Dissertation
Dissertation > Economic > Economic planning and management > Management of National Economy > Management of resources,environment and ecology

Research on economic growth and environmental regulation area China

Author LiuWeiMing
Tutor ShiLei
School Fudan University
Course Industrial Organization
Keywords Environmental Regulation Instrument Choices TechnologicalProgress FDI Sustainable Development
CLC F205
Type PhD thesis
Year 2012
Downloads 1661
Quotes 3
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This paper aims to explore the relationship of environmental regulation and regional economic growth. Industrialization has greatly enhanced our countries’ economic strength and improved the people’s living standard since the reform and opening to the world policy, but the environment has not been well protected, the pollution problems are worsening everyday, the existing development model is unsustainable. The environment is public goods, there exists market failure about it, the governments should take measures to implement the regulation. The additional view is that environmental regulation will increase the costs of production of the enterprises, enhance their burden and weaken their competitiveness, eventually affect the region’s economic growth. The revisionists regard that environmental regulation will stimulate the enterprises to increase environmental investments and carry out technological innovation to obtain the first-mover advantages, thus may wholly or partially compensate for the losses brought about by environmental regulation. The two views have all been confirmed by lots of literatures.This paper discusses the effects of environmental regulation from four aspects: environmental regulation and long-term economic growth, environmental regulation and total factor productivity, environmental regulation and technological innovation, environmental regulation and FDI, what we have done and the conclusion are as follows:First, with respect to the relationship of environmental regulation and long-term economic growth, this paper extends the model of Stokey-Aghion-GangSun, distinguishes two kinds of different long-run growth paths in the case of increasing the pollution abatement inputs constantly and raising the environmental standards gradually, at the same time, we analyze the conditions to maintain sustainable development theoretically。Based on the result of the model, using of panel data from29provinces in China from2003to2009, an econometric model is also employed to verify the theoretical model. The conclusion is that the approach to development of abatement after pollution is Unsustainable, the local governments not only need to reinforce pollution abatement activities, but also need to improve the environmental standard gradually, implement the resource control, this is the only way to maximize the level of human welfare and gain long-term stable economic growth.Second, with respect to the relationship of environmental regulation and total factor productivity, this Paper applies radial and non-oriented directional distance function approach to measure the environmental technological efficiency and the change of environmental TFP of industrial sector of China’s30provinces over the period2000to2009while decomposing environmental TFP to technology progress, efficiency change and scale effect. We also empirically examine the factors which affect on the change of environmental TFP. The empirical results show that the environmental technological efficiency and environmental TFP in eastern regions are higher than centre regions and western regions overall; technology progress is the main factor of promoting the increasing of environmental TFP; environmental regulation, education level, industrial structure, market structure and FDI have the positive relationship with the increasing of environmental TFP, resource endowment, energy consumption structure and the first-order lags have the negative relationship with the increasing of environmental TFP, the relationship of ownership structure with environmental TFP is not significant.Third, with respect to the relationship of environmental regulation and technological progress, this paper finds the choice of environmental regulation instruments will affect the verification of Porter Hypothesis according to regional competition model, relative to command and control environmental regulation instrument, environmental taxes is more conducive to the promotion of technological innovation. This paper also analyzed the relationship of environmental regulation and technical innovation based on the panel data of China’s30provinces between the years of2000to2009, we found that there is significant positive relationship between technical innovation and environmental regulation in lags period, China should gradually increases the pollution charge, encourages the enterprises to innovate constantly and take advantage of clean technology to get the "win-win" result of environmental protection and economic development.Fourth, with respect to the relationship of environmental regulation and FDI, This paper extends the model of Chen Zhao, explains the strategies of "empty the cage for other birds" and "undertake the transfer" are not contradictory, just different regions at different stages of development make the "rational choice" according to their own situation. Government should adopt different policies for different regions and change the performance assessment method to promote sustainable economic growth.Effective environmental regulations also need good mechanism design, this paper discusses the advantages and disadvantages of command-control environmental regulation instruments, environmental regulation instruments based on the market and environmental regulation instruments characterized by information disclosure and public participation, at the same time, this paper analyzes the practice of the three types of environmental regulation instruments in China. The conclusions of this paper are the following:command-control environmental regulation instruments are easy to be operating, but its regulation cost is higher and efficiency is lower than other environmental regulation instruments, at the same time, its incentive is weaker. The environmental regulation instruments based on the market overcome the disadvantages of command-control instruments, but they also require some conditions such as mature market, perfect legal system and strong monitoring capabilities. Therefore, command-control environmental regulation instruments and environmental regulation instruments based on the market are complementary rather than substitute each other.Environmental regulation instruments characterized by information disclosure and public participation emphasize the value of the reputation of regulators and reduce the costs of regulation by means of the cooperation of the regulators, so they will be more common in the future. In China, discussing the validity of environmental regulation instruments will take into account current economic and political system, the only way to achieve sustainable development is to change existing principles of development and evaluation system, bring environmental performance into regional assessment index.

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