The impacts of environmental regulation on regional green productivity growth in China: from the perspective of local-neighborhood effects

Ping Lu, Ying Wen, Zhihong Li, Ying Ding, Xiaoyu Chen and Liangliang Han

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 1, 2120902

Abstract: It is of great theoretical and practical implications for developing countries to achieve the win-win for economic growth and environmental performance. Extant studies focus on the local effect of environmental regulation, but ignore the neighborhood effect. This study tries to fill the gap from both the theoretical analysis and empirical test. We construct the theoretical framework of the local-neighborhood effect of environmental regulation on regional green productivity growth (GPG). Based on the panel data of 237 cities in China from 2011 to 2020, we employ the spatial panel models to empirically examine the local-neighborhood effects of environmental regulation on regional GPG. We further use the mediating effect models to examine the mechanism of environmental regulation affecting neighborhood GPG. The results demonstrate that both the local and neighborhood effect on regional GPG are U-shaped. The difference is that the inflection point of neighborhood effect is larger than that of local effect. The stringency of environmental regulations implemented by most cities in China is on the left side of the inflection point of the U-shaped curve, which leads to the inhibition of local and neighborhood GPG. Moreover, both green technology spillover mechanism and pollution transfer mechanism play a significant mediating role in the neighborhood effect of environmental regulation. The competition between these two mechanisms determines the U-shaped feature of neighborhood effect of environmental regulation. Finally, we put forward policy suggestions for the GPG from the perspective of local-neighborhood effect of environmental regulation.

Date: 2023
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DOI: 10.1080/1331677X.2022.2120902

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