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Balancing Development and the Environment in a Changing World: Expressways, GDP, and Pollution in China

Author

Listed:
  • Guojun He

    () (Division of Social Sciencee, Division of Environment, and Department of Economics, The Hong Kong University of Science and Technology
    Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

  • Yang Xie

    () (Department of Economic, University of California, Riverside)

  • Bing Zhang

    () (Center for Environmental Management and Policy Analysis, School of Environment, Nanjing University)

Abstract

When productivity changes, how would an economy rebalance economic production and environmental preservation? We develop a conceptual framework to analyze the question, and predict that a productivity shock can have heterogeneous impacts on environmental quality and income. Exploiting a quasi-experiment provided by the dramatic expansion of China’s national expressway system, we find empirical evidence that is consistent with the model’s predictions: expressway access increases both pollution and GDP in initially poor counties, decreases pollution and GDP in initially rich counties, and decreases pollution while increasing GDP in counties with moderate levels of initial income. These findings cannot be fully explained by alternative theories such as the pollution haven hypothesis and home market effect.

Suggested Citation

  • Guojun He & Yang Xie & Bing Zhang, 2017. "Balancing Development and the Environment in a Changing World: Expressways, GDP, and Pollution in China," HKUST IEMS Working Paper Series 2017-43, HKUST Institute for Emerging Market Studies, revised Aug 2017.
  • Handle: RePEc:hku:wpaper:201743
    as

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    References listed on IDEAS

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