Can green industrial policy promote the total factor productivity of manufacturing enterprises?

The Green industrial policy is implemented to promote the coordinative development of the environment and industry, while there has been limited research involved in the policy effect evaluation. Taking China's Green Manufacturing Engineering Implementation Guide (GMEIG) released especially for manufacturing industry in 2016 as a quasi-natural experiment, this paper identifies the policy effect on the total factor productivity (TFP) of manufacturing enterprises, and the mechanisms and heterogeneities are further evaluated. The baseline results show that green industrial policy has significant promotion on the TFP of manufacturing enterprises. The mechanism is analyzed from two perspectives, including incentive effect and supervision effect. Moreover, mediating effects of different time points of government subsidy are investigated within the incentive effect. The results reveal that GMEIG promotes the TFP of manufacturing enterprises through incentive effect and the promotion on enterprises' TFP mainly benefits from government subsidies afterwards rather than government subsidies beforehand. When considering the heterogeneity at regional, industrial and enterprise levels, the policy effect is more significant in non-state-owned enterprises, as well as enterprises with smaller scale. What is more, market competitiveness is conducive to the promotion on enterprises' TFP, while current level of green preference fails to positively moderate the policy effect. This study provides theoretical and empirical support for the construction of green industrial policy and further facilitates China's green development.