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Trade openness and green total factor productivity: testing the role of environment regulation based on dynamic panel threshold model

Abstract

As an ecological barrier to ensure the high-quality development of China’s economy, the Yangtze River Economic Belt has attracted more and more attention from academic circles on how to promote the green development of the Yangtze River Economic Belt. This paper uses the SBM directional distance function and the Malmquist–Luenberger index to measure the green total factor productivity of 110 cities in the Yangtze River Economic Belt from 2006 to 2018, and then based on the panel threshold model to empirically explore the intensity of environmental regulations that induce trade openness and promote green total factor productivity. Studies have shown that: Firstly, trade openness has significantly inhibited the increase in green total factor productivity, but environmental regulations can play a positive regulatory role, that is increasing the intensity of environmental regulation can alleviate the adverse effects of trade openness, and it is mainly to improve the adverse effects by promoting the progress of green technology. Secondly, the results of the panel threshold model show that environmental regulations have a nonlinear regulatory effect on trade openness and green total factor productivity. When the intensity of environmental regulations crosses the second threshold, trade openness has a significant positive effect on the impact of green total factor productivity. Finally, the heterogeneity results show that in order to reverse the adverse impact of trade openness on green total factor productivity, the upper, middle and lower reaches of the Yangtze River Economic Belt should formulate relatively strict environmental regulations.

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Acknowledgements

The work was supported by the Key (bidding) Project of Central Universities in Southwest University (SWU2009220) and Major Project of National Social Science Fund (20&ZD156).

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ML and QH conceived and designed the research question. ML constructed the models, analyzed the optimal solutions and wrote the paper. QH reviewed and edited the manuscript. All authors read and approved the manuscript.

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Correspondence to Min Liu.

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The authors declare no conflict of interest. There is no professional or other personal interest of any nature or kind in any product, service and/or company that could be construed as influencing the position presented in, or the review of, the manuscript entitled.

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Huang, Q., Liu, M. Trade openness and green total factor productivity: testing the role of environment regulation based on dynamic panel threshold model. Environ Dev Sustain (2021). https://doi.org/10.1007/s10668-021-01825-y

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Keywords

  • Trade openness
  • Environmental regulation
  • Green total factor productivity
  • Yangtze River economic belt
  • Panel threshold model