The impact of the free trade zone on green total factor productivity ——evidence from the shanghai pilot free trade zone

Highlights: • Introduce energy input and undesirable output into the economic efficiency model. • The SPFTZ has promoted the growth of Shanghai GTFP. • The green policy effect of SPFTZ shows substantial enhancement after slow growth. • The promotion effect stemmed from the improvement of technological progress. The green development of free trade zones conforms to the theoretical principles of sustainable development and is key to promoting regional transformation and upgrading. By using synthetic control methods (SCM) based on microscopic data, this paper investigates the net effect of the establishment of the China (Shanghai) pilot free trade zone (SPFTZ) on green total factor productivity (GTFP) in Shanghai. The results show that the SPFTZ has promoted the GTFP in Shanghai. As far as time trend is concerned, the effects of this promotion become more apparent after a short-term period of slow growth. In terms of impact paths, the main driving force of policy is technological progress. Therefore, the SPFTZ should improve GTFP and create greater incentives for technological innovation. Institutional innovation for green development should play a central guiding role in the construction. We need continue to explore other green development models as well as means of creating higher levels of economic openness.