Greening China: Environmentally adjusted multifactor productivity in the last four decades

Abstract

This paper links "green" and "growth" to produce a measure of economic and environmental performance and natural resource depletion based on an expanded accounting framework: the environmentally adjusted multifactor productivity (EAMFP), which provides a new perspective to examine China's post-1978 economic growth. The results show that China's annual economic growth would be overestimated by 1.14 percentage points over the past four decades averagely. The EAMFP growth maintains positive at an average annual rate of 3.07%, moderating the MFP growth by 1.11 percentage points. It could be further improved compared to the EAMFP-driven economic growth in OECD countries. Benefiting from the greater efforts in environmental and natural resource regulation since 2013, China's growth may be revised upwards by 0.43 percentage points. The contribution of natural capital to economic growth falls from 0.41% to 0.06% per year, and the adjustment of pollution changes from negative to positive.