Abstract
The simple green Solow model we present in this chapter shows that while technological progress in terms of goods production is necessary to generate per capita income growth, technological progress in terms of pollution emission abatement must exceed growth in aggregate output in order to cause pollution to fall and the environment to improve. Based on the central idea of the green Solow model, we carry out our empirical analysis to examine the growth realities of the Chinese provinces. Specifically, we aim to explore the linkages between China’s growth and the quality of its natural environment. According to the regression results in this chapter, for the Chinese provinces over our sample period, no significant part of output growth or productivity growth can be shown to be attributable to increasing environmental inputs.
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Notes
- 1.
In this context, Tzouvelekas, Vouvaki, and Xepapadeas (2006) refers to a few examples of the literature in which the production function has been specified to include the flow of pollution emissions as an input and sometimes, productivity enhancing environmental quality as a stock variable: Brock (1973), Becker (1982), Tahvonen and Kuluvainen (1993), Bovenberg and Smulders (1995), Smulders and Gradus (1996), Mohtadi (1996), Xepapadeas (2005), Brock and Taylor (2005), and Considine and Larson (2006).
- 2.
Later we will use letter “J” to denote (the amount of) pollution abated.
- 3.
A variable with a dot over it is defined as the (first-order) derivative with respect to time.
- 4.
Technological progress may lower the value of ω over time.
- 5.
In this model, we could have, alternatively, replaced [1 − j(σ)] with [1 − j(σ,t)] and assumed that the latter decreases over time (for a fixed σ) at rate x.
- 6.
Just as in previous chapters, these regions include provinces, ethnic minority autonomous regions, and province-level municipalities, but for the sake of convenience we call all of them “provinces”. Owing to missing data, municipality Chongqing and province Hainan are not included in our sample.
- 7.
We use the total volume of waste water discharge of the region that doesn’t meet the discharge standards (in 10,000 t) to proxy for M, and ln(M it /Y it ) is calculated as the average of the five calendar years in each time span.
- 8.
These control variables include trade openness, the shares of the primary, secondary, (and tertiary) industries in terms of labor participation, as well as the changes in these shares.
- 9.
To save space, the estimated coefficients on the set of control variables are not reported in the table.
- 10.
See also Chap. 2. According to Zheng, Hu, and Bigsten (2009), for the United States, the output elasticity of capital is 0.3. (See also Congressional Budget Office 2001), for the EU, it is about 0.4 (See also Musso and Westermann 2005), and for China, it is around 0.5 ~ 0.6 (See also Chow and Li 2002 and Chow 2008).
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Jiang, Y. (2014). Environmental Quality and “Green” Economic Growth in the Chinese Regions. In: Openness, Economic Growth and Regional Disparities. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40666-9_11
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