Working Paper: NBER ID: w18754
Authors: Jing Wu; Yongheng Deng; Jun Huang; Randall Morck; Bernard Yeung
Abstract: In generating fast economic growth, China is also generating growing concern about its environmental record. Using 2000-2009 data, we find that, while spending on environmental infrastructure has visible positive environmental impact, city spending is strongly tilted towards transportation infrastructure. Investment in transportation infrastructure correlates strongly with both real GDP growth, a measure of tangible economic growth relevant to city-level Party and government cadres' promotion odds, and with land prices, which affect city governments' revenues from land lease sales. In contrast, city governments' spending on environmental improvements is at best uncorrelated with cadres' promotion odds, and is uncorrelated with local GDP growth and land prices. These findings suggest that, were environmental quality explicitly linked to a cadre's chance of promotion, or were environmental quality to affect land prices substantially, city-level public investment in environmental improvement would rise.
Keywords: China; environmental policy; infrastructure investment; economic growth; cadre promotion
JEL Codes: G0; H54; P2; P26; Q56; Q58; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| city-level spending on transportation infrastructure (H76) | real GDP growth (O49) |
| real GDP growth (O49) | promotion odds for cadres (M51) |
| city-level cadres (D73) | city-level spending on transportation infrastructure (H76) |
| city-level spending on transportation infrastructure (H76) | land prices (R31) |
| land prices (R31) | local government revenues from land lease sales (H71) |
| local government revenues from land lease sales (H71) | city-level spending on transportation infrastructure (H76) |
| city-level spending on environmental improvements (H76) | environmental outcomes (Q56) |
| city-level spending on environmental improvements (H76) | promotion odds for cadres (M51) |
| city-level GDP growth (R11) | promotion odds for cadres (M51) |