IDEAS home Printed from https://ideas.repec.org/a/gam/jijerp/v17y2020i4p1427-d324114.html
   My bibliography  Save this article

Environmental Regulation, Technological Innovation, and Export Competitiveness: An Empirical Study Based on China’s Manufacturing Industry

Author

Listed:
  • Jiayue Liu

    (School of Economics, South-Central University for Nationalities, Wuhan 430074, China
    Hubei Moderately Prosperous Society in all respects Construction Research Institute, Wuhan 430074, China)

  • Jing Xie

    (School of Economics, Zhongnan University of Economics and Law, Wuhan 430073, China)

Abstract

A current and universal challenge, particularly in developing nations, is the establishment of effective environmental regulation policies that protect the ecological environment without adversely affecting the international competitiveness of the domestic manufacturing industry. To deal with this dilemma, this study investigates the export competitiveness of China’s manufacturing industry from the viewpoint of export value added. The Porter hypothesis is applied for an empirical investigation of the effect of environmental regulation on export competitiveness and to determine the presence of intra-industry heterogeneity. Furthermore, this study seeks to understand the mechanisms through which environmental regulation affects export competitiveness by exploring the two main approaches to technological innovation. The findings reveal that environmental regulation has a promotion effect of approximately 2% on the export competitiveness of China’s manufacturing industry; however, this effect is non-linear and displays a “U-shaped” tendency, indicating that certain prerequisites must be fulfilled to validate the Porter hypothesis. In addition, the effect of environmental regulation displays significant intra-industry heterogeneity, which is evident primarily in heavily polluting sub-industries and to a lesser extent in moderately polluting sub-industries but insignificant in lightly polluting sub-industries. Environmental regulation also differs significantly in the mechanisms through which it affects different approaches to technological innovation. Independent research and development is affected by environmental regulation through the compliance cost effect, which limits export competitiveness, while technology introduction is affected by the innovation offset effect, which favors export competitiveness. These findings offer political implications for the sustainable development of the ecological environment and foreign trade.

Suggested Citation

  • Jiayue Liu & Jing Xie, 2020. "Environmental Regulation, Technological Innovation, and Export Competitiveness: An Empirical Study Based on China’s Manufacturing Industry," IJERPH, MDPI, vol. 17(4), pages 1-19, February.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:4:p:1427-:d:324114
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1660-4601/17/4/1427/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1660-4601/17/4/1427/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paul Lanoie & Michel Patry & Richard Lajeunesse, 2008. "Environmental regulation and productivity: testing the porter hypothesis," Journal of Productivity Analysis, Springer, vol. 30(2), pages 121-128, October.
    2. Daniela Marconi, 2012. "Environmental Regulation and Revealed Comparative Advantages in Europe: Is China a Pollution Haven?," Review of International Economics, Wiley Blackwell, vol. 20(3), pages 616-635, August.
    3. Wang, Yun & Sun, Xiaohua & Guo, Xu, 2019. "Environmental regulation and green productivity growth: Empirical evidence on the Porter Hypothesis from OECD industrial sectors," Energy Policy, Elsevier, vol. 132(C), pages 611-619.
    4. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. de Vries, 2013. "Fragmentation, incomes and jobs: an analysis of European competitiveness [Who captures value in global supply chains?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 28(76), pages 613-661.
    5. Woo-Yong Song & Bongsuk Sung, 2014. "Environmental regulations and the export performance of South Korean manufacturing industries: A dynamic panel approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(7), pages 923-945, October.
    6. Vasilis C. Kapsalis & Grigorios L. Kyriakopoulos & Konstantinos G. Aravossis, 2019. "Investigation of Ecosystem Services and Circular Economy Interactions under an Inter-organizational Framework," Energies, MDPI, vol. 12(9), pages 1-29, May.
    7. Konstantinos G. Aravossis & Vasilis C. Kapsalis & Grigorios L. Kyriakopoulos & Theofanis G. Xouleis, 2019. "Development of a Holistic Assessment Framework for Industrial Organizations," Sustainability, MDPI, vol. 11(14), pages 1-24, July.
    8. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    9. Zhijun Feng & Bo Zeng & Qian Ming, 2018. "Environmental Regulation, Two-Way Foreign Direct Investment, and Green Innovation Efficiency in China’s Manufacturing Industry," IJERPH, MDPI, vol. 15(10), pages 1-22, October.
    10. Manli Cheng & Zhen Shao & Changhui Yang & Xiaoan Tang, 2019. "Analysis of Coordinated Development of Energy and Environment in China’s Manufacturing Industry under Environmental Regulation: A Comparative Study of Sub-Industries," Sustainability, MDPI, vol. 11(22), pages 1-20, November.
    11. Sushanta K. MALLICK & Ricardo M. SOUSA, 2017. "The skill premium effect of technological change: New evidence from United States manufacturing," International Labour Review, International Labour Organization, vol. 156(1), pages 113-131, March.
    12. Vasilii Erokhin & Li Diao & Peiran Du, 2020. "Sustainability-Related Implications of Competitive Advantages in Agricultural Value Chains: Evidence from Central Asia—China Trade and Investment," Sustainability, MDPI, vol. 12(3), pages 1-29, February.
    13. Josh Ederington & Arik Levinson & Jenny Minier, 2005. "Footloose and Pollution-Free," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 92-99, February.
    14. Xie, Rong-hui & Yuan, Yi-jun & Huang, Jing-jing, 2017. "Different Types of Environmental Regulations and Heterogeneous Influence on “Green” Productivity: Evidence from China," Ecological Economics, Elsevier, vol. 132(C), pages 104-112.
    15. Rodriguez Lopez, Juan Miguel & Sakhel, Alice & Busch, Timo, 2017. "Corporate investments and environmental regulation: The role of regulatory uncertainty, regulation-induced uncertainty, and investment history," European Management Journal, Elsevier, vol. 35(1), pages 91-101.
    16. Pengsheng Li & Yanying Chen, 2019. "The Influence of Enterprises’ Bargaining Power on the Green Total Factor Productivity Effect of Environmental Regulation—Evidence from China," Sustainability, MDPI, vol. 11(18), pages 1-20, September.
    17. Hering, Laura & Poncet, Sandra, 2014. "Environmental policy and exports: Evidence from Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 296-318.
    18. Koopman, Robert & Wang, Zhi & Wei, Shang-Jin, 2012. "Estimating domestic content in exports when processing trade is pervasive," Journal of Development Economics, Elsevier, vol. 99(1), pages 178-189.
    19. Zhengge Tu & Tao Zhou & Ning Zhang, 2019. "Does China’s Pollution Levy Standards Reform Promote Green Growth?," Sustainability, MDPI, vol. 11(21), pages 1-18, November.
    20. Costantini, Valeria & Mazzanti, Massimiliano, 2012. "On the green and innovative side of trade competitiveness? The impact of environmental policies and innovation on EU exports," Research Policy, Elsevier, vol. 41(1), pages 132-153.
    21. Selim Cagatay & Hakan Mihci, 2006. "Degree of environmental stringency and the impact on trade patterns," Journal of Economic Studies, Emerald Group Publishing, vol. 33(1), pages 30-51, January.
    22. Bernard C. Beaudreau, 2013. "What the OECD-WTO TiVA Data Tell Us about Comparative Advantage and International Trade in General," The International Trade Journal, Taylor & Francis Journals, vol. 27(5), pages 465-481, December.
    23. Xiaobing Huang & Xiaolian Liu, 2019. "The Impact of Environmental Regulation on Productivity and Exports: A Firm-Level Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(11), pages 2589-2608, September.
    24. Die Li & Jinsheng Zhu, 2019. "The Role of Environmental Regulation and Technological Innovation in the Employment of Manufacturing Enterprises: Evidence from China," Sustainability, MDPI, vol. 11(10), pages 1-23, May.
    25. Wei Shan & Jingyi Wang, 2019. "The Effect of Environmental Performance on Employment: Evidence from China’s Manufacturing Industries," IJERPH, MDPI, vol. 16(12), pages 1-18, June.
    26. Kathryn G. Marshall, 2011. "The factor content of Chinese trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(6), pages 769-787, September.
    27. Matthew A. Cole & Robert J. R. Elliott, 2005. "FDI and the Capital Intensity of “Dirty” Sectors: A Missing Piece of the Pollution Haven Puzzle," Review of Development Economics, Wiley Blackwell, vol. 9(4), pages 530-548, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huang, Xiaobing & Xie, Jiawei, 2024. "Impact of green credit policies on the global value chain position of heavy polluting enterprises," Energy Policy, Elsevier, vol. 192(C).
    2. Tang, Song & Chen, Zejin & Chen, Jiawei & Quan, Lei & Guan, Kaiyang, 2023. "Does FinTech promote corporate competitiveness? Evidence from China," Finance Research Letters, Elsevier, vol. 58(PD).
    3. Ying Fu & Zhaohan Wang & Yun Wang, 2024. "Green Financial Policy for Fostering Green Technological Innovation: The Role of Financing Constraints, Science Expenditure, and Heightened Industrial Structure," Sustainability, MDPI, vol. 16(20), pages 1-26, October.
    4. Yiming Hou & Guanwen Yin & Yanbin Chen, 2022. "Environmental Regulation, Financial Pressure and Industrial Ecological Efficiency of Resource-Based Cities in China: Spatiotemporal Characteristics and Impact Mechanism," IJERPH, MDPI, vol. 19(17), pages 1-18, September.
    5. Xiangxia Liu & Shen Liu, 2024. "Green Technology Innovation, Capital-Factor Allocation, and Manufacturing-Export Resilience," Sustainability, MDPI, vol. 16(3), pages 1-20, February.
    6. Kun Chen & Yinrong Chen & Qingying Zhu & Min Liu, 2022. "The Relationship between Environmental Regulation, Industrial Transformation Change and Urban Low-Carbon Development: Evidence from 282 Cities in China," IJERPH, MDPI, vol. 19(19), pages 1-15, October.
    7. Zhiliang Xu & Changxin Xu & Yun Li, 2023. "Green Credit Policy, Environmental Investment, and Green Innovation: Quasi-Natural Experimental Evidence from China," Sustainability, MDPI, vol. 15(10), pages 1-17, May.
    8. Jing Xie & Qi Sun & Shaohong Wang & Xiaoping Li & Fei Fan, 2020. "Does Environmental Regulation Affect Export Quality? Theory and Evidence from China," IJERPH, MDPI, vol. 17(21), pages 1-23, November.
    9. Qi Wang & Junqi Liu, 2023. "Demand-side and traditional environmental regulations in green construction: the moderating role of CNSC and SOE intensity," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6897-6938, July.
    10. Marco Vacchi & Cristina Siligardi & Davide Settembre-Blundo, 2024. "Driving Manufacturing Companies toward Industry 5.0: A Strategic Framework for Process Technological Sustainability Assessment (P-TSA)," Sustainability, MDPI, vol. 16(2), pages 1-25, January.
    11. Jiangmin Yang & Desheng Xue & Gengzhi Huang, 2020. "The Changing Factors Affecting Local Environmental Governance in China: Evidence from a Study of Prefecture-Level Cities in Guangdong Province," IJERPH, MDPI, vol. 17(10), pages 1-17, May.
    12. Muyao Li & Jinsong Zhang & Ramakrishnan Ramanathan & Ruiqian Li, 2020. "Opening the Black Box: The Impacts of Environmental Regulations on Technological Innovation," IJERPH, MDPI, vol. 17(12), pages 1-18, June.
    13. Yuan, Kaihua & Cui, Jingyuan & Zhang, Haipeng & Gao, Xiang, 2023. "Do cleaner production standards upgrade the global value chain position of manufacturing enterprises? Empirical evidence from China," Energy Economics, Elsevier, vol. 128(C).
    14. Hafele, Jakob & Kuhls, Sonia, 2022. "Trade-off or tension: Can carbon be priced without risking economic competitiveness?," ZOE Discussion Papers 9, ZOE. institute for future-fit economies, Bonn.
    15. Stanislav Zabojník & Dusan Steinhauser & Viktoria Pestova, 2023. "EU Decarbonisation: Do EU Electricity Costs Harm Export Competitiveness?," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 522-522, April.
    16. Wen, Huwei & Wen, Changyong & Lee, Chien-Chiang, 2022. "Impact of digitalization and environmental regulation on total factor productivity," Information Economics and Policy, Elsevier, vol. 61(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jing Xie & Qi Sun & Shaohong Wang & Xiaoping Li & Fei Fan, 2020. "Does Environmental Regulation Affect Export Quality? Theory and Evidence from China," IJERPH, MDPI, vol. 17(21), pages 1-23, November.
    2. Manli Cheng & Zhen Shao & Changhui Yang & Xiaoan Tang, 2019. "Analysis of Coordinated Development of Energy and Environment in China’s Manufacturing Industry under Environmental Regulation: A Comparative Study of Sub-Industries," Sustainability, MDPI, vol. 11(22), pages 1-20, November.
    3. Mian Yang & Yining Yuan & Fuxia Yang & Dalia Patino-Echeverri, 2021. "Effects of environmental regulation on firm entry and exit and China’s industrial productivity: a new perspective on the Porter Hypothesis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 915-944, October.
    4. Xie, Dongchun & Li, Xiaofeng & Zhou, Di, 2022. "Does environmental information disclosure increase firm exports?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 620-638.
    5. Zhang, Yijun & Li, Xiaoping & Song, Yi & Jiang, Feitao, 2021. "Can green industrial policy improve total factor productivity? Firm-level evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 51-62.
    6. Yuping Deng & Yanrui Wu & Helian Xu, 2022. "Emission Reduction and Value-added Export Nexus at Firm Level," Economics Discussion / Working Papers 22-19, The University of Western Australia, Department of Economics.
    7. Yanli Li & Jiayuan Li & Luyao Gan, 2022. "A Meta-Analysis of the Relationship between Environmental Regulations and Competitiveness and Conditions for Its Realization," IJERPH, MDPI, vol. 19(13), pages 1-12, June.
    8. Xiaoting Liu & Jichang Dong & Kangxian Ji & Xiuting Li & Shijie Xu, 2022. "Investigating the ‘Short Pain’ and ‘Long Gain’ Effect of Environmental Regulation on Financial Performance: Evidence from Chinese Listed Polluting Firms," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    9. Sun, Chuanwang & Zhan, Yanhong & Gao, Xiang, 2023. "Does environmental regulation increase domestic value-added in exports? An empirical study of cleaner production standards in China," World Development, Elsevier, vol. 163(C).
    10. Gao, Shiya & Guan, Xin & Tang, Run & Zhu, Junfan & Wang, Zeyu & Xu, Wei, 2023. "Resource curse, economic efficiency and green recovery based on three-subject framework," Resources Policy, Elsevier, vol. 85(PB).
    11. Zhang, Yijun & Song, Yi, 2022. "Tax rebates, technological innovation and sustainable development: Evidence from Chinese micro-level data," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    12. Xin Liu & Zhiyong Kang, 2022. "Environmental Policy and Exports in China: An Analysis Based on the Top 10,000 Energy-Consuming Enterprises Program," Sustainability, MDPI, vol. 14(21), pages 1-16, October.
    13. Yuhua Ma & Tong Lin & Qifang Xiao, 2022. "The Relationship between Environmental Regulation, Green-Technology Innovation and Green Total-Factor Productivity—Evidence from 279 Cities in China," IJERPH, MDPI, vol. 19(23), pages 1-22, December.
    14. Jung‐Ah Hwang & Yeonbae Kim, 2017. "Effects of Environmental Regulations on Trade Flow in Manufacturing Sectors: Comparison of Static and Dynamic Effects of Environmental Regulations," Business Strategy and the Environment, Wiley Blackwell, vol. 26(5), pages 688-706, July.
    15. Peng, Jiaying & Xie, Rui & Ma, Chunbo & Fu, Yang, 2021. "Market-based environmental regulation and total factor productivity: Evidence from Chinese enterprises," Economic Modelling, Elsevier, vol. 95(C), pages 394-407.
    16. Jingjing Huang & Yuan Zhong & Yabin Zhang, 2023. "Does Environmental Regulation of Cleaner Production Affect the Position of Enterprises in Global Value Chains? A Quasi-Natural Experiment Based on the Implementation of Cleaner Production," Sustainability, MDPI, vol. 15(13), pages 1-29, July.
    17. Wu, Haitao & Xu, Lina & Ren, Siyu & Hao, Yu & Yan, Guoyao, 2020. "How do energy consumption and environmental regulation affect carbon emissions in China? New evidence from a dynamic threshold panel model," Resources Policy, Elsevier, vol. 67(C).
    18. Jichuan Sheng & Jing Xin & Weihai Zhou, 2023. "The impact of environmental regulations on corporate productivity via import behaviour: the case of China’s manufacturing corporations," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(4), pages 3671-3697, April.
    19. Xinfei Li & Chang Xu & Baodong Cheng & Jingyang Duan & Yueming Li, 2021. "Does Environmental Regulation Improve the Green Total Factor Productivity of Chinese Cities? A Threshold Effect Analysis Based on the Economic Development Level," IJERPH, MDPI, vol. 18(9), pages 1-21, April.
    20. Ren, Shenggang & Hu, Yucai & Zheng, Jingjing & Wang, Yangjie, 2020. "Emissions trading and firm innovation: Evidence from a natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 155(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijerp:v:17:y:2020:i:4:p:1427-:d:324114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.