Green siphon or green spillover: Analyzing the spatial implications of industrial relocation on green development

Abstract

Industry relocation has a profound impact on the green development of recipient cities and their neighboring areas, driven by various factors such as investment and technological progress. This study investigates the impact of industrial relocation on the green development efficiency (GDE) of recipient cities and its spatial spillover effect using national city-level data and the establishment of national-level Industrial Relocation Demonstration Zones (IRDZ) as a policy shock, employing spatial difference-in-differences models. Both theoretical analysis and empirical tests show that industrial outflow increases the GDE of recipient cities, but reducing the GDE of neighboring cities. This effect decays with spatial distance and only affects non-resource cities. In addition, regional integration and the influence of large cities can significantly mitigate the adverse effects of industrial relocation. Industrial agglomeration, environmental regulation, green innovation, and energy intensity are the main direct and indirect pathways through which industrial relocation affects GDE in recipient and neighboring cities. The findings of this study are significant for promoting industrial relocation, energy conservation, and emission reduction in developing regions, as well as enhancing green cooperation among governments.