Chinese economic growth, FDI, institutional development and environmental problems: Empirical studies in Chinese provincial level

Published: 2019-06-04 07:30:00
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Research Questions

Does the quality of an institution affect economic growth amongst provinces in China?

How is the rate of pollution affecting economic growth rate amid residents of the provinces in China?


Several hypotheses were developed in this research as outlined below:

Firstly, transformations in technology was regarded exogenous

Secondly, it was assumed that homogeneity subsisted in income coefficients in various provinces in China

On the same note, it was assumed that the government regulated the rate of pollution in different provinces with adequate knowledge of the benefits that were to accrue with the control of pollution in China and the amount of cash that was to be used for controlling the frequency of pollution in distinctive provinces within China.

In the research, it has also been assumed that there was no feedback effect from the surrounding to economic growth, as income was assumed to be an exogenous variable

Data Methodology

The sample population for this study included roughly 29 provinces in China (Chen, 2007). Ideally, the study was conducted between the years 2000-2013 (Chen, 2007). Nevertheless, provinces such as Chongqing and Tibet were excluded from the study owing to the verity that the data that was attained from these provinces was not sufficient for substantial analysis of the findings. However, in a bid to retain consistency in the study, the data that was collected from the two provinces mentioned above were added to the total data that was attained from other provinces for proper analysis. Through the data that was collected from distinct provinces in China, we were able to correlate the rate of pollutions in varied provinces in China and income per capita amid the residents of different provinces. Some of the pollutants that were used as part of the study included industrial solid wastes, industrial wastewater, industrial dust, industrial Sulphur-dioxide and soot that was produced from factories.

Nonetheless, the data that was gathered regarding the relationship that existed between the rates of pollution in different provinces and the amount of income persons attained was compared with data collected in the entire state (Chen, 2007). It was vital to use data collected within the same country because this strategy enabled the acquisition of reliable measurements for income, policy and pollution.

Regression Line

Numerous elements were discovered as indicators of the rate at which individuals in different provinces in China witnessed reduced economic growth in their midst. For instance, proportions of land owned by the natives of China in various provinces equally determined individuals rates of growth and development. However, persons who secured large chunks of land in their areas of residence carried out very little economic activities aimed at development. To add onto this, most residents of China owned very small pieces of land and others did not possess any land portions. Way after the state of China adopted reforms in their practices including the implementation of open policy practices in different provinces in China, the country began to experience great economic development. Conversely, even with it being that the country was considered to have reached an average growth rate of 12.7% in their gross domestic product by the year 2013, this percentage has been on the decline to date (Olsson, 2011).


Chen, W., (2007). Economic growth and the environment in China: An empirical test of the environmental Kuznets curve using provincial panel data. Associate professor of department of economics, Xiamen University, China.

Olsson, P., (2011). Provincial Growth in China: Institutional and Economic Development. Lund University. Department of Economics.


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