{Reference Type}: Journal Article
{Title}: Unintended environmental gains: How can a favorable business environment promote the low-carbon transition?
{Author}: Li M;Liu J;Gong N;He S;
{Journal}: J Environ Manage
{Volume}: 366
{Issue}: 0
{Year}: 2024 Aug 20
{Factor}: 8.91
{DOI}: 10.1016/j.jenvman.2024.121892
{Abstract}: Given the increasing threat of economic downturns and global warming, the governments of developing countries urgently need effective measures that can both stimulate economic development and promote low-carbon transitions. As a widely accepted method for stimulating economic growth, the improvement of the business environment and its effect on economic activity have been fully discussed. However, little is known about whether and how the business environment affects the low-carbon transition. By leveraging city-level data from China, this paper exploits whether and through which channels a favorable business environment promotes a low-carbon transition. We find that improving the business environment has a positive impact on carbon efficiency. This relationship is verified to be robust through various alternative tests. Additionally, it is demonstrated that enhancing the business environment can increase carbon efficiency by promoting green technology progress and stimulating new firm entry. Heterogeneity analysis indicates that the positive effect of the business environment is pronounced for cities with intensive environmental regulation, sufficient environmentally targeted fiscal expenditure, and loose economic growth requirements. This paper reveals the unintentional environmental gains of business environment optimization and provides important insights into the low-carbon transition for developing economies.