The Impact and Spillover Effects of Environmental Regulation on GTFP

Abstract

Have environmental regulations introduced by local governments in China promoted regional green development? This paper identifies the impact and spillover effect of environmental regulations on Green Total Factor Productivity by using provincial panel data over the period 2005-2018. We found that the intensity of ERs is positively correlated with regional GTFP growth and also benefits its neighbours. I have also identified green innovation and FDI transfer as two mechanisms of action leading to this phenomenon. Finally, the effects of environmental regulation also vary according to geographical location, the degree of dependence on polluting industries and the level of nationalisation.