Impact of heterogeneous environmental regulation on total factor productivity: an empirical study based on China’s provincial data

Xiao Yu () and Zhaoteng Zeng ()
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Xiao Yu: Shanghai Customs College
Zhaoteng Zeng: Guangdong University of Finance

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2024, vol. 26, issue 7, No 58, 17813-17835

Abstract: Abstract To address the pressing issues of environmental deterioration and energy shortage that have accumulated in the extensive economic growth model, the Chinese government aims to enhance total factor productivity (TFP) by strengthening environmental regulations. The empirical findings on the impact of environmental regulation on TFP are relatively mixed. The literature exploring economic performance of different environmental regulations on TFP is scant; our study filled this gap and explored the microeffect of four categories of environmental policies on total factor productivity without considering natural factors and green total factor productivity (GTFP) considering natural factors based on China’s provincial data from 2007 to 2017. The results illustrate that environmental regulation imposes a more significant positive impact on GTFP and different regulation policies can affect regional TFP through various paths. The administrative monitoring policies and public engagement policies exert more remarkable active effects on GTFP than other policies. Meanwhile, the existing environmental regulation promoted the sustainable development in the eastern and central areas, while failed to accelerate economic transformation in western area. Therefore, to better exert the incentive impact of green regulation on TFP, this study suggests that the government should enhance the eco-objective responsibility system, promote the marketization reform in resource areas, train more professional eco-friendly talent, foster public appreciation for nature conservation, and accelerate the industrial innovation of the midwestern regions.

Keywords: Environmental regulation; Total factor productivity; Sustainability (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10668-023-03365-z

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