Does Environmental Regulation Promote Environmental Innovation? An Empirical Study of Cities in China

Promoting environmental innovation through environmental regulation is a key measure for cities to reduce environmental pressure; however, the role of environmental regulation in environmental innovation is controversial. This study used the number of environmental patent applications to measure urban environmental innovation and analyzed the role of urban environmental regulation on urban environmental innovation with the help of the spatial Durbin model (SDM). The results showed that: (1) From 2007 to 2017, the number of environmental patent applications in China has grown rapidly, and technologies related to buildings dominated the development of China’s environmental innovation. (2) Although the number of cities participating in environmental innovation was increasing, China’s environmental innovation activities were highly concentrated in a few cities (Beijing, Shenzhen, and Shanghai), showing significant spatial correlation and spatial agglomeration characteristics. (3) Urban environmental regulation had a positive U-shaped relationship with urban environmental innovation capability, which was consistent with what the Porter hypothesis advocates.

Environmental policy stringency and comparative advantage of environmental sensitive goods: a study of textile exports in G20 countries

PurposeTextile, listed as one of the highly environmentally sensitive goods, its trade is susceptible to be influenced by the implementation of stringent environmental policies. This paper aims to investigate the long-run relationship between revealed comparative advantage (RCA) and Environmental Policy Stringency Index (EPSI) for textile exports of G20 countries in panel data setup.Design/methodology/approachApart from trend analysis, the authors have employed Pedroni and Westerlund panel cointegration method and fully modified ordinary least square (FMOLS) method to study the long-run relationship between RCA and EPSI in presence of cross-sectional dependence.FindingsA strong link between trade and environmental stringency is observed for textile in the present study. For G20 countries, slight evidence of the Pollution Haven Hypothesis has also been witnessed in the study. Correspondingly, the results reveal the presence of long-run association between the variables under study, implying that stringent environmental policies reduce RCA for some countries, whereas some countries witness the Porter hypothesis.Research limitations/implicationsThe results imply that policy formulation should not aim at limiting the efforts of connecting RCA to environmental stringency but to set trade policies in a wider framework, considering environmental concerns, as these are inseparable subjects. However, this study also provides relevant real-world implications that can support further research.Practical implicationsThe present study has important implications for textile exporters such as green innovations. The Porter hypothesis can be a beneficial tool for G20 exporters in enhancing their export performance, especially for the ones dealing in environmentally sensitive goods. This study offers relevant policy implications and provides directions for future research on global trade and environment nexus.Originality/valueThis study deals in a debatable area of research that evaluates the interlinkages between environmental stringency and global trade flows in the G20 countries. An important observation of the study is the asymmetrical nature of policy stringency across different countries and its impact on trade. The unavailability of updated data is the limitation of the present study.

Investigation of the Relations Between Foreign Trade and Characteristics of Environmental Quality: Existing Approaches and Approbation of Gravity Modeli

The purpose of this study is for the author to summarize approaches and methods for assessing availability, identifying forms and types of relations between characteristics of environmental quality and international trade, and also to test the gravity theory of trade as such a method (on the example of the Republic of Belarus).The author has investigated modern economic works devoted to the study of the influence of trade liberalization on environmental pollution, the pollution haven hypothesis, the environmental Kuznets curve, the Porter hypothesis, etc., as well as the studies aimed at confirming or refuting these hypotheses, has systematized modern approaches to assessing the relations between trade and environmental indicators.Based on the panel data for the period from 1995 to 2019, the author has constructed the gravity models of trade (separately for export and import) of the Republic of Belarus with the EAEU partner countries and neighboring countries (Lithuania, Latvia, Poland, Ukraine), taking into account the environmental impact (the carbon dioxide emissions as the proxy variable of pollution). The simulation results have confirmed the theoretical provisions of the gravity theory. In addition, a significant effect of an increase in carbon dioxide emissions of countries – trade partners of the Republic of Belarus on its imports has been revealed.

The impact of energy consumption and merchandise exports on CO2 emission in the United Nations geoscheme regions

Purpose While sustainable development policies are mostly set based on United Nations (UN) geoscheme classification, no study attempts to examine the impact of influential economic variables such as energy consumption (EC) and merchandise exports (ME) on carbon dioxide (CO2) emission in the UN geoscheme regions. The purpose of this paper is to examine the possible impact of EC and ME on CO2 emission in UN geoscheme classification regions such as Africa, America, Arab, Asia and Europe. Design/methodology/approach This paper uses autoregressive distributed lag (ARDL), Pedroni panel cointegration and panel Granger causality methodologies covering an annual panel data sampling period from 1971 to 2014. Findings The results show that there is bidirectional causality between all three variables in the European and American panel except for the non-causality from CO2 to EC in the American panel. These findings suggest possible consequences of weaker energy efficiency (even under environmental policy tightening) and strong demand for energy-intensive economic activities in those regions. Developed countries with higher environmental policy tightening (America and Europe) show significant estimates from the chosen tests supporting the Porter hypothesis. EC and ME have a long-run impact on CO2 emission in American and European panels. The African region has the least environmental impact of pollution from ME. Practical implications The ME and EC have a direct significant impact on CO2 emission in America and Europe. As these causalities, co-integrations and their impacts share a long-run equilibrium relationship, policymakers must design long-term industry policies such as cleaner production techniques focusing on environmentally sustainable practices. Also, it is suggested that the policymakers must ensure that they implement more robust policies and standards for environmental-friendly export production. Originality/value This is the first paper that examines the impact of EC and ME on CO2 emission in UN geoscheme regions. The findings of this paper provide theoretical implications supporting Porter hypothesis and practical implications for policymaking.

Can Environmental Tax Bring Strong Porter Effect? Evidence From Chinese Listed Companies

Existing researches verify Porter hypothesis mainly through one of its core establishment paths, innovation compensation, but ignore the other one, first-mover advantage. To further clarify the mechanism of Porter hypothesis, this paper considers both paths and further distinguishes between environmental R&D and non-environmental R&D. Based on the principle of the smooth transition of "charge to tax" in China, this paper, taking Chinese A-share listed companies that have disclosed environmental R&D from 2008 to 2017 as sample and predicting environmental tax by pollution charge, analyses the relationship between environmental tax and firm performance and the transmission mechanism between them. Our results show that environmental tax can improve firm performance and this influence remains in long term. After introducing instrument variable (IV) to deal with endogeneity and conducting a series of robustness tests, we find that the relationship between environmental tax and firm performance is robust causality. Furthermore, using mediating effect model to analyse the transmission mechanism, we prove that environmental tax can affect firm performance through innovation compensation and first-mover advantage, which confirms the two core paths of Porter hypothesis. This study reveals the micro mechanism of environmental tax on firm performance, provides evidence from China to support strong Porter hypothesis, and helps guide environmental tax reform and corporate green strategy management.

Urban Environmental Legislation and Green Innovation

With the panel data of 218 prefecture-level cities from 2003 to 2017, this paper empirically tested whether urban environmental legislation realized Porter Hypothesis(PH) in China. After a series of model estimation and robustness tests, the results show that urban environmental legislation increased the number of local green patents, which means that the weak Porter Hypothesis was established. However, the urban environmental legislation did not lead to an increase in green total factor productivity(GTFP). In other words, the strong version of PH did not hold. Further analysis shows that urban environmental legislation led to the decline of GTFP and the increase of green patents in the west of China, but not in the east and central cities. Besides, the legislation did not promote GTFP improvement through green innovation in the short term, which means it did not realize process compensation.