Economic Growth Effects Of Environmental Regulation

Since the beginning of the 1980 s, with the continuous deepening of Laffont and other famous scholars’ researches about the relation between regulation and the industrial development, the academic circles about the document of regulation and growth have sprung up. Upsurge in academic research point in a real weakness: the increasingly serious environmental pollution has been a threat to human survival and development.In the Reform and opening up for 30 years, China’s economy is also expanding and swelling at a high-speed for 30 years. Chinese GDP(Gross Domestic Product, GDP) had surpassed Japan, as the world’s second largest economy since 2010, and "in the second but will be expected to get the first" so far. However, quantity superiorities cannot compensate for quality defects. Thus, we can’t ignore the real dilemma that China’s growth model belongs to the extensive growth which the elements is of high investment and high consumption but output of low level. In spite of the model with elements of high investment has stimulated economic growth, but its cost is excessive consumption of resources and the ecological environment deteriorating sharply. Chinese future development is faced with increasingly tight environmental constraints and resources bottleneck crisis. In addition to the pressure from the domestic, as a result of the signing of more and more international environmental conventions, China has to undertake more international environmental obligations, facing more pressures about the international emission reduction.Environmental quality is related to people’s livelihood and well-being, social harmony, even more closely related to Chinese sustainable economic growth. As a indispensable institutional tool system which can eliminate negative externalities of environmental pollution and correct the market failure, environmental regulation has been recognized by more and more scholars and environmental management department. For modern countries, any institutional arrangement should serve the country’s economic growth. Therefore, to discuss the effects imposed on economic growth by execution of environmental regulation, explore the effect of conduction mechanism, analyze the relationship between environmental regulation and economic growth and reasonably explain the related factors are of great significance.In view of this, this paper firstly reviews wonderful descriptions about environment and development in the Marxist Political Economics, and summarizes a series of prevailing perspectives on the environment and economic growth from the Western Economics, and theoretically demonstrates the importance of environmental factors in the process of economic growthSecondly, this paper carries out research from definition, theoretical foundation and regulatory instruments. On the basis of this, starting from the main micro audience of environmental regulation——enterprise, and according to the existing research, this paper sums up three perspectives on environmental regulation’s impact on economic growth, namely " hypothesis of innovation offsets" that environmental regulation is favorable for the competitiveness of enterprises, "hypothesis of compliance costs" that environmental regulation hurts the competitiveness of the enterprise and "hypothesis of comprehensive effect" that environmental regulation on the competitiveness of enterprises is of uncertain.Third, this paper builds a complete transmission mechanism about effect environmental regulation on economic growth from different levels and aspects. At the micro level, environmental regulation directly affects the enterprises’ production cost, and formation of external pressure will stimulate enterprises to promote technology innovation. And good environmental effect will bring a certain amount of income for the enterprise, enhance the competitiveness of enterprises. From the macro aspect, the net impact of environmental regulation on the competitiveness of enterprises influences a country’s economic growth through the two ways——industrial structure adjustment and export-oriented economy. In the domestic, structural advancement and reasonable industrial layout will enhance the competitiveness of products in the international market, stimulating economic growth.Fourth, from the performance of legislative and institutional settings along different periods,this article reviews the historical evolution of environmental regulation in China from four stages since the founding of the people’s Republic of China, and selects five indicators such as industrial emissions etc. to compare China’s environmental pollution and environmental regulation status from the longitudinal dynamic changes and lateral regions of the comprehensive analysis.Fifth, selecting from 2000 to 2012 Chinese 30 region(including provinces, autonomous regions and municipalities directly under the central government) related panel data, this paper applies model of SBM(Slacks-based model)containing undesirable outputs to calculate the environmental total factor productivity. According to the panel data of provinces from 2000 to 2012,this thesis takes a regression test about the influence factors. It’s concluded that the effects of environmental regulation on economic growth shows "U" type of stage characteristics from a long time.Finally, according to the empirical results, this paper gives the relevant policy recommendations.