The Impact Of Environmental Regulation On Economic Growth And Its Heterogeneity

The world economy has grown considerably over the past few decades.In contrast,environmental problems such as ecological degradation,excessive use of resources and energy,as well as global climate change have not been effectively managed.The inherent contradiction between economic growth and environmental protection is the focus of scholars and scientists.It is greatly significant for sustainability of growth and regulation behaviors’ decision-making that whether and how different regulation behaviors will affect economic growth,and whether different regulatory measures will bring different effectsIn this context,the Solow growth model,which contains the environmental regulation agent variables and the endogenous pollution emission,is constructed.The paper deduces the optimal dynamic decision of the consumer when the utility is maximized,and examine the relationship between per capita capital stock and environmental regulation in steady state.The theoretical analysis concludes that when the output elasticity of effective labor satisfies certain conditions,the elasticity of pollution emissions to the proportion of inputs is decreasing with the deepening of the industrialization,and the impact of environmental regulation on economic growth shows the sleeping "S" type(Ie,the inverted "U" type relationship after the "U" type relationship).In particular,(1)At the early industrial process,environmental regulation will reduce the per capita capital stock in a declining pace while output brings severe pollution.(2)when the economic growth brings mild pollution instead of heavy pollution,the strengthening of regulation shows an increasing marginal effect on increase of the per capita capital,which leads to "win-win".(3)when a country or region achieves "clean production",the increasing regulation will restrain economic growth.In order to verify the theoretical model,the paper uses panel data of 15 sample countries(Ie,United States,Britain,Japan,Germany,Korea,China,Mexico,South Africa,Brazil,Russia,India,Indonesia,Philippines,Vietnam and Morocco)from 2002 to 2014,as well as panel data of 31 provinces from 2000 to 2015 to do the transnational and inter-provincial empirical tests.The transnational empirical results show that:(1)Consistent with the theoretical conclusion,when the per capita fixed capital formation increases 1%,the higher education gross enrollment rate or R&D expenditure of GDP raise by one percentage,the per capita output will significantly increase 0.91%,0.0030%and 0.1196%.(2)The impact of environmental regulation on economic growth is heterogeneous in different countries.The relationship of environmental regulation on economic growth shows a "U" type among 15 sample countries.Specifically,when the level of environmental regulation is relative low(EPI index below 76.65),the more regulation,the less per capita output,which subjects to "compliance cost".When the level of environmental regulation is relative high(EPI Index higher than 76.65),the more regulation,the more per capita output,which subjects to "innovative compensation."(3)From the graphical point of view,India and Vietnam is on the left side of turning point,which means the increase of regulation will lead to the decline of output.While Indonesia,China,South Africa and Morocco is located near the turning point.In the inter-provincial comparison:(1)Consistent with the theoretical conclusion,every 1%increase in the per capita fixed capital formation,the average education years,as well as the per capita public financial science and technology spending,will lead to the 0.55%,0.66%and 0.13%increase of per capita GDP.Compared with the transnational empirical,the promotion of growth by improving level of human capital is obvious.(2)"Cost class" regulation and "investment class" regulation have different impact on growth.The paper collects data of "pollution fees" and "pollution abatement investment" to measure the degree of "cost class" and "investment class"regulation.The regression results find that "investment class" regulation is better than"cost class" regulation to achieve "win-win".Every 1%increase in "investment class"regulation will result in a significant increase in per capita output of 0.03%.Based on the theoretical model and empirical test,the paper puts forward policy suggestions from three aspects:choosing appropriate government regulation measures,perfecting environmental supervision and punishment mechanism,as well as improving the level of human capital,...