Trade liberalization and green productivity: Evaluating the spillover effects of free trade zone policies in emerging economies

Qian Xu and Ya'nan Liu

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: The spillover effects of free trade zone (FTZ) policies on green total factor productivity (GTFP) in emerging economies have been examined through a multi-dimensional empirical framework. By employing panel data from 39,831 firms and utilizing baseline regressions, heterogeneity analyses, threshold models, and spatial autocorrelation tests, the study has evaluated how FTZ-driven trade liberalization influences sustainable productivity. The baseline results have confirmed a statistically significant positive impact of FTZ policies on GTFP, with a 3.2 % average improvement attributed to technological spillovers and resource reallocation. Heterogeneity analyses have revealed stronger effects in state-owned enterprises, eastern regions, and non-high-tech industries, while threshold regressions have identified nonlinear dynamics tied to industry growth rates and institutional ownership. Spatial spillovers have been observed in high-growth clusters, particularly in eastern provinces, whereas geographically isolated regions like Tibet have shown limited benefits. The robustness of these findings has been validated through alternative metrics and subsample tests. It is concluded that FTZ policies must be spatially and institutionally tailored to maximize green productivity gains while addressing regional disparities and sectoral constraints.

Keywords: Free trade zone policies; Green total factor productivity; Trade liberalization (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006264

DOI: 10.1016/j.iref.2025.104463

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