How does export behavior affect firm environmental performance?

LIU Qiren1 CHEN Tian2

(1.School of Economics and Statistics, Guangzhou University)
(2.College of Economics, Jinan University)

【Abstract】Using the firm-level energy consumption and output data of Chinese manufacturing firms, this paper obtained firm environmental performance indicators by converting carbon dioxide emission factors based on different energy types, namely, carbon dioxide emissions of unit output, or carbon emissions intensity. In light of the productivity paradox of Chinese exporting firms, this paper examines special patterns of the influence of Chinese firms’ export behavior on their environmental performance. According to the empirical model built upon the framework of firm production functions, the empirical findings in this research are listed below. ① Exporting has led to a significant increase in Chinese firms’ carbon emissions intensity, and meanwhile, emissions intensity keeps increasing with corporate exporting intensity, indicating that exporting does not significantly contribute to the improvement of firm environmental performance; the results are robust in consideration of different forms of production functions. ② The traditional pollution haven effect is not a major cause of the higher carbon emissions intensity of Chinese exporting firms. ③ Low productivity of Chinese exporters leads to higher carbon emissions intensity. ④ The low efficiency and low markup (low profit rate) further drag down exporters’ technological upgrading and environmental investment, which account largely for the higher emission intensity caused by export behaviors. The research in this paper fills the gap in studies on the relationship between trade and environmental performance of Chinese firms from a micro perspective and provides guidance for the policy-making in terms of pollution control and emissions reduction at a micro level. It is confirmed that during the development of international trade, in addition to identifying macro goals, the micro level of firm circumstances should also be given attention to, a key focus of which is to prompt firms to improve production efficiency and therefore serve the coordinated sustainable development of economy and the environment.

【Keywords】 firm emissions reduction; carbon emissions intensity; trade and environment; productivity paradox;

【DOI】

【Funds】 The National Social Science Fund of China (17BJL110)

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    Footnote

    [1]. ① Copeland and Taylor (2003) incorporated pollutants into the production function of firms, which has been increasingly adopted in the field of environmental economics. Based on Copeland and Taylor (2003), Shapiro and Walker (2018) incorporated firms’ pollution emissions into the model of Melitz (2003), and built a theoretical model. [^Back]

    [2]. ① For example, in the model of Melitz (2003), it is assumed that the heterogeneous productivity of firms is randomly selected from the Pareto distribution. When the firm productivity is higher than the lower limit of the survival productivity of an industry, the firm will continue to engage in production; otherwise, it will directly withdraw from the market. [^Back]

    [3]. ① This paper uses the price-cost margin to replace the markup rate of firms; that is, the business turnover and the total costs are directly used for calculation. [^Back]

    [4]. The main reason for using labor productivity instead of total factor productivity is that columns (2) and (4) of Table 8 control the fixed assets, labor input, intermediate input and energy input of firms. Take the output per capita (y_l) in Column (2) of Table 8 as an example. It can actually be rewritten as yitφll itφkkitφmmitφcco2it= tfpit= φ0 + φxexpit + lit + μi + λt + Єit; therefore, Column (2) of Table 8 uses the total factor productivity to measure the firm efficiency. [^Back]

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This Article

ISSN:1006-480X

CN: 11-3536/F

Vol , No. 01, Pages 99-117

January 2020

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Article Outline

Abstract

  • 1 Introduction
  • 2 Impact mechanism of export behavior on firm environmental performance and theoretical hypotheses
  • 3 Model building and data description
  • 4 Results and robustness tests
  • 5 Further discussion
  • 6 Conclusion and policy implication
  • Footnote

    References