Does the economic growth target overweight induce more polluting activities? Evidence from China.

In China, official promotion evaluation based on economic performance motivates local governments to develop high economic growth targets, which has played an active role in boosting China's economic growth in the past decades, whereas its environmental consequences have not been fully exploited. This paper finds that the economic growth target overweight has a stronger positive impact on the output of high-polluting industries than on the output of low-polluting industries, thus inducing more polluting activities. To deal with the issues of reverse causality and omitted variables bias, we take an instrumental variable approach.