EDZs and Firms' Environment Performance: Empirical Evidence From Chinese Firms

Economic Development Zones have been proven to be an economic success and have been pursued by many governments around the world over the past several decades, but there is still a research gap on their impact on the environment. This paper documents the effect of national-level EDZs on the environmental performance of firms. Combining rich firm and administrative data in China from 1998-2012, we exploit the relationship between the foundation of EDZs and firms' pollution emissions with a multi-period differences-in-differences model. We find that the establishment of national EDZs can effectively reduce the pollution emission intensity of firms within it. Moreover, this pollution reduction effects vary across industries, firms, and EDZs types. We also find that the establishment of EDZs can improve firm environmental performance by improving energy efficiency, optimizing the business environment, and upgrading technology.

Automated summary

This study examines the impact of national Economic Development Zones (EDZs) on firms' environmental performance using firm and administrative data from China. The findings suggest that the establishment of EDZs can effectively reduce firms' pollution emissions, with variations observed across industries, firms, and types of EDZs.