis may be affected by other regulations. Therefore, this study proposes to expand the Porter Hypothesis from a single environmental regulation to multi-dimensional regulations. We propose the interaction mechanism of different dimensional regulations—economic, social, and environmental—of the ecological provinces in China. Through empirical analysis using provincial panel data for 1999–2016 in China, we made the following observations: First, multi-dimensional regulations of China's ecological province construction have a significant positive impact on regional development, which shows that China's comprehensive construction from multiple dimensions is generally successful. Second, environmental regulation is more likely to play a role through the channel of multi-dimensional regulations, which supports that other dimensional regulations have a significant effect in the Porter hypothesis. Third, environmental regulation may increase costs and have potential inhibitory effects on economic development. It may be an effective way to reduce the negative impact of environmental regulation through matching with other reasonable dimensional regulations. In summary, expanding the Porter hypothesis from single environmental regulation to multi-dimensional regulations is applicable and valuable in China's ecological province construction.