IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i8p3408-d1378452.html
   My bibliography  Save this article

Analyzing Green Growth Efficiency in China and Investigating the Spatial Effects of Fiscal Decentralization: Case Study of Prefecture-Level Cities

Author

Listed:
  • Yiming Li

    (School of Economics and Trade, Shandong Management University, Jinan 250300, China
    These authors contributed equally to this work.)

  • Liru Bai

    (School of Economics and Trade, Shandong Management University, Jinan 250300, China
    School of Public Finance and Taxation, Central University of Finance and Economics, Beijing 102206, China
    These authors contributed equally to this work.)

Abstract

Due to inadequate resource availability and environmental contamination, the Chinese government has placed a high priority on ecological civilization in recent years. Emphasis has been placed on the environmentally friendly conversion of the economy and the sustainable progress of society. China has established a fiscal decentralization system that divides financial responsibilities between the central and local governments. Due to their proximity advantage, local governments, as agents of the central government, can effectively deliver public services, optimize resource allocation, encourage innovation in green science and technology, and facilitate green growth in the region. However, local governments may exhibit myopic behaviors that impede the sustainable development of the region in their pursuit of regional growth ambitions. Therefore, this paper aims to investigate whether the institutional factor of fiscal decentralization promotes or inhibits the efficiency of green development in China. Using data from Chinese prefecture-level cities between 2010 and 2020, this paper presents the SBM-DDF model to measure the green growth efficiency ( G G E ) in cities. The study then analyzes the spatial impact of fiscal decentralization on G G E using a dynamic panel model and a dynamic SAR model. The empirical results show that China’s green development level has steadily increased in recent years, and G G E reflects climbing pressure and regional differences. Secondly, increasing the vertical fiscal decentralization of local governments promotes G G E growth, while increasing fiscal freedom hinders it. Additionally, fiscal decentralization in neighboring cities also affects local G G E , with spatial spillover effects. Finally, the impact of fiscal decentralization on G G E is spatio-temporally heterogeneous. This paper expands on the research regarding the factors that affect the efficiency of green growth in China, specifically focusing on institutional factors at a theoretical level. Additionally, this paper provides targeted policy recommendations based on the aforementioned findings. These recommendations hold great practical significance for China in improving its fiscal decentralization system and achieving sustainable economic development.

Suggested Citation

  • Yiming Li & Liru Bai, 2024. "Analyzing Green Growth Efficiency in China and Investigating the Spatial Effects of Fiscal Decentralization: Case Study of Prefecture-Level Cities," Sustainability, MDPI, vol. 16(8), pages 1-28, April.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:8:p:3408-:d:1378452
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/8/3408/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/8/3408/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Di Wang & Zhiyuan Zhang & Ruyi Shi, 2022. "Fiscal Decentralization, Green Technology Innovation, and Regional Air Pollution in China: An Investigation from the Perspective of Intergovernmental Competition," IJERPH, MDPI, vol. 19(14), pages 1-18, July.
    2. Feng Wang & Tayyaba Rani & Asif Razzaq, 2023. "Environmental impact of fiscal decentralization, green technology innovation and institution’s efficiency in developed countries using advance panel modelling," Energy & Environment, , vol. 34(4), pages 1006-1030, June.
    3. Xiangfeng Ji & Muhammad Umar & Shahid Ali & Wajid Ali & Kai Tang & Zeeshan Khan, 2021. "Does fiscal decentralization and eco‐innovation promote sustainable environment? A case study of selected fiscally decentralized countries," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(1), pages 79-88, January.
    4. Jiang, Liangliang & Lin, Chen & Lin, Ping, 2014. "The determinants of pollution levels: Firm-level evidence from Chinese manufacturing," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 118-142.
    5. Yafei Wang & Huanhuan Huang & Jing Liu & Jin Ren & Tingting Gao & Xinrui Chen, 2023. "Rural Industrial Integration’s Impact on Agriculture GTFP Growth: Influence Mechanism and Empirical Test Using China as an Example," IJERPH, MDPI, vol. 20(5), pages 1-21, February.
    6. Dong-hyun Oh, 2010. "A global Malmquist-Luenberger productivity index," Journal of Productivity Analysis, Springer, vol. 34(3), pages 183-197, December.
    7. Justin Yifu Lin & Zhiqiang Liu, 2000. "Fiscal Decentralization and Economic Growth in China," Economic Development and Cultural Change, University of Chicago Press, vol. 49(1), pages 1-21.
    8. Jinlin Li & Litai Chen & Ying Chen & Jiawen He, 2022. "Digital economy, technological innovation, and green economic efficiency—Empirical evidence from 277 cities in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(3), pages 616-629, April.
    9. Lin, Boqiang & Zhou, Yicheng, 2021. "Does fiscal decentralization improve energy and environmental performance? New perspective on vertical fiscal imbalance," Applied Energy, Elsevier, vol. 302(C).
    10. Maxime Uhoda, 2020. "Which competences for sub-national jurisdictions and how to finance them? The economic theory of fiscal federalism from the foundations to nowadays," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(1), pages 91-112, June.
    11. Stephen R. Bond, 2002. "Dynamic panel data models: a guide to micro data methods and practice," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 141-162, August.
    12. Fukuyama, Hirofumi & Weber, William L., 2009. "A directional slacks-based measure of technical inefficiency," Socio-Economic Planning Sciences, Elsevier, vol. 43(4), pages 274-287, December.
    13. Caihua Zhou & Xinmin Zhang, 2020. "Measuring the Efficiency of Fiscal Policies for Environmental Pollution Control and the Spatial Effect of Fiscal Decentralization in China," IJERPH, MDPI, vol. 17(23), pages 1-19, December.
    14. Haoguang Liang & Yaojun Zhang, 2019. "The Theoretical System of Belt and Road Initiative," Springer Books, Springer, number 978-981-13-7701-3, December.
    15. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers 09/02, Institute for Fiscal Studies.
    16. Imran Hanif & Sally Wallace & Pilar Gago-de-Santos, 2020. "Economic Growth by Means of Fiscal Decentralization: An Empirical Study for Federal Developing Countries," SAGE Open, , vol. 10(4), pages 21582440209, October.
    17. Pu, Xiaohong & Zeng, Ming & Zhang, Weike, 2023. "Corporate sustainable development driven by high-quality innovation: Does fiscal decentralization really matter?," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 273-289.
    18. Xin, Fangkun & Qian, Yilei, 2022. "Does fiscal decentralization promote green utilization of land resources? Evidence from Chinese local governments," Resources Policy, Elsevier, vol. 79(C).
    19. Kuo Zhou & Baicheng Zhou & Mengmeng Yu, 2020. "The impacts of fiscal decentralization on environmental innovation in China," Growth and Change, Wiley Blackwell, vol. 51(4), pages 1690-1710, December.
    20. Wei Wei & Zulqarnain Mushtaq & Amir Ikram & Muhammad Faisal & Zhang Wan-Li & Muhammad Irshad Ahmad, 2020. "Estimating the Economic Viability of Cotton Growers in Punjab Province, Pakistan," SAGE Open, , vol. 10(2), pages 21582440209, May.
    21. ZELLNER, Arnold & KMENTA, Jan & DREZE, Jacques H., 1966. "Specification and estimation of Cobb-Douglas production function models," LIDAM Reprints CORE 12, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    22. Zhang, Kun & Zhang, Zong-Yong & Liang, Qiao-Mei, 2017. "An empirical analysis of the green paradox in China: From the perspective of fiscal decentralization," Energy Policy, Elsevier, vol. 103(C), pages 203-211.
    23. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    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. Yiming Li & Liru Bai, 2024. "Economic Decentralization and High-Quality Urban Development: Perspective from Local Effect and Spatial Spillover in 276 Prefecture-Level Cities in China," Sustainability, MDPI, vol. 16(22), pages 1-33, November.

    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. Zhang, Fuyu & Wang, Qiang & Li, Rongrong, 2024. "Linking natural resource abundance and green growth: The role of energy transition," Resources Policy, Elsevier, vol. 91(C).
    2. Maxwell Chukwudi Udeagha & Marthinus Christoffel Breitenbach, 2023. "The Role of Fiscal Decentralization in Limiting CO2 Emissions in South Africa," Biophysical Economics and Resource Quality, Springer, vol. 8(3), pages 1-30, September.
    3. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.
    4. Falavigna, Greta & Ippoliti, Roberto, 2023. "SMEs’ behavior under financial constraints: An empirical investigation on the legal environment and the substitution effect with tax arrears," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).
    5. Meles, Antonio & Salerno, Dario & Sampagnaro, Gabriele & Verdoliva, Vincenzo & Zhang, Jianing, 2023. "The influence of green innovation on default risk: Evidence from Europe," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 692-710.
    6. Ayman Hassan Bazhair & Mohammed Naif Alshareef, 2022. "Dynamic relationship between ownership structure and financial performance: a Saudi experience," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2098636-209, December.
    7. Maria Bas & Ivan Ledezma, 2010. "Trade integration and within-plant productivity evolution in Chile," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(1), pages 113-146, April.
    8. Jamil, Abd Rahim Md. & Law, Siong Hook & Mohamad Khair-Afham, M.S. & Trinugroho, Irwan, 2023. "Financial inclusion and economic uncertainty in developing countries: The role of digitalisation," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 786-806.
    9. Gnangnon, Sèna Kimm, 2023. "Duration of membership in the world trade organization and investment-oriented remittances inflows," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 258-277.
    10. Sèna Kimm Gnangnon, 2024. "Export product quality and inclusivity in developing countries," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 32(3), pages 807-843, July.
    11. Md. Abdul Halim & Syed Moudud-Ul-Huq & Farid Ahammad Sobhani & Ziaul Karim & Zinnatun Nesa, 2023. "The Nexus of Banks’ Competition, Ownership Structure, and Economic Growth on Credit Risk and Financial Stability," Economies, MDPI, vol. 11(8), pages 1-18, July.
    12. Mohamed Mnasri & Georges Dionne & Jean-Pierre Gueyie, 2013. "The Maturity Structure of Corporate Hedging: the Case of the U.S. Oil and Gas Industry," Cahiers de recherche 1337, CIRPEE.
    13. Du, Juntao & Shen, Zhiyang & Song, Malin & Zhang, Linda, 2023. "Nexus between digital transformation and energy technology innovation: An empirical test of A-share listed enterprises," Energy Economics, Elsevier, vol. 120(C).
    14. Fabian Dutschkus & Christian Lukas, 2022. "Social Relationships and Group Dynamics within the Supervisory Board and their Influence on CEO Compensation," Schmalenbach Journal of Business Research, Springer, vol. 74(2), pages 163-200, June.
    15. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.
    16. Adhikari, Tamanna & Whelan, Karl, 2023. "Did raising doing business scores boost GDP?," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 1011-1030.
    17. Son Tran & Dat Nguyen & Khuong Nguyen & Canh Nguyen & Liem Nguyen, 2023. "Income Diversification, Market Structure and Bank Stability: A Cross-country Analysis," Prague Economic Papers, Prague University of Economics and Business, vol. 2023(5), pages 550-568.
    18. Sidra Naeem & Rana Ejaz Ali Khan, 2021. "Fiscal Decentralization and Gender Equality in Developing Economies: Dynamics of Income Groups in Economies and Corruption," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(9), pages 745-761, September.
    19. Sèna Kimm Gnangnon, 2023. "Do unilateral trade preferences help reduce poverty in beneficiary countries?," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 249-288, February.
    20. Guo, Pin & Zhang, Cheng, 2023. "The impact of bank FinTech on liquidity creation: Evidence from China," Research in International Business and Finance, Elsevier, vol. 64(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:jsusta:v:16:y:2024:i:8:p:3408-:d:1378452. 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.