Regional Agglomeration, Environmental Pollution And Productivity Growth Of Energy-intensive Industries In China

This paper investigates the regional agglomeration, pollution and environmental total factor productivity (ETFP) growth of energy-intensive industries in China for the first time. Through the analysis of provincial panel data collected during1996-2009, this work analyzes empirically whether the agglomeration will induce the pollution abatement and ETFP growth. It is found that:Firstly, the paper concludes that while China’s energy-intensive industries are heavily distributed in eastern and central China, the speed of development toward central and western China has, in recent years, risen continuously. Industries located in eastern China do, however, remain the primary polluters in the country. We also find that patterns of pollution in China follow the environmental Kuznets curve (EKC) and pollution heaven. Notably, regional agglomeration of energy-intensive industries plays a positive role in energy conservation and pollution control in the eastern China, but a negative role in the western China.Secondly, By using directional distance function (DDF) and nonparametric data envelopment analysis (DEA) technique, this paper measures ETFP of energy-intensive industries in China on industrial and provincial level, describes briefly the growth of ETFP during1996-2009. We find that the growth of ETFP of energy-intensive industries in China is mostly driven by technical progress rather than productivity efficiency, which implicate the necessity of greater improvement in efficiency. On provincial level, provinces with higher ETFP agglomerated in the East, and a negative growth of ETFP is verified in the West. However, the conditional β convergences has occurred in the different areas, which means a faster growth for those farther to the environmental technology frontier.Thirdly, based on the2SLS and GMM methods of provincial panel data, after controlling the time-invariant unobservable effects and solving the endogeneity issues, we investigate the agglomeration influence on the ETFP growth empirically. It is found that, regional agglomeration of energy-intensive industries actually plays a positive role in the growth of ETFP. Considering the temporal effect of agglomeration, we use the lag-terms of agglomeration to find that the accumulated effect does not play a significant role, but the current term is severely significant to the growth of ETFP when controlling the lag-terms. Through the addition of regional dummies, the paper shows that agglomeration of energy-intensive industries plays a positive role in the growth of ETFP in the eastern China, but a negative role in the western China.