Model construction and application analysis under environment and resource constraints in China

Feiliang Niu,Yunzheng Fu,S Trukhanov,C.-W Chow

doi:10.1051/e3sconf/202126001023

Abstract

How to make sustainable development in the new era has been becoming the most important issue in China. This research explains why China could rapidly increase in the past, and how to fulfil a sustainable development under the resource and environmental constraints in the future by employing an endogenous growth model which includes “learning by doing” factors. Our model explains a learning mechanism called “learning by doing” and the knowledge reserve needed for the sustainable development. The empirical estimation results shows: under threats of environmental pollution and restrictions on natural resource depletion, an sustainable development is possible. Human capital use and technological advances crucially support the maintenance of sustainable growth, and the learning-by-doing effect increases the explanatory power of capital for knowledge production. The sustainable development awareness of consumers determines the economic growth quality. The explanation of the environmental pollution parameter could be extended to a policy simulation variable to measure the practical management level and the contamination controlling effect.

Highlights

Since the implementation of the reform and opening-up policy in December 1978, China's economy has maintained a high growth rate of more than 8% for a long time, partly at the cost of environmental degradation and resource depletion
In the report of the 19th National Congress of the Communist Party of China (CPC) in 2017, the Chinese claimed that China must launch an economic transformation to fulfil a high-quality development
The structure of the paper is as follows: the first part is a literature review; The second part is the setting of the Model of Endogenous Growth Expansion; The third part is the data source explanation, as well as the econometric analysis of the relationship between energy use, environmental pollution and economic growth; The fourth part is the conclusion, countermeasures and future prospects

Summary

Introduction

Since the implementation of the reform and opening-up policy in December 1978, China's economy has maintained a high growth rate of more than 8% for a long time, partly at the cost of environmental degradation and resource depletion. The purpose of this paper is to explain why China’s economy could get a rapid increase in the past 40 years and how to fulfill a high-quality economic growth under the resource and environmental constraints in the future. More Chinese scholars have tried to use the endogenous growth model promoted by technology R&D, and their models were established with environmental or resource constraints (Wu and Zhang et al, 2018; Mingyue Wang, etc,2020 ). They neglected the positive impact of learning-by-doing on economic growth. The structure of the paper is as follows: the first part is a literature review; The second part is the setting of the Model of Endogenous Growth Expansion; The third part is the data source explanation, as well as the econometric analysis of the relationship between energy use, environmental pollution and economic growth; The fourth part is the conclusion, countermeasures and future prospects

Modeling method

Analysis of the relationship between energy use and economic growth

Findings

Conclusion and Policy Implication