Research On The Impact Of Environmental Regulations On Productivity Of Enterprises

Since China’s reform and opening up,the industrial economy has continued to grow,achieving the "miracle of growth".However,the exponential growth of China’s economic aggregate and the rapid development of the industrialization process are accompanied by the huge consumption of energy and the sharp deterioration of the environment.In order to solve the serious economic and environmental problems caused by the increase of energy intensity,the Chinese government proposed binding targets for energy conservation and emission reduction for the first time in the 11th Five-Year Plan(2006-2010).It has formulated detailed energy-saving plans,such as the T1000P and the Ten Key Energy-Saving Projects.Besides,Chemical industry is an important sector in our national economic system.It plays an extremely important role in economic development,national defense and people’s social life.But chemical manufacturing is also a major source of pollution worldwide.The high energy consumption and high pollution of the Chinese chemical industry are extremely destructive to the global gas environment,energy environment and human health.Previous studies have shown that whether environmental regulation can achieve energy conservation and emission reduction,and then achieve the goal of changing industrial production mode,the key lies in whether the measures can help industrial enterprises to improve total factor productivity.This study investigates the impacts of the Top 1000 Energy-Consuming Enterprises Program(T1000P)on the TFP change rate(TFPC)of China’s chemical firms.Using detailed data from the China Industrial Census on 6631 chemical firms(2003-2008),the empirical results from the difference-in-differences(DID)method indicate that T1000P hinders TFPC improvement.The TFPC of firms affected by the T1000P decreased by 0.9230%annually compared with those not affected.The mechanism analysis shows that the implementation of T1000P reduces pollutant emissions,increases costs,and reduces profits of regulated firms.This implies that the emission reduction performance of regulated firms is not reflected in the TFPC,but the emission reduction cost restrains it.Moreover,the growth rate of technological progress of regulated firms is slow,which affects their competitiveness.Thus,when formulating and implementing energy-saving and environmental protection policies,the government should adopt differentiated strategies based on the characteristics of enterprises and their industries.This avoids policies that excessively interfere with the production decisions of enterprises,thereby,reducing the negative impact of environmental regulation and truly promoting the transformation of China’s industrial development mode.