Guojun He, Yang Xie, Bing Zhang

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

Areas of Focus: Environment
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Environment
Producing and using energy damages people’s health and the environment. EPIC research is quantifying the social costs of energy choices and uncovering policies that help protect health while facilitating growth.
Air Pollution
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Air Pollution
Air pollution from fossil fuel combustion poses a grave threat to human health worldwide. EPIC research is using real-world data to calculate the effects of air pollution on human health...
EPIC-China
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EPIC-China
China is indisputably critical to addressing the global energy challenge. China is one of the world’s biggest economies, its top carbon emitter, and among its most polluted countries. Yet, China...