Balancing Environmental Sustainability and Economic Development: Perspectives from New Structural Economics

Abstract

This paper explores the balance between environmental sustainability and economic development in the context of the Yangtze River Economic Belt (YEB) in China, a region pivotal to the country’s industrial and environmental strategy. Utilizing New Structural Economics and the congruence index, we assessed the alignment between the local factor endowment structure and firm production input structure. Using the dataset of pollutant emissions from manufacturing firms in the YEB and focusing on key variables such as Chemical Oxygen Demand (COD) emissions and wastewater emissions, our findings indicate that firms with higher congruence demonstrate enhanced economic performance and alignment with comparative advantages. This alignment not only improves economic efficiency but also results in significantly reduced pollutant emissions, with a higher congruence index correlating with approximately 6.66% lower COD emissions and 5.39% reduced wastewater emissions per unit of industrial output. These findings offer valuable insights for policymakers and businesses, showing how alignment with local factor endowments can lead to mutually beneficial environmental and economic outcomes. The study contributes to the broader literature on environmental sustainability and economic development by demonstrating the practical application of New Structural Economics in a critical industrial region of China.