The heterogeneous influence of economic growth on environmental pollution: evidence from municipal data of China

Abstract

AbstractThis study aims to investigate the influence of rapid economic development on pollution at the municipal level in China. It constructs a Stochastic Impacts by Regression on Population, Affluence and Technology model (STIRPAT model) and uses comprehensive municipal data on industrial pollution and economic performance. The dataset contains 290 cities from 2003 to 2016 as a sample for the panel data analysis. The study further separates the cities into two groups by their levels of economic development for heterogeneity analysis. It reveals that a low level of economic development would aggravate environmental pollution, and when the economy reaches a high level, this economic development will improve environmental quality. We also find that the relationships between foreign direct investment and industrial dust and sulfur dioxide (SO2) discharge are significant, while the relationship between economic growth and effluent emission is not. The more developed subsample cities present an inverted U-shaped curve between industrial pollutant emission, GDP per capita, and foreign direct investment, while the less developed subsamples show no such relationship. Since the shape of these curves differs among regions, their turning points vary accordingly. Based on this finding, this study suggests that the governments of more developed cities should balance environmental pollution and economic development by enhancing environmental regulations and adjusting industrial structure.