The Impact Of Environmental Regulation On China Green Industrial Total Factor Productivity

Since the implement of reforming and opening up policy, the industry of Chinais developing rapidly. However, those achievements were gained in sacrifice ofdamaging natural environment and consuming excessive resources which havearoused gigantic problems and blocked the way of further development. Total factorproductivity generally refers to the remaining part of the growth rate in addition tocapital input and labor factor which represents the quality of economic development.As a matter of fact, the key point to remain sustainable development of China’seconomy, is to improve the "quality" of economic growth which equals to improvetotal factor productivity.On the basis of existing research, the latest analysis tool SBM directionaldistance function of production frontier and Luenberger productivity index are pickedto estimate the green total factor productivity. Under the assumption of VRS, Resultsshowed that, during the year2000and2011, the average value of green total factorproductivity is about4.86%and technology innovation is the main driving factors ofit。Moreover, total factor productivity in eastern area is generally greater than it in themiddle and Western part of China. Then，the impact on green total factor productivityby the environmental regulation will be discussed from two aspects: the results ofenvironmental regulation and the system of environmental regulation. From the firstperspective, it is testified that first ordre influence coefficient to the green industrytotal factor productivity is negative, and two order coefficients are positive whichillustrates the relationship between green total factor productivity and environmentalregulation like an "U". When the environmental regulation intensity increased till itreachs one point, the impact of environmental regulation on green industrial totalfactor productivity will be promoting. On the other aspect, representative indicatorsare chosen from four environmental regulation system: the law system, the methodssystem/the supervision system and the supporting system to testify the relationshipeach system has with green total factor productivity. Overall, the impact ofenvironmental petition supervision (LP) and the environmental industry investment(INV1) on green total factor productivity are significant and improving; On thecontrary, influence of the sewage fee income (PI) is negative and environmental lawenforcement strength (LAW), and the Environmental Protection Agency (EP), the number of simultaneous execution of environmental protection investment (INV2)statistical indicators are significantly lower has little impact on the industry of greentotal factor productivity.