The effects of environmental policy uncertainty on productivity growth- Data from Chinese micro enterprise level

Abstract

China’s economy has made remarkable achievements in the past 40 years. However, the economic development is accompanied by serious environmental pollution. Chinese government has promulgated many policies to reduce environment pollution. However, it is doubtable whether the increased uncertainty in environmental policies inhibits enterprise development. Therefore in this study we use Mathematical Derivation, Stepwise Regression Method and Regulated Effect to investigate the impact of environmental policy uncertainty on enterprise productivity. The results show that (1) environmental policy uncertainty significantly inhibits the improvement of enterprise productivity. (2) environmental policy uncertainty inhibits enterprise productivity by enterprise innovation, human capital and foreign direct investment; (3) environmental policy uncertainty has heterogeneous impact on enterprise productivity. According to this study we also provide some beneficial environmental policy suggestions for the Chinese government. Such as the government should build a stable economic environment, maintain the sustainability of local environmental regulation policies and formulate more detailed measures to adapt different types of enterprises.