In this research, therefore, I would like to examine whether there is positive or negative economic impact so as to assess the need of strong environment policy in the stage of economic development in China.
Literature Review
A lot of work is theoretically done to define the role of environmental policy in encouraging or discouraging productivity growth. Conventional view about environmental regulations was that the impact of the regulations on market productivity is expected to be negative since the regulations are likely to induce firms to invest in environmental compliances and thus reduce the investment for market output. However, recently some argues that environmental regulations can encourage productivity growth and ultimately higher profits. In addition, if the social benefits of regulation were fully taken into account as an additional output, then theoretical prediction would be complicated.
Summary of Previous Research
Negative relationship between environmental regulations and economic development
- Firms might be reluctant to innovate if they believe regulators will respond by stepping up environmental standards even tighter. (McCain, 1978)
- More regulated firms have significantly lower market productivity growth than less regulated firms in the US steel, oil and paper industries. (Gray and Shadbegian, 2003)
Positive relationship between environmental regulations and economic development
- Abatement pressures may stimulate innovative responses that reduce the actual cost of environmental compliances below the original estimates. (Downing and White, 1986)
- Positive relationship was found between environmental compliance cost and patenting of new environmental technologies using the dataset of U.S., Japan, and Germany. (Lanjouw and Mody, 1996)
- Significant relationship between environmental compliance costs and the R&D expenditure in the US industry was found. (Jaffe and Palmer, 1997)
Research question
“Implementing strong environment policy in China would bring about the gain of productivity growth and technological process?”
To assess economic impact of environmental regulations in China, I would like to exercise quantitative research on “the R&D expenditure and environmental compliance costs in China from 1990s”. Even though this similar approach adopted in the US, but US and China has different industry and political structure. Thus I would like to experiment whether it would have same positive relationship despite different structures and behaviors between two countries. If positive relationship would be found in this research, it would be helpful for government to adopt environmental-friendly policies in Chinese on-going developing economy.
Expecting Results
- Positive relationship between the amount of R&D expenditure in China from 1990s and environmental compliance costs from 1990s
- Successful environmental policies can contribute to efficiency improvements by encouraging technology innovation
- Chinese green movement is right set for pursuing sustainable and powerful economy
Reference
Batabyal, Amitrajeet A. and Beladi, Hamid. 2002. Aspects of the Theory of Environmental Policy in Developing Countries, Discrete Dynamics in Nature and Society 7(1): 53-58.
Delhotal, Katherine C. 1999. A Green Accounting of Coal Production in China.
Greenpeace. 2008. China after the Olympics: Lessons from Beijing.
Lindhjem, Henrik et al. 2006. Environmental Economic Impact Assessment in China: Problems and Prospects, Econ Analysis.
Managi, Shunsuke and Kanekob, Shinji. 2004. Environment Policies in China.
Matsuno, Hiroshi. 2009. China’s Environmental Policy: Its effectiveness and Suggested Approaches for Japanese Companies, Nomura Research Institute Papers No.140.
Meyer, Stephen M. 1995. The Economic Impact of Environmental Regulation, Journal of Environmental Law & Practice 3(2): 4-15.
Mol, Arthur P.J. and Carter, Neil T. 2006. China’s Environmental Governance in Transition, Environmental Politics 15(2): 149-70.
Organization for Economic Co-operation and Development (OECD). 2006a. Environmental Performance Review of China: conclusions and recommendations. Paris: OECD.
Organization for Economic Co-operation and Development (OECD). 2006b. Environmental Compliance and Enforcement in China: an assessment of current practices and ways forward. Paris: OECD.
Ramzy, Austin. 2008. Is Beijing manipulating air pollution statistics? Time, Mar. 14.
Stokoe, Sarah et al. 2008. China’s Environmental Law Framework. Pacific Business Press.
Streets, David G. et al. 2007. Air Quality during the 2008 Beijing Olympic Games, Atmospheric Environment 41: 480-92.
The Economist. 2009. The Price of Cleanliness: China is torn between getting greener and getting richer, October 22.
Wassermann, Rogerio. 2009. Can China be Green by 2020? BBC News, April 2.
World Bank. 2007. Cost of Pollution in China: Economic Estimates of Physical Damages. Washington, DC.: World Bank.
Yardley, Jim. 2007. Beijing’s Olympic Quest: Turn Smoggy Sky Blue, New York Times, December 29, Asia Pacific section.
President Hu Jintao’s speech at the opening plenary session of the United Nations Summit on Climate Change, New York, Sep.22, 2009
