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Can the Introduction of an Environmental Target Assessment Policy Improve the TFP of Textile Enterprises? A Quasi-Natural Experiment Based on the Huai River Basin in China

Yi Li (), Lili Ding () and Yongliang Yang ()
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Yi Li: East China Sea Institute/Center for Ecological Civilization of Yangtze River Delta, Ningbo University, Ningbo 315211, China
Lili Ding: School of Economics and Management, Zhejiang Sci-Tech University, Hangzhou 310018, China
Yongliang Yang: School of Economics and Management, Zhejiang Sci-Tech University, Hangzhou 310018, China

Sustainability, 2020, vol. 12, issue 4, 1-19

Abstract: Green development is an inevitable requirement to build a modern economic system and fundamental solution to pollution problems. Exploring the relationship between environmental regulation and enterprise total factor productivity (TFP) has great significance for realizing the win-win goal of achieving both environmental protection and economic development. Based on a firm-level dataset from 2000-2007, this paper explores the economic effects of the Environmental Target Assessment Policy of Huai River Basin (ETAP, HRB) in 2004, an environmental regulation that clarifies the responsibility of local governments, by identifying changes in the TFP of the clothing industry (CMI). The empirical findings support that the ETAP can significantly promote improvement in the TFP using the difference in differences (DID) method. Robustness tests, such as the triple differences (DDD) and propensity score matching-difference in differences (PSM-DID), are used to address concerns about the DID approach. Analysis of dynamic effects shows that the ETAP has no impact on enterprise TFP in 2004 but significantly improve the TFP on the next three years (2005-2007). The heterogeneity test results indicate that nonstate-owned enterprises are more sensitive to the ETAP, and the coefficient of the average treatment effect is 0.033. In addition, the ETAP has no noteworthy impact on large- and medium-scale enterprises but results in an average increase of 0.037 in small-scale enterprises’ TFP.

Keywords: environmental target assessment policy; total factor productivity; Huai River Basin (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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