Have China’s Pilot Free Trade Zones Improved Green Total Factor Productivity?

Abstract

Free trade zones (FTZ) are designated areas for promoting trade openness and investment facilitation. In China, FTZs are also regarded as “green areas” in which planning actions and institutional innovations are implemented, and there is a commitment to promoting urban green and healthy development. Given that green total factor productivity (GTFP) is an important measure of a city’s health and green performance, this study exploits the difference-in-differences method to explore the impact of pilot FTZs on urban GTFP in 280 cities in China for the period between 2005 and 2017. The results show that the green areas positively contributed to the growth of GTFP. Moreover, the outcome holds with robustness tests. Statistically, the positive effect emerged in cities during the first three years after introducing the initiative, with the effect disappearing afterward. It also had a strong positive impact in the central and western regions and in large and medium-sized cities, while the influence remained insignificant in the remaining areas in China. Furthermore, the paper also reveals that the promotion of foreign direct investment and industrial structure upgrading are the primary channels through which the positive relationship between pilot FTZs and GTFP is established.

Do pilot free trade zones improve the green total factor productivity? Evidence from a quasi-natural experiment in China

“…The research conclusions drawn only from Shanghai PFTZ are not representative. For another study, Ma et al ( 2021 ) explored the GTFP growth effect of PFTZ construction and its transmission mechanism from the city level. However, this study overlooked the functional positioning of the construction of PFTZ and the synergy of the construction of PFTZ with other policies.…”

A Knowledge Map Study of an Application of a Smart Land Planning Free-Trade Zone and China’s Contribution

“…This progress substantiates the upward trend, and we believe the breadth and depth of FTZ research will be enhanced further. Among these estimations of FTZ effects, Jiang et al [37] used the synthetic control method to estimate the extra promotion of policy effects on the Shanghai FTZ, finding that the FTZ could bring extra promotion of green total factor productivity (GTFP) by driving technical innovations; Ma et al [80] used the PSM-DID (Propensity Score Matching-DID) method to extend the driving effect of FTZs on GTFP in 280 Chinese cities; Zhuo et al [25] used DID method to find that FTZs can be a "policy trap" by exacerbating the discharge of wastewater and exhaust gases in Guangdong because of low-end industries' expansion. All the signs of progress from this research have illustrated that FTZs can bring diversified policy implications of FTZ, and that the positive effects play a leading role, but also that negative effects exist.…”

Does Regional Development Policy Promote Industrial Structure Upgrading? Evidence from the Yangtze River Delta in China

“…Several studies have reported on the impact of industrial and fiscal policies. Zhuo et al (2021) and Ma et al (2021) found that the establishment of free trade zones is not only an important channel for the optimization and upgrading of regional industrial structure, but also a core element among many factors that influence the optimization and upgrading of industrial structure [54,55]. Song et al (2020) and Sun et al (2020) revealed that regional tax incentives can accumulate a large number of production factors in the short term and play a more important role in promoting the upgrading of industrial structure and the level of openness to the outside world [56,57].…”