Environmental Regulation, Trade Comparative Advantage, and the Manufacturing Industry’s Green Transformation and Upgrading

Mengqi Gong, Zhe You, Linting Wang and Jinhua Cheng
Additional contact information
Mengqi Gong: School of Law and Business, Wuhan Institute of Technology, Wuhan 430205, China
Zhe You: School of Law and Business, Wuhan Institute of Technology, Wuhan 430205, China
Linting Wang: School of Law and Business, Wuhan Institute of Technology, Wuhan 430205, China
Jinhua Cheng: Research Center for Resources and Environmental Economics, China University of Geosciences, Wuhan 430074, China

IJERPH, 2020, vol. 17, issue 8, 1-17

Abstract: This paper is the first to systematically review the theoretical mechanisms of environmental regulation and trade comparative advantage that affect the green transformation and upgrading of the manufacturing industry. On this basis, corresponding hypotheses are put forward. The non-radial and non-angle SBM (slacks-based measure) efficiency measurement model with undesirable outputs was used, combined with the use of the ML (green total factor productivity index) productivity index to measure green total factor productivity. Finally, the theoretical hypothesis was empirically tested using data from 27 manufacturing industries in China from 2005 to 2017. The results show the following: (1) There is a significant inverted U-shaped curve relationship between environmental regulation and the transformation of the manufacturing industry. In other words, as environmental regulation increases, its impact on the transformation and upgrading of the manufacturing industry is first promoted and then suppressed. (2) When there are no environmental regulations, the trade comparative advantage of the manufacturing industry is not conducive to industrial transformation. However, under the constraints of environmental regulations, the comparative advantage of trade will significantly promote the green transformation and upgrading of manufacturing. Therefore, in order to effectively promote transformation and upgrading of the manufacturing, this paper proposes the following policy recommendations: (1) The Chinese government should pay more attention to the impact of environmental regulation intensity on the transformation of manufacturing industries, further increase the intensity of environmental regulation within the reasonable range, and fully exert the positive effects of environmental regulation on the trade patterns and manufacturing industry transformation. (2) We should further optimize the structure of trade, realize the diversification of manufacturing import and export, and promote its transformation into high-end manufacturing. On this basis, green production technology in the manufacturing industry can be improved through the technology spillover effect. (3) Efforts should be made to improve the level of collaborative development between environmental regulation and trade patterns and to explore the transformation path of the manufacturing industry with the integration of environmental regulation and trade patterns.

Keywords: environmental regulation; trade comparative advantage; manufacturing; green transformation upgrade; green total factor productivity (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://www.mdpi.com/1660-4601/17/8/2823/pdf (application/pdf)
https://www.mdpi.com/1660-4601/17/8/2823/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijerp:v:17:y:2020:i:8:p:2823-:d:347767

Access Statistics for this article

IJERPH is currently edited by Ms. Jenna Liu

More articles in IJERPH from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().