Porter Hypothesis Testing

With the accelerated process of industrialization in China, Environmentalproblems is bound to become increasingly serious, and with the correspondingenvironmental regulation on environmental issues will also continue to strengthenpolicy. If you continue to follow the development model of the past, coupled with itscumulative environmental pollution and complexity reasons, income level reachedbefore a satisfactory environmental pollution may cause a number of disastrousconsequences. Scholars at home and abroad related to the implementation ofregulatory policy for the environment to economic growth possible, industrialperformance and international competitiveness of industries such as the impact of agreat deal of theoretical and empirical analysis. However, the current test forenvironmental control environmental control agency exists mostly variable difficult tomeasure, mix of inputs endogenous variables exist the problems as well as researchperspective limitations.In order to avoid the endogeneity between combinations of input variables, thispaper use a two-stage method to test Porter, M.E. Hypothesis. Using an industry-levelpanel dataset for the1990-2011period, empirical results show that pollutionabatement fees, a proxy for environmental regulations, is positively related to R&Dexpenditure, implying that stronger environment protection induces more R&D. Onthe other hand, pollution abatement capital expenditures do not have a statisticallysignificant influence on R&D. Further evaluation of the influence of induced R&D byenvironment regulation on Enterprise Performance and Environmental Performanceshows that some indicators have a significant positive association between them. Thispaper then exams the direct influence between them shows that some indicators havea significant positive association between them. Simultaneously, the panel datasethave caliber conversion and missing data problems for the1990-2011period, weusing panel dataset for the1990-2011period to Robustness test, to some extent boththe results support the Porter, M.E. Hypothesis. The paper is to do empirical test witheconometric model method on basis of the theoretical hypotheses Receivecorresponding results as follow:(1) Properly designed environmental regulatory policy can promote enterprisetechnological innovation, However, R&D and business performance induced regression results show: the development of environmental regulation-induced effectson TFP is not significant.(2) Technological innovation on total factor productivity inthe provinces was not significant, but the impact on overall labor productivity,significantly positive, indicating that environmental regulation can induce thedevelopment of the provinces to improve corporate performance, thereby enhancingthe competitiveness of enterprises.(3) R&D and environmental performance inducedregression results, indicating the development of environmental regulation-inducedimprove the environmental performance of all provinces.(4) Environmentalregulation and corporate performance, environmental performance regression resultsshow that properly designed environmental control policies not only improvedbusiness performance in the provinces, but also improve the environmentalperformance of all provinces verified third layer between Porter, M.E. Hypothesis.The conclusion of the study for the Government departments to developenvironmental control policies and economic development to provide a scientificbasis for the theory, the paper which made a number of promoting China’s economicdevelopment and environmental regulatory policy recommendations. Limited by theauthor’s own academic standard, of course, there are many inadequacies. Limitationsof this study and future research directions are mentioned in the last part of thisarticle.