Environmental Regulation,green Directed Technical Change,and Urban Economic Growth

With the continuous development of society and economy,the conflict between economy and environment is becoming more and more prominent,and the shortage of resources,environmental pollution and ecological damage are becoming more and more serious.As the urban economy is an important part of China’s economy,government departments,enterprises and academics are all focusing on how to properly coordinate the relationship between urban economic development and environmental protection.The environment is a public good with externalities.In the process of economic development,enterprises tend to choose the profit maximisation model based on rational thinking and stick to the traditional production model,neglecting the research and development of environmental protection and pollution reduction technologies to reduce pollutant emissions and improve energy efficiency.In this context,government-led environmental regulation has become a necessary tool for balancing the environment and development.At the Fifth Plenary Session of the 18 th Party Central Committee,General Secretary Xi Jinping put forward the five major development concepts of "innovation,coordination,green,openness and sharing".The adoption of green development and environmental protection has become an important strategic focus for China’s sustainable development in the coming period.However,there is still controversy among academics and government departments as to whether environmental regulation has a double dividend effect of preventing pollution and reducing emissions and promoting economic growth.Based on this background,this paper aims to analyse the theoretical and empirical mechanisms of whether and how environmental regulations can promote urban economic growth.This paper begins with a division of labour perspective and constructs an endogenous economic growth model incorporating environmental regulation,green technological progress bias and economic growth in an emerging classical general equilibrium framework to explore how different levels of environmental regulation act on green technological innovation and economic growth.The model results show that when the negative impact of environmental pollution on social welfare is ignored,environmental pollution does not automatically disappear with economic growth in the absence of government intervention.Furthermore,the effect of environmental regulation on green technology innovation has a threshold effect due to the ’path dependence’ of firms’ innovation types,whereby individuals(or producers)will shift their technology type towards green technology innovation and away from polluting technology innovation only when the ratio of carbon taxes and carbon abatement subsidies reaches a certain level.The paper also uncovers the underlying mechanisms and micro mechanisms by which environmental regulation promotes economic growth,finding that strict environmental regulation significantly facilitates the evolution of the division of labour in green technology innovation,thereby increasing the average labour productivity of each production sector and expanding the market size of products to the extent that the benefits of switching to green technology production exceed the costs incurred by firms.Secondly,this paper empirically examines the specific effects of environmental regulation on urban GDP,urban GDP per capita and green technological innovation at two levels: the economic growth effect and the green technological progress effect,and examines their heterogeneity in terms of city size,urban industrial structure type and urban location characteristics.The study finds that if environmental regulation reaches a certain threshold,it will lead to a jump in the structure of the division of labour and a bias towards green technological progress,thus achieving simultaneous promotion of environmental protection and economic growth;as environmental regulation increases,economic growth will show a "U" shaped characteristic of falling before rising.This is because when environmental regulation is low,it leads to a ’cost-following effect’,which increases the cost of production using the original technology and induces firms to innovate;while when environmental regulation is high,it leads to an ’innovation compensation According to the results of the spatial Durbin model regression,there is a clear "U" shaped relationship between environmental regulations on local economic development in the geographic boundary adjacency matrix and the economic distance matrix,i.e.a trend of first inhibiting and then promoting,and the spatial impact of regional environmental regulations on the economic growth of neighbouring cities.The spatial spillover effect of regional environmental regulations on the economic growth of neighbouring cities also shows a "U"-shaped relationship of decreasing before increasing;according to the mediating effect of green technology progress bias,environmental regulations will promote green technology progress bias.Finally,on the basis of the findings of the previous theoretical model and empirical analysis,the article proposes corresponding policy recommendations.On the one hand,the government should increase the intensity of environmental protection policies and improve the level of environmental regulation;"tailor-made" policies according to regional heterogeneity to promote regional synergistic development;and improve the financial expenditure system for R&D investment to encourage the development of green technologies.On the other hand,enterprises need to stimulate independent innovation,improve labour productivity,cultivate craftsmanship,develop comprehensive comparative advantages and expand the market scale of green products.This has both theoretical and practical significance in identifying the fundamentals of environmental regulation affecting economic construction,comprehensively assessing the socio-economic effects of policies,and guiding the environmental policy formulation of relevant departments.