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Is enterprise environmental protection investment responsibility or rent-seeking? Chinese evidence

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  • Jiang, Xin-Feng
  • Zhao, Chun-Xiang
  • Ma, Jing-Juan
  • Liu, Jian-Qiu
  • Li, Si-Hai

Abstract

Having enterprises engaged in environmentally friendly behavior is an important part of reducing negative environmental impacts. This study makes a quantitative analysis against the backdrop of China's transitional economic system. The results show that politically-connected enterprises significantly reduce environmental expenditure, but this only holds for state-owned enterprises; private enterprises with political connections spend significantly more. Analysis of the efficiency of environmental expenditure indicates that, for private enterprises, environmental spending is used as a way to maintain political connections, with rent-seeking as the likely motivation. Politically-connected private enterprises have not reduced their emissions to the same extent as state-owned enterprises, despite increased expenditure. Given the scale of environmental degradation in China during a period of massive economic and social upheaval, the results of this analysis provide a quantitative case for policy change: governments should shift focus to the results that environmental spending produces.

Suggested Citation

  • Jiang, Xin-Feng & Zhao, Chun-Xiang & Ma, Jing-Juan & Liu, Jian-Qiu & Li, Si-Hai, 2021. "Is enterprise environmental protection investment responsibility or rent-seeking? Chinese evidence," Environment and Development Economics, Cambridge University Press, vol. 26(2), pages 169-187, April.
    • Handle: RePEc:cup:endeec:v:26:y:2021:i:2:p:169-187_4
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    Cited by:

    1. Du, Weijian & Fan, Yuhuan & Liang, Sunfan & Li, Mengjie, 2023. "The power of belief: Religious traditions and rent-seeking of polluting enterprises in China," Finance Research Letters, Elsevier, vol. 54(C).

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