The Coordinated Development Of Economic Growth And Environment: An Econometric Analysis In China

Since reform and open up to the outside world, the economy has developed so fast in China that may be unprecedented in the history. In England, the per capita income just increased by 2.5 times during the whole 19 century. In United States, it increased by 3.5 times between the years from 1870 to 1930. In Japan, it increased 6 times from 1950 to 1970. But the per capita income in China has increased 7 times since it was free from economic isolation. Growth with high level of input, consumption and discharge while low level of coordination, circulation and efficiency can cause many environmental problems, the phenomenon appeared in different stages of industrialization which lasted hundreds of years in developed countries, while arose in just 2 decades in China with the characteristic of structure, complex and condensation. In the following 13 years, our population will continue to increase. Although the gross domestic production will be 4 times more than before, resources and energy consumption will be growing steadily, by then environmental protection may face even more pressure. Especially since 2003, the pollution discharge has bounced dramatically, and environmental problems and economic growth have become the focus again which meanwhile provide people with a chance to make a deeper study about them.Based on the reasons illuminated above, the main problem discussed in this paper is the relationship between economic growth and environmental pollution. Meanwhile, due to the limitation of time and the data , we will emphasize on following topics:(1) the general evaluation on China's environmental condition; (2) the overall analysis on the relationship between economic growth and environment; (3) the effects of elements of economic growth on environment; (4) the influence of environmental pollution on growth; (5) the coordinate development of economy and environment; (6) the choice of coordinate development path between economy and environment.In our study, we combine theory analysis and empirical tests with qualitative and quantitative analysis. At the same time, we especially attach important to the use of econometric methods. The main ideas are as follows:1.We first describe China's environmental situation, on this basis, a general analysis is given on the relationship between economic growth and environment. This paper also shows that the Environmental Kuzents Curve is not a necessary phenomenon in theory. EKC depends upon specific assumptions and the relationship between growth and environmental pollution is also very complex. In empirical research, time series tests show that there is no co-integration relationship between economic growth and the three major pollutions, or it is not the shape of an inverted"U"though exists. A unit root test with respect to so2 made with the panel data has already proved that.2.By Summarizing decomposition models used by experts both at home and abroad, we find that the primary elements that can affect environmental quality are economic scale, composition, technical changes, regime (including the degree of market, reform and opening up) and so on. According to the empirical research from China's data, we know that economic scale expansion leads to the increase of pollution, which is also responsible for the three kinds of pollutants. Composition effect has a negative implication for the environment, but positive in some specific years. However, to the three kinds of pollutants, the value of composition effect is generally small. Technical progress has different impacts on different pollutants. In most years, technical change contributes to reduce industrial water and castoffs, but increase the discharge of industrial gases. Market economy contributes to improve the environmental quality but with a slower speed. This may be due to the gradual way of our economy's transformation. Through the upgrading changes of market demands and the perfection of market systems, the economic development itself can stimulates enterprises to protect environment and enhance their abilities of doing this, so that the relationship between economy and environment will be improved and they will cooperate well in the long run. Foreign trade is helpful to the environmental quality, but evidence shows that pollution havens exists in the three main regions of China, even the whole nation.3.Environmental pollution has a gate-effect. The growth rate of balance is greater than zero if the pollution level exceeds the gate level, and smaller than zero if under the gate level. Environmental pollution can cause lots of financial losses, but we can not completely calculate the amount with the present technology. The impact of pollution on economic growth depends on balance of positive effect and negative effect of the marginal output. To the five kinds of environmental indicators, except industrial castoffs, the aggregated response values of the whole sample are all positive, which suggests that economic growth increases the amount of the other four pollutants discharge. In the meantime, the pollutants have two different effects on the growth of economy: the increases of industrial water and so2 have a positive effect upon economic growth while industrial gases and industrial castoffs have a negative effect.4.Coordinated Index Model (CIM) is used to study the degree of coordinate development between economy and environment, while experts have not got a consistent idea now about the models due to the shortages of all kinds of models. Quantitative tests made by the above models show that both Coordination Degree Model and Entropy Function have a worse explanation on the relationship between economy and environment, while the Gray System Model does better. Prediction made by the Gray System Model indicates that coordinate level of China's economy and environment is not optimistic during the eleventh five-year-plan, except 2008.5.There are four ways to improve the harmonious relationship between economic growth and environment: firstly, strengthen the environmental protection directions. This means to form scientific views of development and correct attitudes towards official career achievements, to assign the tasks of environmental protection and duties to each single person. Secondly, adjust the economic development policies to promote coordination of economy and environment. That is to deepen economic system reform, to speed up the structural regulation, to reinforce environmental protection by technological innovation, to enforce the opening policy of sustainable development and so on. Thirdly, be strict with the legal system and strengthen the capacity construction of law execution. In the last, encourage the public to protect environment, which includes carrying out environmental protection education, making the environmental information public and establishing the public participation regime.