IDEAS home Printed from https://ideas.repec.org/a/gam/jijerp/v20y2023i4p2831-d1058855.html
   My bibliography  Save this article

The Impact of Economic Growth Target Constraints on Environmental Pollution: Evidence from China

Author

Listed:
  • Changfei Nie

    (School of Economics and Management, Nanchang University, Nanchang 330031, China)

  • Wen Luo

    (School of Economics and Management, Nanchang University, Nanchang 330031, China)

  • Yuan Feng

    (College of City Construction, Jiangxi Normal University, Nanchang 330022, China)

  • Zhi Chen

    (School of Economics and Trade, Hubei University of Economics, Wuhan 430205, China)

Abstract

Economic growth target (EGT) has become an essential tool for macroeconomic administration all around the world. This study examines the effect and mechanisms of EGT on environmental pollution (EP) by using economic growth target data from provincial Government Work Reports in China from 2003–2019. The conclusions denote that EGT significantly aggravates regional EP, and it still stands after robustness tests and instrumental variable (IV) estimation. The result of mediating effect shows that EGT aggravates EP mainly from three ways: investment surge, technological innovation, and resource allocation. The result of the moderating effect shows that government’s fiscal space positively adjusts the effect of EGT on EP, while environmental regulation negatively adjusts the effect of EGT on EP. The heterogeneity test reflects that the effect of EGT on EP is more significant on provinces that adopt a “hard constraint” setting method and fulfill EGT. Our study provides a reference to better balance the link between EGT and sustainable development for the government department.

Suggested Citation

  • Changfei Nie & Wen Luo & Yuan Feng & Zhi Chen, 2023. "The Impact of Economic Growth Target Constraints on Environmental Pollution: Evidence from China," IJERPH, MDPI, vol. 20(4), pages 1-23, February.
    • Handle: RePEc:gam:jijerp:v:20:y:2023:i:4:p:2831-:d:1058855
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1660-4601/20/4/2831/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1660-4601/20/4/2831/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Augustin Ntembe & Aloysius Ajab Amin & Regina Tawah, 2018. "Analysis of public investments and economic growth in Cameroon," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(3), pages 591-614, July.
    2. Liu, Dayong & Xu, Chunfa & Yu, Yongze & Rong, Kaijian & Zhang, Junyan, 2020. "Economic growth target, distortion of public expenditure and business cycle in China," China Economic Review, Elsevier, vol. 63(C).
    3. Du, Kerui & Cheng, Yuanyuan & Yao, Xin, 2021. "Environmental regulation, green technology innovation, and industrial structure upgrading: The road to the green transformation of Chinese cities," Energy Economics, Elsevier, vol. 98(C).
    4. Fodha, Mouez & Zaghdoud, Oussama, 2010. "Economic growth and pollutant emissions in Tunisia: An empirical analysis of the environmental Kuznets curve," Energy Policy, Elsevier, vol. 38(2), pages 1150-1156, February.
    5. Gabriel Chodorow-Reich, 2019. "Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned?," American Economic Journal: Economic Policy, American Economic Association, vol. 11(2), pages 1-34, May.
    6. Xianxiang Xu & Yuanhua Gao, 2015. "Growth target management and regional economic growth," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 20(3), pages 517-534, July.
    7. Olivier Blanchard & Andrei Shleifer, 2001. "Federalism With and Without Political Centralization: China Versus Russia," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-8.
    8. Titus O. Awokuse & Weishi Grace Gu, 2015. "Does Foreign Intellectual Property Rights Protection Affect Us Exports And Fdi?," Bulletin of Economic Research, Wiley Blackwell, vol. 67(3), pages 256-264, July.
    9. Wheeler, David, 2001. "Racing to the bottom : foreign investment and air pollution in developing countries," Policy Research Working Paper Series 2524, The World Bank.
    10. Xing Li & Chong Liu & Xi Weng & Li-An Zhou, 2019. "Target Setting in Tournaments: Theory and Evidence from China," The Economic Journal, Royal Economic Society, vol. 129(623), pages 2888-2915.
    11. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
    12. Yang, Mian & Yang, Fuxia & Sun, Chuanwang, 2018. "Factor market distortion correction, resource reallocation and potential productivity gains: An empirical study on China's heavy industry sector," Energy Economics, Elsevier, vol. 69(C), pages 270-279.
    13. Ouyang, Xiaoling & Li, Qiong & Du, Kerui, 2020. "How does environmental regulation promote technological innovations in the industrial sector? Evidence from Chinese provincial panel data," Energy Policy, Elsevier, vol. 139(C).
    14. Peng, Jiaying & Xie, Rui & Ma, Chunbo & Fu, Yang, 2021. "Market-based environmental regulation and total factor productivity: Evidence from Chinese enterprises," Economic Modelling, Elsevier, vol. 95(C), pages 394-407.
    15. Na Yang & Zilong Zhang & Bing Xue & Junxia Ma & Xingpeng Chen & Chenyu Lu, 2018. "Economic Growth and Pollution Emission in China: Structural Path Analysis," Sustainability, MDPI, vol. 10(7), pages 1-15, July.
    16. Qin, Duo & Cagas, Marie Anne & Quising, Pilipinas & He, Xin-Hua, 2006. "How much does investment drive economic growth in China?," Journal of Policy Modeling, Elsevier, vol. 28(7), pages 751-774, October.
    17. Neves, Sónia Almeida & Marques, António Cardoso & Patrício, Margarida, 2020. "Determinants of CO2 emissions in European Union countries: Does environmental regulation reduce environmental pollution?," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 114-125.
    18. Shang, Juan & Wang, Zhuo & Li, Ling & Chen, Yong & Li, Pengfei, 2018. "A study on the correlation between technology innovation and the new-type urbanization in Shaanxi province," Technological Forecasting and Social Change, Elsevier, vol. 135(C), pages 266-273.
    19. Emi Nakamura & J?n Steinsson, 2014. "Fiscal Stimulus in a Monetary Union: Evidence from US Regions," American Economic Review, American Economic Association, vol. 104(3), pages 753-792, March.
    20. Hongshan Ai & Shenglan Hu & Ke Li & Shuai Shao, 2020. "Environmental regulation, total factor productivity, and enterprise duration: Evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2284-2296, September.
    21. Thornton, John, 2007. "Fiscal decentralization and economic growth reconsidered," Journal of Urban Economics, Elsevier, vol. 61(1), pages 64-70, January.
    22. Jingxia Chai & Yu Hao & Haitao Wu & Yuemiao Yang, 2021. "Do constraints created by economic growth targets benefit sustainable development? Evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 4188-4205, December.
    23. Mo, Jiawei, 2018. "Land financing and economic growth: Evidence from Chinese counties," China Economic Review, Elsevier, vol. 50(C), pages 218-239.
    24. Chen, Shimin & Sun, Zheng & Tang, Song & Wu, Donghui, 2011. "Government intervention and investment efficiency: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 17(2), pages 259-271, April.
    25. Chu, Zhen & Cheng, Mingwang & Yu, Ning Neil, 2021. "A smart city is a less polluted city," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    26. Kose, M. Ayhan & Kurlat, Sergio & Ohnsorge, Franziska & Sugawara, Naotaka, 2022. "A cross-country database of fiscal space," Journal of International Money and Finance, Elsevier, vol. 128(C).
    27. A. G. Aganbegyan, 2017. "Investments in fixed assets and human capital: Two interconnected drivers of socioeconomic growth," Studies on Russian Economic Development, Springer, vol. 28(4), pages 361-363, July.
    28. He, Qichun, 2015. "Fiscal decentralization and environmental pollution: Evidence from Chinese panel data," China Economic Review, Elsevier, vol. 36(C), pages 86-100.
    29. Yang Zhou & Jintao Fu & Ying Kong & Rui Wu, 2018. "How Foreign Direct Investment Influences Carbon Emissions, Based on the Empirical Analysis of Chinese Urban Data," Sustainability, MDPI, vol. 10(7), pages 1-19, June.
    30. Marco Pesce & Ilaria Tamai & Deyan Guo & Andrea Critto & Daniele Brombal & Xiaohui Wang & Hongguang Cheng & Antonio Marcomini, 2020. "Circular Economy in China: Translating Principles into Practice," Sustainability, MDPI, vol. 12(3), pages 1-31, January.
    31. Merriam Haffar & Cory Searcy, 2018. "Target‐setting for ecological resilience: Are companies setting environmental sustainability targets in line with planetary thresholds?," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 1079-1092, November.
    32. Dong, Kangyin & Shahbaz, Muhammad & Zhao, Jun, 2022. "How do pollution fees affect environmental quality in China?," Energy Policy, Elsevier, vol. 160(C).
    33. Fumin Deng & Yanan Jin & Meng Ye & Shuangyi Zheng, 2019. "New Fixed Assets Investment Project Environmental Performance and Influencing Factors—An Empirical Analysis in China’s Optics Valley," IJERPH, MDPI, vol. 16(24), pages 1-21, December.
    34. Borge, Lars-Erik & Brueckner, Jan K. & Rattsø, Jorn, 2014. "Partial fiscal decentralization and demand responsiveness of the local public sector: Theory and evidence from Norway," Journal of Urban Economics, Elsevier, vol. 80(C), pages 153-163.
    35. Justin Yifu Lin & Zhiqiang Liu, 2000. "Fiscal Decentralization and Economic Growth in China," Economic Development and Cultural Change, University of Chicago Press, vol. 49(1), pages 1-21.
    36. Zhu, Bangzhu & Wang, Kefan & Chevallier, Julien & Wang, Ping & Wei, Yi-Ming, 2015. "Can China achieve its carbon intensity target by 2020 while sustaining economic growth?," Ecological Economics, Elsevier, vol. 119(C), pages 209-216.
    37. Kirchherr, Julian & Reike, Denise & Hekkert, Marko, 2017. "Conceptualizing the circular economy: An analysis of 114 definitions," Resources, Conservation & Recycling, Elsevier, vol. 127(C), pages 221-232.
    38. repec:oup:econjl:v:129:y:2019:i:10:p:2888-2915. is not listed on IDEAS
    39. Jing Lan & Makoto Kakinaka & Xianguo Huang, 2012. "Foreign Direct Investment, Human Capital and Environmental Pollution in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(2), pages 255-275, February.
    40. Sapkota, Pratikshya & Bastola, Umesh, 2017. "Foreign direct investment, income, and environmental pollution in developing countries: Panel data analysis of Latin America," Energy Economics, Elsevier, vol. 64(C), pages 206-212.
    41. Guangyou Zhou & Sumei Luo, 2018. "Higher Education Input, Technological Innovation, and Economic Growth in China," Sustainability, MDPI, vol. 10(8), pages 1-15, July.
    42. Jinqian Deng & Na Zhang & Fayyaz Ahmad & Muhammad Umar Draz, 2019. "Local Government Competition, Environmental Regulation Intensity and Regional Innovation Performance: An Empirical Investigation of Chinese Provinces," IJERPH, MDPI, vol. 16(12), pages 1-17, June.
    43. Awokuse, Titus O. & Yin, Hong, 2010. "Intellectual property rights protection and the surge in FDI in China," Journal of Comparative Economics, Elsevier, vol. 38(2), pages 217-224, June.
    44. Trang Thi-Huyen Dinh & Duc Hong Vo & Anh The Vo & Thang Cong Nguyen, 2019. "Foreign Direct Investment and Economic Growth in the Short Run and Long Run: Empirical Evidence from Developing Countries," JRFM, MDPI, vol. 12(4), pages 1-11, November.
    45. Keliang Wang & Bin Zhao & Tianzheng Fan & Jinning Zhang, 2022. "Economic Growth Targets and Carbon Emissions: Evidence from China," IJERPH, MDPI, vol. 19(13), pages 1-16, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yu He & Wenkuan Chen, 2023. "Evaluation of Sustainable Development Policy of Sichuan Citrus Industry in China Based on DEA–Malmquist Index and DID Model," Sustainability, MDPI, vol. 15(5), pages 1-23, February.
    2. Hong Xu & Kai Lin & Lei Qiu, 2023. "The Impact of Local Government Environmental Target Constraints on the Performance of Heavy Pollution Industries," Sustainability, MDPI, vol. 15(22), pages 1-24, November.
    3. Sara Majid & Xin Zhang & Muhammad Bilawal Khaskheli & Feng Hong & Patricia Jie Hung King & Imran Haider Shamsi, 2023. "Eco-Efficiency, Environmental and Sustainable Innovation in Recycling Energy and Their Effect on Business Performance: Evidence from European SMEs," Sustainability, MDPI, vol. 15(12), pages 1-30, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yu Hao & Jingwen Huang & Yunxia Guo & Haitao Wu & Siyu Ren, 2022. "Does the legacy of state planning put pressure on ecological efficiency? Evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3100-3121, November.
    2. Yu, Yongze & Li, Ke & Duan, Shenglan & Song, Chenchen, 2023. "Economic growth and environmental pollution in China: New evidence from government work reports," Energy Economics, Elsevier, vol. 124(C).
    3. Keliang Wang & Bin Zhao & Tianzheng Fan & Jinning Zhang, 2022. "Economic Growth Targets and Carbon Emissions: Evidence from China," IJERPH, MDPI, vol. 19(13), pages 1-16, June.
    4. Chai, Jingxia & Wu, Haitao & Hao, Yu, 2022. "Planned economic growth and controlled energy demand: How do regional growth targets affect energy consumption in China?," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    5. Xiangyan Wang & Jinye Li & Nannan Wang, 2023. "Are Economic Growth Pressures Inhibiting Green Total Factor Productivity Growth?," Sustainability, MDPI, vol. 15(6), pages 1-23, March.
    6. Xiaodong Chen & Haoming Mi & Peng Zhou, 2024. "Whether to decentralize and how to decentralize? The optimal fiscal federalism in an endogenous growth model," Applied Economics, Taylor & Francis Journals, vol. 56(29), pages 3499-3516, June.
    7. Ge, Tao & Li, Chunying & Li, Jinye & Hao, Xionglei, 2023. "Does neighboring green development benefit or suffer from local economic growth targets? Evidence from China," Economic Modelling, Elsevier, vol. 120(C).
    8. Jianan Liu & Ni Dai & Yuan Sui & Asmatullah Yaqoubi, 2023. "A Study on the Impact of Fiscal Decentralization on Regional Green Development: A Perspective Based on the Emphasis on Sports," Sustainability, MDPI, vol. 15(16), pages 1-17, August.
    9. Boxi Deng & Fanglei Zhong, 2023. "Leading or Constraining? Development of New-Type Urbanization under Economic Growth Targets," Land, MDPI, vol. 12(4), pages 1-24, April.
    10. Ren, Meixu & Ke, Konglin & Yu, Xin & Zhao, Jinxuan, 2023. "Local governments' economic growth target pressure and bank loan loss provision: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 1-14.
    11. Yushkov, Andrey, 2015. "Fiscal decentralization and regional economic growth: Theory, empirics, and the Russian experience," Russian Journal of Economics, Elsevier, vol. 1(4), pages 404-418.
    12. Wu, Yan & Heerink, Nico, 2016. "Foreign direct investment, fiscal decentralization and land conflicts in China," China Economic Review, Elsevier, vol. 38(C), pages 92-107.
    13. Juan Tang & Fangming Qin, 2022. "Analyzing the impact of local government competition on green total factor productivity from the factor market distortion perspective: based on the three stage DEA model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(12), pages 14298-14326, December.
    14. Li, Kunming & Fang, Liting & He, Lerong, 2019. "How population and energy price affect China's environmental pollution?," Energy Policy, Elsevier, vol. 129(C), pages 386-396.
    15. Sanz Labrador, Ismael & Sanz-Sanz, José Félix, 2013. "Política fiscal y crecimiento económico: consideraciones microeconómicas y relaciones macroeconómicas," Macroeconomía del Desarrollo 5367, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. Whitney Buser, 2011. "The impact of fiscal decentralization on economics performance in high-income OECD nations: an institutional approach," Public Choice, Springer, vol. 149(1), pages 31-48, October.
    17. Qichun He & Meng Sun, 2018. "Does Fiscal Decentralization Increase the Investment Rate? Evidence from Chinese Panel Data," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 75-101, May.
    18. Andrea Filippetti & Agnese Sacchi, 2016. "Decentralization and economic growth reconsidered: The role of regional authority," Environment and Planning C, , vol. 34(8), pages 1793-1824, December.
    19. Pierre Salmon, 2013. "Decentralization and growth: what if the cross-jurisdiction approach had met a dead end?," Constitutional Political Economy, Springer, vol. 24(2), pages 87-107, June.
    20. Zhiguo Wang & Liang Ma, 2014. "Fiscal Decentralization in China: A Literature Review," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 51-65, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijerp:v:20:y:2023:i:4:p:2831-:d:1058855. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.