Expressways, GDP, and the Environment: The Case of China

66 Pages Posted: 31 Jan 2019

See all articles by Guojun He

Guojun He

The University of Hong Kong

Yang Xie

University of California, Riverside (UCR) - Department of Economics

Bing Zhang

Nanjing University - School of Management and Engineering

Bing Zhang

School of Environment

Date Written: Sep 1, 2019

Abstract

In a matched difference-in-differences setting, we show that China’s expressway system helps poor rural counties grow faster in GDP while slowing the rich rural counties down, compared with their unconnected peers. This heterogeneity is not driven by factors about initial market access, factor endowments, or sectoral patterns, but is consistent with the Chinese government’s development strategy that relatively more developed regions prioritize environmental quality over economic growth, while poor regions pursue the opposite. We further investigate the environmental outcomes and find that expressway connection indeed makes poor counties adopt dirtier technologies, host more polluting firms, and emit more pollutions, contrary to what happens to the rich connected counties. These results imply that recognizing the GDP–environment trade-off can help understand the full implications of infrastructure investment and other development initiatives.

Keywords: transport infrastructure; pollution haven hypothesis; home market effect; political economy of the environment

JEL Classification: O18, O13, Q56, H54, R11

Suggested Citation

He, Guojun and Xie, Yang and Zhang, Bing and Zhang, Bing, Expressways, GDP, and the Environment: The Case of China (Sep 1, 2019). HKUST IEMS Working Paper No. 2017-43, Available at SSRN: https://ssrn.com/abstract= or http://dx.doi.org/10.2139/ssrn.3113220

Guojun He (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Yang Xie

University of California, Riverside (UCR) - Department of Economics ( email )

900 University Avenue
Riverside, CA 92521
United States

Bing Zhang

Nanjing University - School of Management and Engineering ( email )

Nanjing, Jiangsu 210093
China

Bing Zhang

School of Environment ( email )

Nanjing, Jiangsu 210093
China

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