A Research On Impact Of Environmental Regulation On Total Factor Producticity

Since China’s opening up, China’s economy has achieved rapid development, but the current Chinese economic growth depends on factor inputs, the contribution of total fact productivity is not high; China is stepping up efforts to increase the total fact productivity as the major economic growth mode. On the other hand, China’s extensive growth brought serious environmental pollution problems, and China is increasing the strength of environmental regulation. So, with the increasing strength of environmental regulation, whether will it hinder the growth of total factor productivity? Therefore, this paper’s intention is to in-depth analysis the impact of environmental regulation on TFP.Firstly, we will analyze the transmission mechanism of environmental regulation on productivity from four perspectives, using 36 industrial data and DEA-Malmquist method to estimate industry TFP and test the impact of environmental regulation on TFP. Meanwhile, considering the industry’s differences, we will test the impact of environmental regulation on TFP of different industries. Finally, adding the interaction term to test the impact of environmental regulation on TFP of different industries, try to fully answer the combined effects and conduction mechanisms of environmental regulation on TFP.Conclusions are as follows:First, the impact of environmental regulation on TFP is the result of a variety of integrated transmission mechanism, both positive and negative effect. Second, the relationship between China’s environmental regulation intensity and TFP is a U-shaped curve, that is, with the increasing of the intensity of environmental regulation, TFP first go down and then rise up. Third, the impact of environmental regulation on TFP is not the same in different industries, the inflection point of polluting industry is greater than cleaning industry. Therefore, we proposal:China should moderately improve the environmental regulation intensity and enter the rising stage of the U-shaped curve so that it can promote TFP; Considering industries’differences, we should formulate relatively greater intensity of environmental regulation for polluting industry.