ENVIRONMENTAL REGULATION AND INDUSTRIAL STRUCTURE UPGRADING: EVIDENCE FROM CHINA

Abstract

This paper investigates the spatial correlation between environmental regulation and industrial structure upgrading. As the main means of government environmental protection, environmental regulation policies have a significant impact on industrial structure upgrading. Based on the environmental frequency mentioned in the government work report, this paper constructed environmental regulation intensity data for 285 cities in China and matched it with data on industrial structure upgrading. We found that without considering the spatial spillover of environmental regulations, the industrial structure upgrading effect of environmental regulations is significant. Incorporating the spatial spillover of environmental regulation into the model, it was found that environmental regulation not only promotes the upgrading of local industrial structure, but also to a greater extent promotes the upgrading of industrial structure in neighboring areas. Further decomposition of spatial effects shows that indirect effects are higher than direct effects, indicating that the improvement of environmental regulations has a greater driving force on the upgrading of industrial structures in neighboring regions than on local ones. The findings provide corresponding references for the government to implement environmental policies.