Developing nexus between economic opening-up, environmental regulations, rent of natural resources, green innovation, and environmental upgrading of China - empirical analysis using ARDL bound-testing approach

Abstract

With increasing demand for green growth globally, the escalating economic growth of China is also needed to be accompanied with environmental protection. From an environmental upgrading perspective, current study developed a nexus amid Green Total Factor Energy Productivity (GTFEP), Economic Opening-up (EOU), Environmental Regulations (ER), Rent of Natural Resources (RNR) and Green Innovation (GI) of China. Using annual data from 1990 to 2020 and applying a bound testing approach for Auto-regressive Distributed Lag model (ARDL) along with an error correction model, current study investigated short and long run dynamics amid variables of concern. The results confirmed cointegration between GTFEP and all other variables, and Granger causality analysis revealed uni-directional causality, running from independent variables towards GTFEP. Concluding the results, both long and short-run findings suggested effectiveness of EOU, ER, RNR and GI on GTFEP of China, and the results are statistically significant. Thus, the policies should be aimed to improve opening-up, environmental regulations and green innovation.