Who are the genuine contributors to economic development under environmental regulation? Evidence from total factor productivity in the three industries

Wenjun Ge (), Siyuan Wu () and Derong Yang ()
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Wenjun Ge: Guangdong Ocean University
Siyuan Wu: Guangdong Ocean University
Derong Yang: Guangdong Ocean University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2024, vol. 26, issue 9, No 35, 22838 pages

Abstract: Abstract In recent years, the miracle of China achieving a balance between environmental governance and high economic growth has attracted the attention of many scholars, especially at the production level in various industries. To search for production activities with sustainable development potential and explore their characteristics. This study uses the panel data of 31 provinces in China from 2011 to 2020 to establish a unified analysis framework based on the division criteria of three industries. It takes the three industries' total factor productivity (TFP) as the entry point to study the impact of environmental regulation (ER) on economic growth and its potential mechanisms at the production level. The results show that ER will force the secondary industry to improve TFP but also negatively affect the TFP of the primary and tertiary industries. In addition, ER indirectly affects TFP in the three industries by affecting public environmental concerns and foreign direct investment. This results from the comprehensive effect of production cost effects, compensation effects of innovation, and compensation effects of optimizing resource allocation caused by ER. Moreover, the positive impact of ER on the TFP of the secondary industry is nonlinear. The higher the level of digital economy development, the more significant the positive impact. More importantly, there are regional differences in the impact of ER on the TFP of the primary and secondary industries. This article considers both static and dynamic panels and the results of the two models show consistency.

Keywords: Environmental regulation; Three industries; Total factor productivity; System GMM; Threshold regression (search for similar items in EconPapers)
JEL-codes: C33 O11 O53 Q50 R15 Z19 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10668-023-03577-3

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