Nature Environment and Pollution Technology

Open Access Open Access  Restricted Access Subscription Access

Environmental Regulation, Manufacturing International Competitiveness, and Industry Heterogeneity:Empirical Evidence from China


Affiliations
1 School of Economics, Wuhan University of Technology, Wuhan 430070, China
 

In recent years, as the world’s environmental regulations are strengthened, the development of ecological civilization has already become an irresistible trend. In the past, the economy was developed at the expense of the environment, and increasingly stringent environmental standards now exert an immediate effect on environmental protection. However, a consensus in academia about environmental regulation, whether affecting the economic development and international competitiveness of the industry or not, has yet to be reached. This study aims to reveal the relationship between environmental regulation and industrial international competitiveness in the context of the new era and whether the relationship has industry heterogeneity. Using the data of 26 manufacturing industries in China from 2005 to 2015 and the panel data regression model, the effect of environmental regulation on the international competitiveness of the manufacturing industry was analysed. Results show that environmental regulation and manufacturing international competitiveness, display an inverted “U”- shaped relationship. Currently, China lies on the left side of the curve, and moderately strengthening the environmental regulation is beneficial for the improvement of manufacturing industry international competitiveness. The effect of environmental regulation on the international competitiveness of the manufacturing industry is characterized by heterogeneity. Meanwhile, the turning point of the inverted “U” curve can be delayed by strengthening the environmental regulation in high pollution and research and development (R&D) intensity and competitive industries. In addition, foreign direct investment, human capital, and industrial scale have a positive impact on manufacturing industry international competitiveness. Meanwhile, patent quality and capital deepening have inhibitory effects. This study provides a theoretical basis for the government to implement strict environmental regulation policies and new concepts for their implementation.

Keywords

Environmental Regulation, Industrial Competitiveness, Industrial Heterogeneity, Panel Data Regression.
User
Notifications
Font Size


  • Arouri, M.E.H., Caporale, G.M. and Rault, C. et al. 2012. Environmental regulation and competitiveness: evidence from Romania. Ecological Economics, 81(5): 130-139.

  • Brunnermeier, S.B. and Cohen, M.A. 2003. Determinants of environmental innovation in us manufacturing industries. Journal of Environmental Economics & Management, 45(2): 278-293.

  • Cole, M.A. and Elliott, R.J.R. 2003. Do environmental regulations influence trade patterns? Testing old and new trade theories. The World Economy, 26(8): 1163-1186.

  • Dong, M.J., Liang, Y.M. and Li, G. 2011. The impact of environmental regulation on export competitiveness in China-based on the analysis of input-output table. China Industrial Economics, (3): 57-67.

  • Du, Y.S. 2014. Empirical research on the impact of environmental regulation on competitiveness of Chinese manufacturing industries. World Economy Studies, 12: 71-76.

  • Feichtinger, G., Hartl, R.F. and Kort, P.M. et al. 2004. Environmental policy, the porter hypothesis and the composition of capital: effects of learning and technological progress. Social Science Electronic Publishing, 50(2): 434-446.

  • Fraj, E., Matute, J. and Melero, I. 2015. Environmental strategies and organizational competitiveness in the hotel industry: the role of learning and innovation as determinants of environmental success. Tourism Management, 46(6): 30-42.

  • Fu, J.Y. and Li, L.S. 2010. Empirical research of environmental regulation, factor endowment and industrial international competitivenessbased on the panel data of Chinese manufacturing industries. Management World, (10): 87-98.

  • Fu, J.Y. and Zhao, C.M. 2014. Will environmental regulation affect export trade of pollution-intensive industries? Based on the analysis of panel data in China and gravity model of trade. Economist, 2: 47-58.

  • Grether, J.M. and De, M.J.. 2003. Globalization and dirty industries: do pollution havens matter? (No. w9776). National Bureau of Economic Research.

  • Hamamoto, M. 2006. Environmental regulation and the productivity of Japanese manufacturing industries. Resource & Energy Economics, 28(4): 299-312.

  • Harris, M.N., Kónya, L. and Mátyás, L. 2002. Modeling the impact of environmental regulations on bilateral trade flows: OECD, 1990-1996. The World Economy, 25(3): 387-405.

  • Hitchens, D.M. 1999. The implications for competitiveness of environmental regulations for peripheral regions in the EU Omega.27(1): 101-114.

  • Li, G.P., Yang, P.G. and Song, W.F. et al. 2013. Environmental regulation, FDI and “pollution heaven” effect-empirical analysis from the perspective of Chinese industry heterogeneity. Science of Science and Management of Sc. and Tech., (10): 122-129.

  • López-Gamero, M.D. and Molina-Azorín, J.F. 2015. Environmental management and firm competitiveness: the joint analysis of external and internal elements. Long Range Planning, 31(B07): 1- 2.

  • Picazo-Tadeo, A.J., Reig-Martínez, E. and Hernández-Sancho, F. 2005. Directional distance functions and environmental regulation. Resource & Energy Economics, 27(2): 131-142.

  • Porter, M.E. and Claas, V.D.L. 1995. Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4):97-118.

  • Ren, L. and Huang, C.J. 2012. The impact of environmental regulation at home and abroad on export trade in China. World Economy, 5: 59-80.

  • Shen, N. 2012. Environmental efficiency, industry heterogeneity and optimum regulation strength-nonlinear test on panel data of China’s manufacturing industries. China Industrial Economics, 3: 56-68.

  • Sheng, B. 2002. Politics Economy Analysis on Chinese Foreign Trade Policy. Shanghai: SDX Joint Publishing Company, China.

  • Song, W.F., Li, G.P. and Han, X.F. 2014. Environmental regulation, trade liberalization and efficiency threshold characteristics of R&D and innovation-based on the analysis of panel data from 33 industries of China. Journal of International Trade, 2: 65-73.

  • Tan, K.H., Chung, L. and Shi, L. et al. 2017. Unpacking the indirect effects and consequences of environmental regulation. International Journal of Production Economics, 186: 46-54.

  • Tang, J.Y.. 2014. Environmental regulation, participation degree of foreign capital and trade competitiveness-empirical research from the industries of China. World Economy Studies, 5: 40-45.

  • Testa, F., Iraldo, F. and Frey, M. 2011. The effect of environmental regulation on firms’ competitive performance: the case of the building & construction sector in some EU regions. Journal of Environmental Management, 92(9): 2136-2144.

  • Tobey, J.A. 1990. The effects of domestic environmental policies on patterns of world trade: an empirical test. Kyklos, 43(2): 191-209.

  • Wang, J. 2011. Comparison of output efficiency between R&D funded by government and R&D invested by enterprise. The Journal of Quantitative & Technical Economics, 6: 93-106.

  • Xu, M.Y. and Zuo, H.P. 2013. Research on the relationship between environmental regulation and industrial competitiveness under agglomeration effect-based on the retest of Porter hypothesis. China Industrial Economics, 3: 72-84.

  • Yang, C.H., Tseng, Y.H. and Chen, C.P. 2012. Environmental regulations, induced R&D, and productivity: evidence from Taiwan’s manufacturing industries. Resource & Energy Economics, 34(4): 514-532.

  • Yu, D.H. and Sun, T. 2017a. Environmental regulation, skill premium and international competitiveness of manufacturing industries. China Industrial Economics, 5: 35-53.

  • Yu, W., Chen, Q. and Chen, H. 2017b. Environmental regulation, technological innovation and business performance-based on empirical analysis of 37 industries. Science Research Management, 38(2): 18-25.

  • Yue, X.M., Li, S. and Shi, T.L. 2010. Discussion on high income of monopolized industry. Social Sciences in China, 3: 77-93.

  • Zhang, X.Q. and Zhang, M.X. 2012. Empirical analysis on the impact of environmental regulation on export competitiveness of environmental sensitive industry in China. Journal of International Trade, 5: 128-135.


Abstract Views: 429

PDF Views: 0




  • Environmental Regulation, Manufacturing International Competitiveness, and Industry Heterogeneity:Empirical Evidence from China

Abstract Views: 429  |  PDF Views: 0

Authors

Long Wang
School of Economics, Wuhan University of Technology, Wuhan 430070, China
Li Kang
School of Economics, Wuhan University of Technology, Wuhan 430070, China

Abstract


In recent years, as the world’s environmental regulations are strengthened, the development of ecological civilization has already become an irresistible trend. In the past, the economy was developed at the expense of the environment, and increasingly stringent environmental standards now exert an immediate effect on environmental protection. However, a consensus in academia about environmental regulation, whether affecting the economic development and international competitiveness of the industry or not, has yet to be reached. This study aims to reveal the relationship between environmental regulation and industrial international competitiveness in the context of the new era and whether the relationship has industry heterogeneity. Using the data of 26 manufacturing industries in China from 2005 to 2015 and the panel data regression model, the effect of environmental regulation on the international competitiveness of the manufacturing industry was analysed. Results show that environmental regulation and manufacturing international competitiveness, display an inverted “U”- shaped relationship. Currently, China lies on the left side of the curve, and moderately strengthening the environmental regulation is beneficial for the improvement of manufacturing industry international competitiveness. The effect of environmental regulation on the international competitiveness of the manufacturing industry is characterized by heterogeneity. Meanwhile, the turning point of the inverted “U” curve can be delayed by strengthening the environmental regulation in high pollution and research and development (R&D) intensity and competitive industries. In addition, foreign direct investment, human capital, and industrial scale have a positive impact on manufacturing industry international competitiveness. Meanwhile, patent quality and capital deepening have inhibitory effects. This study provides a theoretical basis for the government to implement strict environmental regulation policies and new concepts for their implementation.

Keywords


Environmental Regulation, Industrial Competitiveness, Industrial Heterogeneity, Panel Data Regression.

References