Environmental pollution and economic growth: Research based on China's provincial data for difference areas

Abstract

With the more and more serious environmental pollution caused by economic growth and the enhancement of consumer' s requirement for environment quality, the environment has become a very important rare resource in economic society. Environmental changes impact economy when environment is impacted by economic changes. Based on six environmental indicators of China's 30 provincial areas in the period 1998-2006, the paper analyzes the relationship between environment and per capital income in the east, center, west areas of China by building pollution and output equation and utilizing panel unit root, panel cointegration and Granger causality test, The results show that there is cointegration relationship between the average capital income and environment variable in the three areas. But the estimate result of output equation and pollution equation differs from one area to another in po pulation, capital investment, import and export turnover, direct investment from foreign merchants, investment on environment protection, etc. These lead to the conclusion that the relationship between environmental pollution and economic growth has a mutual and significant difference for three areas.