Effect Of Environmental Regulation On Industrial Structure:History,Logic And Empirical Analysis

The paper is a study of how environmental regulation affect the industrial structure change. Understanding the impact of environmental regulation on industrial structure is one of the basis for understanding the adjustment of economic structure. The main part of this paper is to answer the following questions:how do environmental regulation affect regional industrial structure, and the role of regional characteristics? Dose environmental regulation weakened the comparative advantage of pollution industry? How to upgrade the industrial structure? In the transition period, the impact of command and control Instruments on the industrial structure is more effective? In order to answer these questions, we use the industry and the provincial data panel model to test the possibility of hypothesis.After the reform and opening-up, an important problem with the rapid development of China's economy is the worsening environmental problems. Although the factors affecting the pollution discharge are different, but from the domestic and foreign development experience, the pollution type industrial structure impose significant influence on environment. Low environmental cost make China products higher competitive. High energy consumption and high pollution industries obtain comparative advantage in international competition. Since the reform and opening-up.China gradually become a "world factory", also day by day the aggravation of environmental pollution. The structure problem of polluting industries is also reflected in the location, even some polluting industries located in the densely populated residential area, and located in the source of drinking water and ecological fragile areas. The unreasonable structure will aggravate the pollution, reduce the carrying capacity of the environment. Because of the heterogeneity of pollution caused by different industries, the industrial structure can be optimized through environmental policy to achieve sustainable economic and social development. Policy makers often use of industrial policy to promote the upgrading of industrial structure, in fact, environmental policy should help regulate the industrial structure of a region. Environmental policy can promote a healthy regional industrial structure upgrading. In the formulation of environmental policy concerning about the adjustment of industrial structure, can make China to reverse the plight of the environment, at the same time maintain high speed of economic development.Mechanism of Environmental Regulation Affecting Industrial Structure mainly consist of three kinds:(1) The spatial effect of environmental regulation on the industrial structure change.The effect of environmental regulation on enterprise migration. Due to the different stages of development, the degree of economic development is different. Therefore the industry also obviously there is a gradient transfer.In less developed areas, it is possible to choose high energy consumption, high pollution, and high tax industry. It will have an impact on the regional industrial structure. Due to the opening restrict of China's service industry, FDI mainly concentrated in the second industry. With the increase in production costs of environmental regulation, the growth rate of foreign investment is slow down. This will affect the industrial structure. (2)Optimization Effect of environmental regulation on industrial structure change. The technological innovation effect of environmental regulation. Environmental regulation can act on the technological progress, then affect changing in industrial structure. Environmental regulation or environmental policy is strict, the initial production of the enterprise will bear short-term cost, "cost effect", but in the long run enterprise's technology innovation will bring "compensation effect". The green technology can change the production processing, manufacturing technology and investment in new products and many other ways to improve the production efficiency and market share of enterprises, promoting the development of social division, and ultimately change the industry structure. The government's green consumption policy, is often in the form of subsidies, which it is bound to change the consumer habits. To change people's consumption habits can play a multiplier effect. (3)The effect of environmental regulation on worldwide division. Environmental regulation will increase the costs of the industry. Different industries are affected differently, and the worldwide division will be affected too. If pollution industry and clean industry to be divided, in fact, environmental regulation will weaken the comparative advantage of pollution industry.Environmental regulation can deal with the dilemma of China environmental problems and economic development through promoting the adjustment of industrial structure. Although market-based environmental instruments can be the most efficient, but environmental problems caused due to the early accumulation of the institutional issues, command-and-control environmental instruments maybe more efficient in environmental protection. From what have discussed above, the main conclusions are as follows. First, the policy which consider of the development stage and the environmental carrying capacity will cause the environmental the industry's regional alternative. Loose environmental policy highlights the comparative advantage of the western region, making the environment pollution intensive industries to move westward. Second, environmental regulation promotes the international division of whole industry and weakens the comparative advantage of pollution industry. Due to the high pollution industry generally corresponds to higher taxes for less developed areas, local governments will undoubtedly enhance the comparative advantage of pollution industries. Third, environmental regulation can promote the optimization of industrial structure, but there are obvious characteristics of regional heterogeneity. The effect of environmental regulation instruments on the optimization of industrial structure in the eastern region was significantly higher than that in the central and Western Regions. The role of technological progress in the eastern region is better than that of the central and western regions. Fourth, command-control environmental regulation instruments are still the main means to promote industrial structure change. Many western studies suggest that market-based means, such as sewage charges, environmental taxes are more useful, but it is the difference mainly because institutional in China.There are some innovations in this study. First, research on the micro basis of industrial structure which influenced by environmental policy. Many environmental policies are macro, but the regulated body of the policy is the micro enterprise, through changing the behavior of the enterprise to achieve the purpose of regulation, and the adjustment of the micro behavior of the enterprise finally reflects the change of the industrial structure. Second, the impact of environmental regulation on the industrial chain is estimated by using the input-output model. Environmental regulation will promote the remodeling of the industrial structure, promoting the evolution of each enterprise product value chain cooperation and competition, and making the market supply and demand change, then adjust the organizational structure to enhance the market performance. Third, from the perspective of regional economics, the influence of environmental regulation on the industrial structure is studied. The regional differences of environmental policy will impact on the behavior of enterprises, making pollution enterprises migration, then the behavior will be reflected in the change of regional structure. Fourth, some new empirical studies are carried out by using new command-control agency variable. The Ministry of environmental protection assess the provincial and central enterprises chemical oxygen demand (COD) every year. The amount of emissions corresponding measures of punishment, can reflect the command-control properties. Therefore the paper choosing unit COD output intensity as a regional command-control environmental regulation indicator have strong persuasive.