Spatial spillover effect of environmental regulation on regional economic growth

Fangming Xie (), Yali Liu () and Mengman Yang ()
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Fangming Xie: China University of Mining and Technology
Yali Liu: China University of Mining and Technology
Mengman Yang: China University of Mining and Technology

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 7, No 53, 7149-7160

Abstract: Abstract China's rapid economic development has attracted worldwide attention, but the resulting environmental problems also cannot be ignored. Whether environmental regulations can achieve a win–win situation between "green" and "economic growth" has become the focus of academic circles. While related studies have examined environmental regulation through the “Cost-following theory” and “Porter hypothesis”, they have mostly focused on a particular region or province, thus neglecting the spatial effects. The spatial effects of environmental regulation are important to study because of the overall environmental correlation across regions and especially adjacent provinces. This paper extends the "cost-following theory" and the "Porter hypothesis" to the spatial perspective and proposes two hypotheses, respectively. Through the spatial expansion of environmental regulation theory, this paper not only analyses the direct effect of local environmental regulation on local economic growth, but also the spatial spillover effect of adjacent provinces' environmental regulation on local economic growth. The empirical results show that the relationship between environmental regulation and economic growth in China is consistent with the spatial perspective of "Cost-following theory", but not with the spatial perspective of "Porter hypothesis". Through the above analysis, this paper is able to address the issues of how to make environmental regulation policies in adjacent provinces or regions as a whole, and how to coordinate environmental regulation with economic growth in adjacent regions. The findings of this paper also suggest that spatial effects need to be sufficiently considered in future studies on environment-related issues.

Keywords: Environmental regulation; Cost-following theory; Porter hypothesis; Economic growth; Spatial spillover effects (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10668-022-02366-8

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