THE TRANSFORMATION TO SUSTAINABLE DEVELOPMENT AND ECONOMIC GROWTH: EVIDENCE FROM CHINA

Rui Li (), Litian Yu () and Jun Zhang
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Rui Li: School of Economics, Fudan University, No. 600, Guoquan Road, Yangpu District, Shanghai, P. R. China
Litian Yu: School of Economics, Fudan University, No. 600, Guoquan Road, Yangpu District, Shanghai, P. R. China
Jun Zhang: School of Economics, Fudan University, No. 600, Guoquan Road, Yangpu District, Shanghai, P. R. China

The Singapore Economic Review (SER), 2024, vol. 69, issue 05, 1629-1657

Abstract: This paper studies how the transformation to sustainable development affects short-term economic growth. In late 2013, the Chinese central government proposed a sustainable development transformation (SDT) program for resource-based regions, mainly targeted at improving environmental quality, promoting alternative industries, and improving social well-being. With the use of a difference-in-differences (DID) framework, our estimation shows that this program significantly reduces GDP per capita in resource-based counties by 5.1%. Mechanism analysis indicates that local governments implementing stricter environmental regulation, the failure of alternative industry strategies and the decline of officials’ economic growth incentive with the appraisal shift are the main channels through which the SDT program negatively impacts short-term economic growth. Further analysis indicates that this program improves environmental quality, but the employment and income of residents are negatively affected. Our findings provide valuable policy implications for developing countries to better balance economic growth and sustainable development.

Keywords: Sustainable development; economic growth; resource-based regions; environmental regulation (search for similar items in EconPapers)
JEL-codes: O38 O47 Q38 Q56 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0217590823420031

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