Free trade zone policies and green development: an empirical examination based on China’s free trade zone cities

Hongjun Guan (), Jingyi Wang () and Aiwu Zhao ()
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Hongjun Guan: Shandong University of Finance and Economics
Jingyi Wang: Shandong University of Finance and Economics
Aiwu Zhao: Shandong University of Finance and Economics

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2025, vol. 27, issue 9, No 19, 20785-20812

Abstract: Abstract Facing increasingly severe urban issues such as resource scarcity and environmental pollution, the enhancement of green total factor productivity (GTFP) plays a crucial role in the sustainable development of cities. Considering unique policy advantages and high-quality business environments in free trade zone (FTZ) cities, this paper utilizes the quasi-natural experiment policy evaluation theory and the multi-period difference in difference (DID) method to study the policy effects and transmission mechanisms of FTZs on GTFP. Empirical examinations are based on the data from 239 prefecture-level cities in China from 2007 to 2019. Results show that: (i) The FTZ policies have an average positive effect of 8.17% on urban GTFP. (ii) The mechanism test reveals that openness to trade and technological innovation have significant mediating effects on the impact of FTZs on GTFPs. (iii) According to regional heterogeneity research, the influences of FTZ on GTFP are higher in the eastern and central areas. According to the multi-period heterogeneity analysis, the second and third batches of FTZs have more significant policy effects. (iv) Further spatial effect analysis finds that the FTZ construction can drive the green development of the surrounding cities. Accordingly, a series of suggestions are put forward to optimize the spatial layout of the FTZs, coordinate technological innovation and green development, and improve the policy system of the FTZs. Graphical abstract

Keywords: FTZ; GTFP; Multi-period DID (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10668-024-05123-1

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