Environmental Regulation and Development Transformation in the Tropical and Subtropical Cities of China: A Big Data Analysis

Abstract

This paper studies the effects of Key Control Areas (KCA) policy implemented by the Chinese government in 2012 on city development transformation, in which strict environmental regulations were imposed in KCA cities in both tropical and subtropical zone. Based on the panel data of 155 tropical and subtropical cities in China from 2000 to 2017, we use a simple Differences-in-Differences approach to estimate the effects. Results show that more draconian environmental regulation has significant positive effects on city transformation. Furthermore, the designation of key areas leads to a screening effect on firms, that is, some of them increase technology investment in green production, while other firms are not capable to shoulder the rising cost and choose to reduce production or even shut their business, which ultimately promotes the city transformation. Meanwhile, with the expansion of the service industry, the relative proportion of manufacturing has declined, which brings about the upgrading of the industrial structure, and in turn promotes the city transformation.

Environmental Regulation, Technological Innovation, and Industrial Transformation: An Empirical Study Based on City Function in China

“…Consequently, enterprises' inappropriate production behavior has been regulated and restricted [43]. In addition, this has promoted the internalization of the social cost of environmental pollution emissions [44], guided the flow and distribution of resources among industries, and transformed industrial development from resource-driven to technologicaldriven, thereby promoting industrial structure transformation [45]. Moreover, strict environmental regulations may encourage enterprises to adapt their product and management structures, improve their independent innovation capacity, and create societal excitement for innovation, resulting in industrial structure transformation [17,23].…”

“…Yasmeen et al [3] found that severe environmental regulations, rather than voluntary environmental rules, negatively influenced ecological efficiency in places with low resource reliance. Deng et al [44] indicated that ER influenced the transformation of cities with a large population and high pollution levels. Similarly, ER can promote industrial transformation in cities with high and low economic development but may not affect cities with medium economic growth.…”

Could the Environmental Regulation Promote Green Innovation? Evidence From China

“…Strict but reasonable environmental regulatory policies, such as Pigovian taxes and pollution permits, can encourage producers to internalize external uneconomic behavior, encourage producers to actively participate in green innovation research and development activities, increase green product output, and generate "innovation compensation" effect to offset the impact of compliance costs (Porter and Vander, 1995). Later, many scholars conducted a series of explorations around Porter's hypothesis and believed that the greater the intensity of environmental regulation, the more conducive to driving the development of regional green innovation levels, and there is a positive linear correlation (Rubashkina, 2015;Santis, 2017;Tang et al, 2019;Deng et al, 2020). So, does environmental regulation have a significant positive or negative impact on green innovation?…”

Data Analytics in Supply Chain Management: A State-of-the-Art Literature Review

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