Political Achievement Demand Of Officials,Environmental Regulation And Enterprises Productivity

Since China’s reform and opening up in1978, great achievement in economic construction has been made. Meanwhile, China faces the international and domestic environmental pressure. In international climate negotiations, developed countries have required China to take more environmental protection responsibilities and obligations. The long-standing extensive mode has resulted in obvious resource and environmental constraints on economic development. The leading cause of environmental pollution problems is the market failure resulting from the negative externality of pollution; therefore, environmental regulation is quite essential.The policy implementation of environmental regulation is often affected by local government targets, such as, economic growth and tax increase. The local government that competes for economic growth pays excessive attention to the short-term growth, and ignores the livelihood issues, e.g., education, health, and environmental protection. That will lead to the soft constraints of environmental regulations. In recent years, environmental accidents have often happened, which not only caused huge economic loss, but also brought direct threat to peoples’ safety and property. Undoubtedly, there are direct relationships between the environmental accidents and soft constraints resulting from governments’ excessive attentions to economic growth.Using foreign direct investment (FDI) actively and effectively has always been an important matter. In2011, the foreign capital actually utilized reaches117.698billions of dollars. Researchers focus on the environmental effect of FDI, while FDI provides strong impetus for China’s economic development. Under the background of economic globalization, whether FDI has been with the multinational pollution transfer or FDI brought about clean production technology and green development concept? This issue is worthy of our concern.Based on the existing literature, this thesis focuses on the discussion about the following three questions. The first one is whether the officials’political achievement demand is an important factor leading to environmental pollution accidents. The second one is whether FDI improves the intensity of environmental regulation. The last one is whether the environmental regulation improves the enterprises productivity. The answers to the three questions would help us compare the factors affecting environmental regulation from the international and domestic view. Meanwhile, it also provides us a theoretical test on the question that whether we could realize the win-win situation of environmental protection and economic development. This thesis includes7chapters, and the main idea of each chapter is listed as follows:Chapter one firstly illustrates the research background and importance, and then introduces the definition and classification of the environmental regulations, and finally gives the frame, the innovation and deficiency of this research.The second chapter reviews the relevant literatures, including the local governments’incentive and economic growth, local governments’competition and environmental protection, the relationship between FDI and environmental regulation, the effect of environmental regulation on enterprises productivity. From the theoretical and empirical angle, it makes some comments and points out the directions and value of further research.Chapter three introduces the evolution of China’s environmental regulation and the situation of industrial pollution. It mainly includes following contents:the institutional change of environmental management, the continued perfection of environment law, the enrichment of policy instrument and the description of industrial pollution. These works help us understand the changing course of China’s environmental policies and phased results of environmental protection, which is the foundation for further research.Chapter four investigates the effect of officials’political achievement demand on environmental pollution accidents using the provincial panel data from1992to2006as sample. After measuring officials’political achievement demand using the relative performance of economic growth, we find that there is significantly positive relationship between officials’ political achievement demand and environmental pollution accidents, and this relationship is more significant in coastal areas. At the same time, the ratio of foreign-invested enterprises, industrial structure and the personal characteristics of local officials also have significant effect on environmental pollution accidents. These findings provide us not only the theoretical evidence to understand the reasons of environmental pollution accidents, but also the evidence to support the reform of officials’evaluation system.Chapter five analyzes the relationship between FDI and environmental regulation using Chinese city-level data between2003and2010. The results suggest that firstly, on the whole, FDI is accompanied with more stringent environmental regulation. The empirical evidence based on the city-level data doesn’t support the "pollution haven hypothesis" of FDI. Secondly, the positive effect of FDI on environmental regulation is more significant in the regions with better economic growth performance and richer human capital. The results infer that, FDI can play more efficient role on improving environmental quality when we weaken the performance evaluation of economic growth and raise the human capital.Chapter six empirically analyzes the relationship between environmental regulation and enterprises productivity based on the World Bank’s enterprise survey data. Our research takes the firm heterogeneity into account and empirically tests the "Porter hypothesis". We find that firstly, current intensity of environmental regulation is significantly and negatively related to enterprises productivity, while lagged intensity of environmental regulation is significantly and positively related to enterprises productivity. Secondly, political connection significantly reduces enterprises productivity. Thirdly, the intensity of environmental regulation has weaker effect on the productivity of enterprises with stronger political connection. These findings not only provide micro-level evidence for "Porter hypothesis", but also prove there is large elasticity in the implementation process of Chinese environmental regulation policies.The last chapter draws out the conclusions, gives relevant implications, and points out directions for further study.Compared with the existing literatures, the innovations of this study are as following:Firstly, from the research viewpoint, environmental protection is a hot topic that policy makers and the public pay close attention to. This study has theoretical contribution and realistic significance. Aiming at the frequent pollution accidents, this study systematically summarizes the underlying reasons, and firstly confirms the important role of officials’political achievement demand. Additionally, focusing on environmental regulation rather than environmental pollution, this study suggests the positive effect of FDI on the environmental regulation, and verifies influencing mechanism. These findings enrich relevant literature, and provide evidence to support the reform of officials’evaluation system and valuable references to use the environmental effects of FDI.Secondly, in terms of analysis methods, this study pays more attention to quantitative analysis and empirical test. In order to draw more reliable conclusions, this study uses several methods according to different issues, such as2SLS, fixed-effected poisson regression and system GMM.Thirdly, for seeking the empirical supports, the research sample consists of different level data, e.g., provincial panel data, city-level data, and enterprise survey data. Especially, domestic literatures investigating the "Porter hypothesis" always use district-level or industry-level data as sample. By contrast, our research provides the micro evidence for investigating the "Porter hypothesis". Additionally, we make further analysis to the relationship between environmental regulation and enterprise productivity, considering enterprises’difference in industry, region, ownership and political connections.