Abstract
In this paper, we investigate the implications of continued industrial economic growth on environmental pollution in China in order to inform strategic policies to achieve sustainable development of the industrial sector. We calculate green total factor productivity (TFP) for each industrial sector by estimating the Global Malmquist-Luenberger (GML) index using a Slacks-based Measure Directional Distance Function (SBM-DDF). We find that the green TFP increased at an average annual rate of approximately 6% over the 11-year period. A slightly greater portion of this growth is attributable to technological progress (57%) rather than technical efficiency (43%). To investigate the relationship between industrial economic growth and pollutant levels, we first adopt a hierarchical clustering procedure to group all industrial sectors into green-intensive, intermediate and extensive clusters based on the contribution of green TFP to industrial economic growth within respective industries. Based on an econometric estimation of the relationship between pollutant levels and industrial GDP per capita, we find clear evidence in favor of the Environmental Kuznets Curve (EKC) theory only with wastewater as the primary pollutant of interest and only with industrial sectors that are already relatively pollution intensive. We find no evidence in support of the EKC theory when sulfur dioxide or solid waste is the pollutant of major concern. In general, blindly accelerating industrial economic growth will likely worsen environmental quality, unless reasonable environmental policy interventions are implemented.
Highlights
The rapid development of China’s economy, largely attributable to its industrial sector, has resulted in increased resource depletion and environmental pollution
Environmental Kuznets Curve (EKC) relationship exists between CO2 emissions and economic growth
We further calculate the contribution of green total factor productivity (TFP) to rate of industrial economic growth as the primary measure of transition of industrial sectors to sustainable development
Summary
The rapid development of China’s economy, largely attributable to its industrial sector, has resulted in increased resource depletion and environmental pollution. Based on the 2016 Report of Trends in Global CO2 emissions, China’s emissions increased by 10% from 2002–2011, generating per capita CO2 emissions of 7.7 tons by 2015 [1]. While it is not among the nations with the highest per capita CO2 emissions, China, due in part to its large population, is currently the world’s highest carbon emitter, with total CO2 emissions of 10,433 Mt in 2016. The current growth pattern of China’s economy may not be sustainable if prevailing environmental pollution rates are not reduced
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