Does environmental regulation increase domestic value-added in exports? An empirical study of cleaner production standards in China

The effectiveness of environmental regulations and foreign trade competitiveness are important concerns for developing countries that face serious environmental degradation and boost economies by participat-ing in the global market. Taking the cleaner production standards in China as a case study, this paper investigates the relationship between the environmental regulations and export upgrading from the per-spective of the domestic value-added rate (DVAR) of exports. We find that cleaner production standards increase Chinese enterprises' DVAR, and the impact varies with firms', industrial and regional hetero-geneities. Mechanism analysis shows that the markup percentage of cost and the total factor productivity enhance the positive effect of cleaner production regulations on enterprises' DVAR. Moreover, we also find that 43.94% of the promotion of Chinese enterprises' DVAR is contributed by the resource realloca-tion effect brought by the cleaner production standards. This study provides empirical evidence that envi-ronmental regulations coordinate the development of the ecological environment and the upgrading of Chinese exports, which is also of enlightening significance to other developing countries in the transition to a high-quality development path.(c) 2022 Elsevier Ltd. All rights reserved.